Campaign Promises - Good Policy or Bad Business?
Dennis O'Keefe
30+ Years Helping Verizon and other Telecom Employees with Retirement Planning ?? Buyout Offers ?? Career Changes ?? Wealth Management Services ???Host of Your Telecom Retirement
In recent discussions on policy and political proposals, we’ve seen a range of ideas presented—some more feasible than others. Let's dive into some of these proposals and see if they are truly great policy or empty campaign promises.
Tipping Culture: Is It Time for a Change?
Both candidates support eliminating federal income taxes on tips. While this sounds good on the surface, it may be a red herring to garner votes.
When we think of to-taxes-on-tips, we think of that single mom eeking out a living at the local diner. But think further. Do you really believe she is paying taxes in the first place? It's unlikely. This change in tax policy will provide her with no benefits.
Who will benefit? Waitstaff in mid-level to high end restaurants. These folks could be earning six-figures. Is eliminating the tax on most of their income really a good policy decision?
Personally, I grossly over-tip and think we should abolish the practice altogether. But that will take real effort.
Anti-Price Gouging Laws: Are They Effective?
The proposal for anti-price gouging laws, aimed at curbing exorbitant prices during times of crisis, raises concerns about government intervention. Historical attempts to control prices, such as during the Nixon administration with wage and price controls, often resulted in more harm than good, exacerbating shortages and economic instability.
I still recall the Nixon Whip Inflation Now campaign from 50+ years ago. Government control on prices did nothing but increase overall inflation.
Finally - who decides what is gouging and what are normal price increases? Can you imagine how this could quickly get out of control?
The idea is to allow the free market to regulate prices, where high prices signal either a scarcity or an opportunity for new suppliers to enter the market. Introducing more government regulation might lead to more bureaucracy and less effective results. The challenge is to find a balance that protects consumers without stifling market dynamics.
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Trade Tariffs: The Pros and Cons
Trade tariffs are a hot topic, with debates centered around whether increasing tariffs on imports can benefit domestic industries. While tariffs might encourage manufacturing within the U.S., they also have the potential to drive up consumer prices, leading to inflation.
Think of it this way - if there is a $200 tarrif on your imported $200 Air Jordans, you'll now pay $400. Tariffs aren't paid by the exporting country. They are paid by you and me.
The $25,000 Homebuyer Incentive: Inflationary Impacts
One of the most discussed proposals is the $25,000 incentive for first-time homebuyers. While it sounds appealing, it risks inflating housing prices even further. If sellers know buyers have an extra $25,000, they are likely to raise their asking prices accordingly, negating the intended benefit of the incentive.
The housing crisis is driven by a lack of supply in high-demand areas, and throwing more money at buyers doesn’t address the root of the problem. Instead, focusing on increasing the housing supply and reducing regulatory barriers might be more effective.
Conclusion
There are many more issues that divide the candidates this Fall. This is just an economic look. Personally, it's all rhetoric. Candidates at every level make promises they rarely deliver on. . . and often just don't make good law.
Good luck to us all in November!
Let’s stay engaged and informed as we navigate these important discussions.
New episode! Presidential Economic Policies: How Will The Election Affect My Finances?