Tuesday, July 5, 2011

Ray Merriman On Taxes

Over at Merriman Market Anaylst, Ray takes the time to talk about taxes in terms of Pluto (of course) and Saturn cycles. Here is a snippet:

The message for today (2001-2020), as I understand these planetary correlations to economic cycles, is simple: if a government increases its spending, increases its tax rates on individuals and small companies (the primary engine for hiring workers), it will enter period of prolonged economic contraction with greater unemployment, more frequent and deeper economic recessions, stagnant or volatile stock markets, and roaring commodity markets. This is not an opinion. Notice that nowhere is there mention of lowering taxes (although for small businesses, I am, because the USA trails only Japan in the highest tax rates for small businesses: 39.6% in USA versus 40% in Japan). If anything, it simply suggests a policy of “not raising taxes.” Why? Well, this cycle indicates that raising taxes in this phase of the Saturn-Pluto orbits does not solve the debt issue, but rather escalates it. And you know what Capricorns like myself think of escalation in tense times. We are trained to de-escalate.

This is not the case in the waxing segment, when employment is high. During the 1947-1966 boom years, for example, when employment was quite high, the wealthiest in the United States were at one point taxed as much as 90%, and the economy kept growing. It was a different part of the cycle. Beyond that, I don’t personally favor lower taxes or higher taxes or any change in the tax structure as almost every incoming president tries to enact, because that change itself –and certainly the perception that it will change - creates anxiety and paralysis in the business climate. Business owners can’t plan when they don’t know. The only people who benefit from any change in tax laws are the accountants – and even they don’t wish for that. The business community and one’s personal financial planning go more smoothly when tax levels remain constant. You can’t put a dollar amount on an environment that allows for proper financial planning. But you can be certain that any change in taxes paralyzes the effort to plan properly, and in that situation, small business hold back on hiring new personnel and individuals hold back on large purchases.

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