In the classic Marx Brothers’ movie “Duck Soup” the main
character, Rufus T. Firefly (Groucho Marx), is debating with the Secretary of
War on whether to raise taxes on the mythical country of Fredonia and the
ensuing exchange goes something like this…
Secretary: “How about taking up the tax?”
Firefly: “How
about taking up the carpet?”
Secretary: “I
still insist we must take up the tax”
Firefly: “He’s right;
you gotta take up the tacks before you can take up the carpet.”
I thought of this absurd
parody while watching the much anticipated Presidential Debate earlier this
week – a political train wreck that you just can’t help but rubberneck. And of
course one of the main talking points during that often painful and
finger-pointing 90 minutes was the oft-discussed subject of taxes.
I don’t often get political
in this space, but after Monday night, there are some things that need to be
said with regard to proposed tax changes – whether real or imagined.
Hillary Clinton has stated
that under her plan the rich would pay their fair share of taxes, while Donald
Trump would cut the corporate tax rate to 35 percent to usher in a more
business friendly environment.
Guess what? No matter who
gets elected, there’s a 99.9 percent chance there will be exactly no changes to
the tax code.
Zero.
Nada.
Why?
Because there’s an elephant
on the room the size of New Jersey in the form of a deficit that’s approaching
$20 trillion – and rising thanks to an additional $600 billion or so for the
most recent fiscal year. And the U.S. managed to post that ocean of red ink
while interest rates haven’t risen in years. Once the Fed raises rates watch
what happens to that deficit number when borrowing money will cost more to do
so.
Not to mention the changes to
those rosy Dow indices once there are other places for folks to put their
money. Trump warned of an impending Wall Street bubble and this is one of the
rare times I agree with him.
Truthfully, all their
respective plans will accomplish is to shift spending from one demographic to
another. In the end, 50 percent of some group will be outraged.
But cheer up, there’s always
a Marx Brothers movie to keep things in perspective.
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