It’s time for our annual review! Here are my picks for the top stories on taxgirl.com for the year:
10, Dancing With The Stars champ and race car driver Helio Castroneves is indicted on federal tax evasion charges. In a related story, my mother is stricken with grief and may never samba again (okay, I’m not sure that she sambaed before but I’m pretty sure that this will end any chance).
9, Prop 8 in California passes and prompts the promise of tax boycotts by the gay and lesbian community.
8, taxgirl endorsed Obama for President. I was both roundly cheered and jeered for my picks but stand behind my choice. One of my most controversial and commented posts of the year.
7, Tax evaders hit the slopes. A massive tax fraud investigation in Germany, the UK, the US and other countries points the finger at the tiny Alpine principality of Liechtenstein. I am elated to finally have a reason to prove that I can spell Liechtenstein.
6, After Congress says no, President Bush says yes and earmarks taxpayer dollars to save the Big 3 automakers. As a result, Fiat misses its chance to hit it big in the US.
5, Wesley Snipes is acquitted of tax fraud. Remarkably, the world did not end, though we will now be subjected to more of his movies.
4, Congress commits US taxpayers to a remarkable bailout package. Treasury Secretary Paulson is now more powerful than Oprah.
3, The “biggest tax fraud ever” tax trial finally reaches an end. Out of the original 19 defendants involved in the spectacle that was the KPMG trial, only 3 were eventually convicted.
2, Rebates, rebates and rebates. I probably posted the most – and received the most comments – about this year’s rebate checks. Taxpayers were confused about the amount of the check, set-offs, when checks might arrive and more. An overwhelming majority of Americans admitting to being as cynical about the chances of the checks stimulating the economy as they are about Paula Abdul “just being tired.”
1, taxgirl gets a nod by the editors of the American Bar Association in the ABA Journal Blawg 100 for 2008. In case you missed it before, voting by readers for the best of the blawgs runs through January 2 – just click to vote. And no, this tidbit never gets old (not for me, anyway)!
So those are my picks for the year. What did you like? What did you hate? And what did I miss?
When Forbes magazine President and CEO Steve Forbes called Treasury Secretary Henry Paulson “the worst treasury secretary we’ve had in modern times,” it made for some good chuckles on late night television, but not many people seemed to pay attention. I have a feeling that will be changing.
Paulson keeps changing his mind, it seems, about how he wants to spend our money. Remember the financial institution bailout? The one where taxpayers basically handed out a big fat blank check to Paulson and his cronies? The one that set the stage for Congress now trying to be “responsible” when it comes to the Big 3 automakers?
Yeah, that one. Well, now there’s a very real possibility that some of that money will go directly towards bailing out borrowers. And according to CNN, taxpayers are a bit furious. And why wouldn’t they be? It’s the classic “not fair” scenario.
To quell the 2.3 million anticipated foreclosures in 2009, Paulson is considering a plan to buy more troubled mortgages and force mortgage rates lower. The kicker? The plan, financed by tax dollars, would only apply to those struggling with their mortgages – those who are continuing to make their payments on time will pay higher rates.
Nice, huh?
Now, don’t get me wrong. I don’t think anyone should be homeless. I don’t think anyone “deserves” to be forced out of their homes. But my husband and I, like millions of other taxpayers, made an economic decision when we bought our house. We were offered a mortgage package that was in excess of three times what we paid for our house. I’ll admit: I wanted the bigger house. I wanted a pool. And a great big fancy kitchen with Viking appliances. And at the time, my husband and I were both working at sizable law firms in Center City pulling down a considerable amount of money. We could afford it. But my husband looked at me and said, “What if something happens?” He was right (note that I’ll only utter those words infrequently).
“Something” did happen. In fact, lots of things did. It’s called life. We left our big law firms, opened a new business and eventually had three children that, for some reason, insist on eating and wearing clothes that fit. And while our disposable income dipped considerably, our mortgage payment stayed the same.
Are we lucky? Of course we are. I am typing this post from my nice (yet modest and affordable) home in Philadelphia with a hot steaming cup of coffee in hand. My children are still asleep (thank goodness) in their warm beds. I realize that we are blessed.
But I also realize that we were smart. We have made good decisions. We’ve made some bad ones, too (starting a business is not the easiest thing in the world). As a rule, though, we try to be thoughtful about how we spend our dollars and make more good decisions than bad ones.
And it’s with that understanding that I join the choruses of frustrated taxpayers who are angry over this latest proposal.
I also understand the perspective. Despite all of the media hype, most Americans are not spending blindly; they are changing their spending habits to adjust for the current economy. And although many Americans worry about losing their homes, the reality is that Bernanke says 15% of mortgages are in danger. That sounds like a huge number. But in the US, at the top end, about 75% of American families (not Americans) are homeowners. About half of American families that own homes have mortgages. And if 15% of those have mortgages under water… let’s do the math. That means, if you believe the worst case scenario, about 5% of American families with mortgages that are in danger. Is it a lot? Yes. Is it enough to justify the expenditure of gobs of taxpayer dollars? I don’t think so. And I’m not alone: there are even web sites now devoted to stopping the housing bailout.
As the economy continues to bobble, there are a number of fiscal emergencies fighting for dollars: the Big 3 automakers, jobless benefits, food stamps, health insurance. So far, none of those are getting the attention – or money – that the housing industry has managed to win.
And yes, I’ve heard the warnings about the housing market, how a mortgage fall out will bring down the entire US economy. I’m not totally convinced. Believe it or not, some economies have done well traditionally without a strong homebuyer’s market; Japan and Germany both have lower rates of home ownership than the US.
On the tax side, I’d rather see real incentives for American taxpayers to keep more of their own money. Continuing to put taxpayer dollars at risk (and yes, buying debt and loaning money for failed assets is risky) means that our national debt remains high. More borrowing means more dollars in interest paid out. The money has to come from somewhere – check your wallet. My guess is that’s where it’s coming from.
Wondering how Paulson intends to spend your tax dollars? Me too. But if he has his way, you and I won’t have a say in it – nor will anyone else.
In a three page summary of his plans for a bailout, which he hoped that Congress would rush to approve, Paulson wrote:
Sec. 8. Review. Decisions by the Secretary pursuant to the authority of this Act are non-reviewable and committed to agency discretion, and may not be reviewed by any court of law or any administrative agency.
Of course, now he’s claiming that of course he wants oversight.
This is scary, folks. It’s not just a few dollars of someone else’s money. It’s yours and mine.
Be sure and let Congress know what you feel about the bailout – no matter where you stand – because it’s that important. You can contact your Representatives here – and your Senators here.
Okay, so I made the last part up.
But Treasury Secretary Henry Paulson’s series of statements today regarding the latest proposal sounded like those spam emails in my inbox promising everything from riches to more energy. And just like those “too good to be true” messages, Paulson’s messages were a little too over the top to be believed.
Paulson didn’t offer a lot of specifics during his press conference today but made enough noise that the gist is there. I expect that he will turn over a package to Congress that will offer to buy massive amounts of debt from sinking banks. If all goes according to plan, if the housing market recovers, if the government gets a big enough discount, if the government can find a willing buyer when this is all said and done, then the government could make a profit. That’s a lot of ifs.
How much will this deal cost? Senator Richard Shelby (R-AL) who is the ranking member on the Senate Banking Committee has tossed around a figure of $500 billion. If that turns out to be true, that will bring the total bailout to date to $1.3 trillion (considering $800 million already earmarked).
Paulson, however, is quick not to characterize this as a net expense to taxpayers because if all goes well (there’s that if word again), the government will get what is being referred to as “saleable and income-producing assets.”
Hmm… Buy low even if you can’t afford it. We swear you’ll make a profit later. It’s a great investment!
Isn’t that thinking how we got into this mess to begin with?
