Bonds and Taxes

15 10 2009

alg_pothole-[gadling-bumper]Another interference into the life of the individual in these United States of America. I was told only yesterday that the government, meaning the liberal Democrats, have devised another new tax system. The average American thinks that streets and sewers and schools built in this country are paid for by their tax dollars. This is not true. Those new city and county and state projects are paid for with bonds. The city or county or state or schools or whatever is needed issue bonds in the amounts that they need to get their construction under way. These bonds are put out for the public to buy at an interest rate that will attract buyers. In effect, they are borrowing money from the investors to pay for these projects. The life of these bonds can vary from a few years to up to about 30 years. The interest rates are not generally very high, but they are usually issued as ‘tax free bonds’. This is what draws the taxpayer to purchase these bonds. Because he can draw interest every six months for the life of the bond or until the bond is called. And he does not have to pay tax on this interest. If the municipality or school or college is able to pay off the bonds earlier than their life, then the bond will be called and the taxpayer gets his investment (loan) back. The taxpayer can buy bonds that are rated very highly, meaning you are almost assured of getting your money returned to you, or they can take more risk, usually for higher interest rates, gambling on whether or not they will get their full return back.

This method of taxpayer funding for municipalities and schools has been around a long time. It has worked for many years. People want to invest their money where they can make enough to pay for their investment. Remember, when a bond is purchased, that money is not in your pocket and you do not have it to spend for a few years or up to 30 years. So you cannot risk buying bonds if you are not sure you can do without the money for a long time. But the municipalities are willing to pay enough tax free interest to attract a myriad of buyers. This tax free interest is very, very important to the progress of municipalities in these United States.

So now, the liberal Democrats have devised a new method for paying for these bonds. They have put out the word to municipalities that if they will put their bonds out for sale and not make them tax free, the government will pay up to 35% of the interest due on the bonds. How’s that for getting into your back pocket without anyone knowing about this. The usual hidden agenda. And this will eventually kill the tax free bond market. The funds will dry up and people will not invest in the building of new streets or schools or sewers of the city or the county or the state. So who will win in this situation. Certainly not the investor. And not the general public because they will be without those much needed services. And the bond seller won’t win either as he will lose most of his business. But the most important part is that the person who will eventually lose in this endeavor is the average, every day taxpayer. Because he will no longer have the services he is entitled to. He will not have the new schools for his children nor the new streets in his town nor the new sewer and water lines that his town and county are depending upon for their expansion. But he will get to pay more in hometown taxes than he ever has before. Because someone will have to pay to have the old streets fixed and to have the old schools renovated and to have the old water and sewer systems upgraded so that everyone won’t get sick. So who has won in this? Of course, as usual, the liberal Democrats, the so-called Government of today. They will have destroyed another entity of this country of ours. They will have once again brought about the change they talk about which is only hurtful to everyone except them.

I remember when Stalin was powerful and how they said only a handful of people benefitted from progress in Russia – of which there was very little. Only a handful of people lived a really good life with homes on the sea and servants and automobiles and schools for their children. That is where this liberal Democrat Congress is leading our country. To where only THEY will benefit. The rest of the country does not count. Just ask Obama and Nancy Pelosi and they will probably tell you just this – it is their country. They have been waiting a long time to change it the way they want it to be.

Vote Republican as soon as you can.