Lani's Blog

Almost a HENRY?!!

There is an interesting opinion piece on Fox News.





http://foxforum.blogs.foxnews.com/2009/03/05/diamond_taxes_obama/





Here are some highlights








Fortune magazine’s Shawn Tully has called these people “HENRYs” –aka “high earners, not rich yet.” 


They are doctors, lawyers, consultants, managers and small business owners who have prospered in recent years. At first glance, the president’s plan to make the rich pay a bigger share of the nation’s tax bill would seem to make sense.





The only problem is that the HENRYs are not rich.





As Tully explains, “‘Rich’ means personal wealth, or net worth, not income.” Raising taxes on HENRYs at a time when much of the value of their assets–their homes and retirement portfolios–has evaporated, could have unintended negative consequences for the economy and the president’s plan for recovery. Why? Because the HENRYs are big spenders. They are “the bulwark of the professional and entrepreneurial class that drives the economy,” writes Tully.





Well





I don't make what the HENRYs do, but I have no debt, no property other than my house, no tax deductions so I am comfortable. I can give to charity. I can spend if I am careful especially for things like a new heating system for the house or a new transmission for the car.





The problem is I was bumped up a tax bracket 2 years ago. I paid quarterly estimated taxes last year above what was coming out of my pay check. I shudder to think what will happen when Mr. Obama and Co. decide that they need to lower the definition of rich again.








I applaud the president for ramming through a massive stimulus package to kick start the economy into recovery. But his idea to fund it by raising taxes on the very people who will need to pick up where the stimulus package leaves off, is myopic and dangerously misguided.





Japan proved during its so-called “Lost Decade” that raising taxes during an economic downturn has a negative effect on consumer spending. “To counter mounting debt created by government stimulus packages,” observed former Secretary of the Treasury (and State) James Baker in Monday’s Financial Times, “Japan increased taxes in 1997. Consumption dropped and the country’s economy collapsed.”





The Japanese experience holds an ominous warning for President Obama.





Harumph!





I don't applaud the of ramming anything through. Something needs to be done, but not at ramming speed. It makes me think that the Congress and media are trying to pull a fast one. They may be surprised especially if the Japanese experience of the Lost Decade is not taken into account.











Now awaiting your jeers and cheers