In the wake of the recent passing of healthcare reform legislation by Congress, after considerable debate, we’d like to take some time this week to examine the roll that government plays in our lives, particularly as it relates to finance.
Over the course of an average American’s working life, they will pay in excess of $600,000 to the United States government for income tax alone. Keep in mind that number does not include sales tax, property taxes, or capital gains tax, not to mention social security and the other costs (e.g.: driver’s license, license plates, hunting license).
The question I would pose to readers is this: Do you think that you receive enough benefit for your money?
Obviously, our interest in this subject hints immediately at our own bias; but at a time of political turmoil, with such emotionally charged public debate, it’s important that Americans educate themselves on issues they face.
Tax revenue in the United States historically averages more than a quarter of our country’s GDP. From personal income tax to corporate payroll taxes, the US government collects approximately $2 TRILLION per year to fund its current programs and provide for the national defense.
Unfortunately for us, many of these programs do not work, or they fall apart over time. The history of the United States is plagued with failures both large in small.
• Medicare: Broke
• Medicaid: Broke
• FDIC: Insolvent – Fancy word for BROKE
• Social Security: Broke
• US Postal Service: Broke
• Fannie Mae and Freddie Mac: Broke
• Mustang Ranch brothel: Broke
Thankfully, failures such as these constantly serve as reminders to our elected officials that they should stop trying to do things better than the private sector, and they stick to what they do best: talking.
While it sure would be nice if that were true, we’re not so lucky.
Instead of keeping their noses out of business, politicians remain absolutely convinced that they know how to run your life better than you do. They continue to believe that they know what’s best for you and your family, and that for every problem there is a solution that will make everyone happy.
And so, every time a government program fails, the debate resumes; not on whether or not to abandon the cause and leave it to those more capable people who can run a business, but how best to overhaul a failed program. In other words, let’s put 20” spinners on a ’97 Daewoo Lanos.
For those of you who may not recognize the Mustang Ranch cited above, it was a brothel outside Las Vegas that was seized by the federal government in the 1990s as part of a tax evasion case. The government, thanks to a little known line in the IRS handbook, was required to continue running the ‘business’ to try to recoup its lost tax revenue.
Pretty sweet deal, right? The US government running a bar and brothel just outside Las Vegas, that must have made them back all their losses pretty quick!
This was hardly the case. In fact, the governments running of the Mustang Ranch was a total failure, and the government had to abandon its efforts after a few short years to auction off assets held by Nevada brothel.
Lesson learned: The government has failed in its attempts at running Medicare/Medicaid, social security, banks, and a brothel outside Las Vegas. What, exactly, makes anyone think that they can effectively oversee US healthcare, which accounts for more than 15% of our nation’s GDP?
This blog is written weekly by Dock David Treece, a registered investment advisor with Treece Investment Advisory Corp. It is meant to share insight of investment professionals, including Dock David and his father, Dock, and brother, Ben, with the public at large. The hope is that the knowledge shared will help individuals to better navigate the investment world.