[TomAdkinsCC]

RESPONSE TO QUESTIONS

FIRST- let me assure everyone that the economy will grow about 3-4% in the second quarter. Revenue will follow. That will have nothing to do with tax cuts, however, which won't have taken effect yet. (we conservatives will claim it does, however. And we should, just to screw the Democrats)
But the tax cuts will have nothing to do with that growth.

SECOND- let me also assure everyone that permanent tax cuts always work. Incidentally, Clinton's '95 capital gains tax cut, from 28% to 20%, was that famous "tax cut for the rich", which sparked the economic boom of the late 90s, and actually saw the rich (and everyone else who invested) pay more taxes on our new wealth. Again, no complaints. That's how it's SUPPOSED to work- the economy grows, and a lower rate on higher growth should yield more revenue AND more growth.

THIRD- The temporary effect will not be subtle. Businesses, particularly, will not spend long-term without assurance of permanance. That is a fact. Any CEO who goes into debt, then loses the tax break will cost his company millions. He will lose his job, if not his company.

LESSON FOR EVERYONE- Remember the S&L crisis? Reagan conceeded the change in the depreciation schedule to Democrats, as a compromise to get our desperately needed lower tax rates. But when depreciation dropped from 30% to 3%, commercial real estate lost up to 80% of its value, leaving owners stuck with worthless real estate, and banks stuck with worthless loans. If a someone had purchased a mall or an apartment complex ten years earlier, how could they have seen such a devastating move?
Sure, some incidences were cause by fraud and such, but the vast majority of failures were from innocents who could have never known they would lose their depreciation, and thus an immense value of their real estate business holdings disappeared. NOBODY saw that comning, but it led to the greatest bank crisis since the Depression.
The same will apply here. Businesses WILL NOT make long term purchases until they KNOW the cuts are permanant. Thus, any purchases that will work in 2-4 years will be made. But anything that takes 5-10 years to recoup will NOT be made. And businesses DO NOT trust congress. If your job was to control your company's multi-million dollar investments...would you?

Anyone who does not see this aspect automatically excudes himself from being qualified to disagree. The point is that obvious. Especially to those of us in the business world, who do this for a living.

Yes, let's happily take our tax cuts, and push the Congress to make them permanant. And I think Rove's political move was brilliant. But at the same time, remember it is ALWAYS great to fool your enemy...but ALWAYS stupid to fool yourself.

Your favorite millonaire businessman...

Tom Adkins
Publisher- CommonConservative.com

[agitator]

Tom neglected to plug his weekly radio show on Radio FreeRepublic so I'm going to shamelessly do it for him!

His show can  be heard live every Tuesday at 10pm ET, 7pm PT and the archives of his previous shows can be found here.

The call-in # is 1-866-RADIOFR or 1-866-723-4637. Feel free to call in on Tuesdays from 10-11pm ET!

[justshutupandtakeit]

I don't believe the collapse of the S&Ls was the result of the tax code changes. Most of the collapses were in Texas and Oklahoma and were related to the collapse of the price of oil. That is what undermined the S&Ls, not cuts in the tax code.

Had that caused the problem the failures would have been spread out across the country not regionalized.

It is not clear what depreciation change you were referring too at any rate.

[whipitgood]

Tom,
My concern is this: There are many, many in the US who are unemployed. Many more are just barely 'making ends meet' every month. If taxes go up, and these people are faced with the choice between paying their taxes and buying food for their kids, what will they do? If taxes stay the same, they will be faced with the same choice. If taxes go down, they might just have some room to 'breathe' and it will be a great message from those who levy taxes that government at least 'feels their pain' and maybe, just maybe, can use their influence in a positive way. Seems to me that any intelligent politician (assuming that there are some, of course!!) would be able to understand the economic situation in the US and act accordingly.