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    Monday, May 13, 2024

    McGuigan: Keeping an eye on both the private and public sector

    I always welcome feedback to my columns. Recently a Times reader contacted me in regards to my Sept. 20 column, "Waxing philosophical about clean cars and the U.S. economy." I'd like to address the letter, which criticized the theme of the column and some prior opinion pieces I've written.

    While I can't say I enjoy criticism, I do welcome it because it serves to sharpen my thinking, the way I relate to my readers and hopefully, my writing.

    Because I didn't ask permission to quote the letter, I'll summarize the issues she raised.

    First, the reader said my columns reflect partisanship. To that, let me simply reply that I have no allegiance to any political party.

    As a lobbyist for the National Audubon Society at the Minnesota Legislature, I saw party politics in action. I didn't like it then, and I still don't. Alexander Hamilton expressed it best in October 1787 when he wrote in Federalist Paper No. 1 that "... nothing could be more ill-judged than that intolerant spirit which has, at all times, characterized political parties."

    Second, the reader said my columns unfairly criticize government programs. While I don't believe I've written too much about government in general, I can think of two passages that may provide insight.

    The first comes from a column that was published in August 2009, titled "Cash for Clunkers round two." I wrote "…some commentators have said that cash for clunkers is proof that government can't run anything well. I disagree with that assessment. There are plenty of things that government does well, and there are countless government employees who provide services to society every day that we don't even see or understand. They deserve our thanks."

    The second passage concerns the financial crisis of four years ago and comes from a November 2010 column, titled "Henry Paulson's on the brink." I wrote "…fierce competitors, both public and private, worked diligently to resolve the crisis at hand. It wasn't always pretty, but they ultimately got the job done…"

    I have, on the other hand, been critical of specific government initiatives that I considered ill-designed, just as I have been critical of specific private-sector programs and financial products that harm consumers.

    The third point the reader argued is that I'm overly critical of taxes and fail to recognize they pay for needed programs. She also said the complexity of the tax code doesn't stop people from starting small businesses.

    My columns regarding taxes have primarily argued that the code is too complex and creates distortions. Because of marginal rates, the code can also provide a disincentive for work or production.

    Several columns have addressed this issue. Others have dealt with the imbalance in the federal budget, and our intern's calculation that the tax rate would have to be about 50 percent for most taxpayers (adjusted gross income of $50,000 and up) to balance the budget. None of these columns have disparaged the general role of government or taxation in a civil society.

    While reasonable people can disagree on the exact role of government or the amount of overall government spending, we should be able to agree on a simpler, more efficient tax code and a more balanced federal budget.

    Concerns about the tax code are not partisan. President Obama's bipartisan National Commission on Fiscal Responsibility and Reform reported these findings:

    "The current individual income tax system is hopelessly confusing and complicated. ... In short, the Commission has concluded what most taxpayers already know - the current income tax is fundamentally unfair, far too complex, and long overdue for sweeping reform."

    "Tax reform should lower rates, reduce the deficit, simplify the tax code, reduce the tax gap and make America the best place to start a business and create jobs."

    In my "Waxing philosophical" column, I wondered if the tax code was leading to the anemic economic and job growth we are currently experiencing. My admission was that I truly did not know. Since that column, a survey prepared for the National Federation of Independent Businesses and the National Association of Manufacturers has shed light on the subject. Two-thirds of those businesses surveyed stated that there is too much economic uncertainty for their companies to expand. Their top three concerns are health insurance costs, government spending, and federal, state and local taxes. These even outweighed concerns about foreign competition by a significant amount.

    Lastly, the reader wrote that my columns are designed to only appeal to a narrow subset of readers.

    My goal is to write these columns for you, the reader. They are designed to present economic and investing principles in an accessible format. They are also meant to warn you about things that might hurt you, whether they are brought to you by the private or the public sector. I hope you'll keep reading, and keep providing me with feedback.

    TOM MCGUIGAN IS A CERTIFIED FINANCIAL PLANNER WITH EXENCIAL WEALTH ADVISORS, 187-B BOSTON POST ROAD, OLD LYME, CT 06371, (860) 434-5999. CONTACT HIM AT TMCGUIGAN@EXENCIALWEALTH.COM

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