Monday, May 09, 2011

Ryan's $34 Trillion Tax Folly

Why is it that these so-called conservatives, like Mr. Ryan, constantly seem to duck the difference between "net" and "gross"? Maybe it's because they aren't fiscal conservatives.

For instance....


tax.com: Ryan's $34 Trillion Tax Folly

If repairing your car cost 18 percent of your income, would you buy a new car? Of course you would.

Now imagine that your mechanic tried to persuade you to keep the jalopy with a clever tax argument: The costs of your annual car tax and registration would decline over time, saving you money. Keep the car long enough and you would save a third of a year's income just in taxes.

That sounds appealing, unless you stop to think about how much more you would pay for repairs as your vehicle ages and breaks down ever more often.

Now imagine that your mechanic's savings estimate relied on data that could be analyzed to determine how much of your tax savings would be offset by higher repair costs, but he did not give you those figures. So you do the analysis and find out that for every dollar of tax you save, you would spend $5 to $8 on repairs.

How would you react? Would you laugh out loud at your mechanic? Or get mad? Or walk away in disgust at his lack of candor? Would you not only buy a new car, but also look for a trustworthy mechanic?

This analogy describes the "roadmap" for future taxes and spending on Medicare being marketed by House Budget Committee Chair Paul Ryan, R-Wis.

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