TAX Filers

114 – 250 Baker Drive

Dartmouth, Nova Scotia

B2W 6L4

Phone: (902) TAX-FILE

A new venture for Roger Haineault, formerly of Help 4 Taxes

Monday to Friday 9 AM to 5 PM

Call (902) 829-3453 or Fax (902) 829-3450

Email Roger@TaxFilers.ca or Twitter @TaxFilers

Read Roger every Saturday in the Halifax Chronicle-Herald!

Latest Column

8/13/11 - Tough not to notice the action in the stock market, but in case you haven’t, here’s what you’ve missed.

In the interest of full disclosure, I must tell you that I invested a significant amount of money at the end of the last week of July. If you recall, the Americans were wrestling with their debt ceiling crisis, the markets were slightly panicked and I felt that going into the weekend, we’d get a lift (and some easy profits) once they announced a deal. Or at least I should have.

Who would have thought that anybody would have instituted a package with those terms? Listen, if you make $40,000 a year and you spend $30,000 a year, you have a surplus in government terms. But if you spend $50,000, you have a deficit. With every deficit, more is added to the national debt!

The US is in trouble. They, like others, are living beyond their means. And the debt package resolution did not address increasing revenues – raising taxes in other words. Instead it focused on cutting spending. Which brought us to the chaos that started after the long weekend.

The latest annual numbers from the IRS (2007) state that the top 400 Americans average more than $350 million, yet pay federal tax at only 17 per cent. The top rate is 35 per cent. Talk about tax planning! Furthermore, almost half of all households pay no tax. No wonder investors were ticked and selling off. How could the government not send a clear message that they were getting their house in order?

Anyway, they were taken to the wood shed and by Friday, August 5 the market numbers had moved back into the green. That is, until Standard and Poor’s downgraded US debt to AA+ from AAA (with reportedly a questionable math error in the multi-trillion dollar range).

If you were like me, you know that the real discipline is delivered by the vice-principal, and that’s what this week has seen – alternating days out of New York with gains and losses in the hundreds of points.

The US Fed came out and basically said that they would keep their key interest rate near zero for the next two years, hoping to settle things down. Think of how that kind of talk must surely put a strain on the Bank of Canada if they were thinking about increasing rates here at home.

Add to that the crisis in the European debt. No doubt you remember the news awhile back out of Greece of rioting in the streets from the austerity measures they were trying to install. Back in 2008, most countries undertook stimulus programs to try and spend themselves out of the recession brought on by the sub-prime mortgage mess, and now are paying the piper.

Euro commission folks suggest that a country’s debt should be no more than 60 per cent of GDP. Yet, countries like the UK are running in the 80 per cent neighbourhood and Italy is kissing 120 per cent. By the end of the week, short selling (which is effectively buying with an eye toward even greater losses) was banned in France, Italy, Spain and Belgium.

Many folks might be thinking about selling out at this point. Let me leave you with this thought. Buy when there is blood in the streets – after all, purchases by insiders are way up right now based on the Form 4’s being filed with the US Securities and Exchange Commission. Many would suggest that the end of the chaos is near. On the other hand, I’m not so sure.