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vanhalen.jpg
Go ahead and jump! An increasing number of lawmakers and economists say the Van Halen song is a good theme for their increasing belief it's okay to take the plunge off the fiscal cliff. (AP image)

Nothing to fear! Go ahead and jump...off the fiscal cliff

BY Dave Ross  on December 4, 2012 @ 8:12 am (Updated: 8:29 am - 12/4/12 )

Still no fiscal cliff deal, but Republicans have put some real tax revenue on the table. And we are now seeing some economists questioning how scared we should really be about what might happen at midnight on December 31st.

Neither party wants the middle class tax increase, so that's going to go away. But what about the tax increase on the rich? This threat that investors will go Galt? America's Atlases will shrug, and the stock market will tank? That would be scary.

But now a few economists and at least one hedge fund manager are saying, wait. Let's think about this.

The higher taxes on investments only affect taxable investment accounts. But today, most Americans who invest have their money in 401Ks, which aren't taxed.

Today, less than 15 percent of American households have taxable investment accounts. So if taxes on investments go up, that means 85 percent of American households will see an effect of approximately zero.

Then you have foreign investors who don't pay taxes in the US, and insurance companies and pension funds which also don't pay taxes. As a result, there is at least one hedge fund manager who is saying the maximum effect on the stock market of just doing nothing might be around one percent.

Which would explain the the small but growing "Skyfall" caucus, and their pop metal theme, Van Halen's "Jump."

Where else are you going to put your money? Do you even bother to look at the rate on your savings account anymore?

As David Lee Roth sang, "go ahead and jump."

Dave Ross, KIRO Radio Talk Show Host
Dave Ross is co-host of The Ross & Burbank Show on KIRO Radio (weekdays 9-Noon) and never too far from the spotlight.
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Comments (39)


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  • ron prevost wrote...
    Don't be so sure, Dave, when you say neither party wants a middle class tax increase.
    December 4, 2012 7:50 am
    More and more, it's looking like the president would be just fine with taxes going up on everyone - so long as HE doesn't get the blame. ........ And, once undone, the tax cuts can be completely reworked and passed in Obama's image next year - and he then looks like the hero. .............. Sweet.

    Except, maybe, then middle class taxes are a bit higher than now - after all, we need the money - and the payroll tax cut is gone (hey, it's not even being discussed now, anyway) and taxes shoot up to pay for 'affordable' health care. ... And then there is no need for entitlement reform.

    Dave, the president doesn't fear that fiscal cliff. He's the only one who's got the fool proof parachute.

    .

    And we all are the fools.

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  • Forrest wrote...
    The Bush tax cuts did work...
    December 4, 2012 8:03 am
    For the wealthy. Their income keeps going up while middle class income keeps going down.
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  • sportsguru wrote...
    I would rather see
    December 4, 2012 8:23 am
    The automatic cuts take place. That way everybody get's what they want, the dems get the bush tax cuts expired and the repubs get there across the board cuts over 1 trillion. They can work on the entitlements after christmas and hash out additional savings. Everybody go home and have a good holiday. Peace
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  • ron prevost wrote...
    Except that everyone knows the spending cuts are far too draconian.
    December 4, 2012 8:35 am
    This whole automatic thing, when it was set up, way to make sure a solution was found BEFORE it happened. Unfortunately, to some now, financial Armageddon doesn't look all that bad. .......... so long as the other side gets the blame.
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  • sportsguru wrote...
    both sides want draconian changes
    December 4, 2012 9:12 am

    I want draconian changes as well, I want draconian changes to entitlements, I want draconian changes to social programs (make it more like unemployment use to be, 26 -48 weeks and your done), you can restart after a few years of working again.

    I want draconian changes to the tax code, I would accept a flat tax for everybody instead of this complex tax code we have now were you have to hire a tax lawyer to realize any type of benefit. I want draconian changes to how we deal with the mentally ill, let's get these nuts off the street and get them some real help instead of giving them an ssi check and saying here's your help and make sure you take your meds.

    I want draconian changes to how we pay our bills as a country, I think we have to pay annually on the principle and not just the interest (I could never do that with my credit card, I would never have any money to keep borrowing), I think it should be mandatory to pay down the debt, I don't care how small, we should be paying down the debt on an annual basis.

    Man, I could go on and on, but right now, both parties are doing an song and dance that I have seen over and over and over and over and over again. I am tired

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  • logical open mind wrote...
    sports-wow I agree with you 100%
    December 4, 2012 10:41 am
    sadly most folks are not informed of the long term spending increases we will see as the population ages.
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  • Forrest wrote...
    Sporty, Yes a flat tax. But...
    December 4, 2012 12:11 pm
    do away with all the payroll taxes and do away with special treatment for capitol gains. Income be income. Fund all programs from the flat tax.
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  • ron prevost wrote...
    What the heck is going on ?
    December 4, 2012 12:36 pm
    since when am I the leftist on this site?
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  • WAmovesRight wrote...
    One of the best posts on MyNW... ever...
    December 4, 2012 7:54 pm
    ... I hardly ever agree with anything you say. :) but this post is absolutely the truth.

    Well said.

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  • rational wrote...
    sportsguru
    December 4, 2012 10:00 pm
    Well said, I agree 100%.
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  • mynorthwester wrote...
    Dave and Luke
    December 4, 2012 8:36 am
    Can you guys get AJ on you're show I want to listen to him trip all over himself debating Dave when he's not sitting in some basement behind his keyboard I mean seriously he gets on here and says the same thing in every post I don't know just a thought I think we all enjoy listening to that
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  • logical open mind wrote...
    AJ and Dave R- AJ is far better informed on taxes, deductions and economics
    December 4, 2012 8:50 am
    Dave R only speaks in broad, touchy feely terms. AJ would eat him up. Dave r won't have anyone on to debate him. Michael Medved works down the hall and Dave will never debate Medved.
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  • mnpat wrote...
    Until there is reform of
    December 4, 2012 8:50 am
    Medicare, Medicaid, Social Security, and now the new Obama Care....and interest on the 16 trillion dollars, it doesn't matter how much you tax the people because it won't be enough.....even if all of the other government spending goes to zero.....so tell me, how close are we towards another trillion in debt and we haven't even gone through half of the fiscal year.
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  • Ron_Spins wrote...
    A Leftist's dream
    December 4, 2012 10:44 am
    The so called Cliff is a Leftist's dream come true.Military hobbled , Taxation for everybody and Blame to affix on the Republican's.
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  • HLC wrote...
    Obozo wants the debt ceiling raised again as part of his program.
    December 4, 2012 11:07 am
    You could tax the rich at 100% and it won't keep up with what the fool will spend. Wouldn't it be funny if he actually came up with a budget. He hasn't done it yet in 4 years.
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  • cdbtx wrote...
    Now I understand how you failed common sense
    December 4, 2012 3:49 pm
    No, let me rephrase that it's either complete dishonesty or stupidity - 85% of Americans would see no impact if taxes on investments went up?

    Dave - what on earth do you think investments dollars are spent on and why do people make investments? Just curious...

    Let me give you an investment tip Dave... write this down... heck.. you might even want to pass this on to your hedge fund manager.. *LOL*

    Raise my taxes on Capital Gains and Investments and I pull my investments out of public and private companies and put it into "TAX FREE MUNI BONDS".. it's no big secret... investors are simply sitting on the sidelines waiting.. raise the rates and watch the money move..

    BTW Dave - you are aware that a 3% Capital Gains Tax and Investment tax goes into effect Jan 1, 2013 to help pay for Obamacare - a tax that is expected to generate $800Bn.. of course.. NO IMPACT TO 85% of Americans.. *ROFL* if those investors stop investing.. then I guess the Fed's will have to take a closer look at your income to make up for the lost tax revenue.

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  • BarnDerk wrote...
    A perfect setup
    December 4, 2012 3:56 pm
    Male a big deal over it until the end of the year, them let tome run out. Both sides know that something has to be done. Budget cuts and taxes increases are required. This is the perfect scenario for doing both and can be everyone else fault.
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  • rational wrote...
    You should try a econ class sometime...
    December 4, 2012 4:48 pm
    Today, less than 15 percent of American households have taxable investment accounts. So if taxes on investments go up, that means 85 percent of American households will see an effect of approximately zero.

    You are only correct if you are speaking about direct and immediate effect. If you were to look at the economy as a whole then you're just displaying the reknown liberal lack of grasping basic economics.

    Consider for a moment what those "investments" are. Typically they are things such as stocks and bonds. The money corporations derive from selling stocks they use to expand. If you drive some of the investors out of the market then you reduce the availability of funding for expansion. The left keeps claiming they want to grow the economy, but it seems like every policy they promote is designed to stifle the economy. Go ahead, complete the job of crashing the economy, but please be honest and take responsibilty for doing so this time.

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