Tax Rebates and Stimulus

It is somewhat troubling that the long term impacts of what the congress has done and is planning to do are not being considered. That the congress and the new administration are planning to issue additional rebate/stimulus checks is irresponsible considering the lack of impact such things have had in the past.

As a result of such spending on the part of the federal government, it is a certainty that federal taxes of all sorts will go up drastically. Additionally, with the government printing so much new money, won't this necessarily create an inflationary environment?

Corporations Don't Pay Taxes People Do

I found this recently and thought it hit on an important subject. Who pays taxes? At the end of the day it is people who pay taxes of any kind. Corporations seem to get demonized sometimes about not paying enough/any taxes. If anyone would really stop to think about who is really paying the taxes they would realize that it isn't the corporation. Taxes are a cost of doing business and as such are factored into the pricing of the products or services purchased by the consumer. At the end of the day, it is the consumer of those products or services that are paying the taxes.

Tax Tail Wags The Dog

The tax tail should never wag the dog. All other factors in making a financial decision should be evaluated before any tax ramifications are considered. Once it is decided that a particular course of action makes good financial sense, then making the transaction tax efficient should be considered. If a financial decision is only viable because of tax "savings" then it is not likely to be a good decision.

People tend to spend a great deal of time worrying about the tax effect of a particular decision as opposed to thinking about the overall financial impact of the decision. As a consequence, frequently a dollar is spent to save 25 cents and that doesn't tend to have a positive result.

This isn't to say that taxes are unimportant. Far from it. Proper tax planning at the proper time has the potential to turn a good deal into a great one and failure to consider tax impacts can have a disastrous effect on a transaction. Its just that taxes should not (in general) be the driving factor in making financial decisions.

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