• With: Rich Karlgaard, Neil Weinberg, Elizabeth Macdonald, Morgan Brennan, Dennis Kneale, Kim McNicholas

    DISCLAIMER: THE FOLLOWING "Cost of Freedom Recap" CONTAINS STRONG OPINIONS WHICH ARE NOT A REFLECTION OF THE OPINIONS OF FOX NEWS AND SHOULD NOT BE RELIED UPON AS INVESTMENT ADVICE WHEN MAKING PERSONAL INVESTMENT DECISIONS. IT IS FOX NEWS' POLICY THAT CONTRIBUTORS DISCLOSE POSITIONS THEY HOLD IN STOCKS THEY DISCUSS, THOUGH POSITIONS MAY CHANGE. READERS OF "Cost of Freedom Recap" MUST TAKE RESPONSIBILITY FOR THEIR OWN INVESTMENT DECISIONS.

     

    NEW CALLS TO LOWER TAXES IN ORDER TO BOOST GOVERNMENT REVENUE

    RICH KARLGAARD: The Walmart example is really a good one because Walmart is going back to basics; everyday low prices, a broader base of products, the thing that made them what they were. They thought they were Target for a while and that got them into trouble. The U.S. under the Obama administration thinks its Western Europe and that's getting us into trouble. What we need to do as Walmart is doing is broaden the tax base, lower the price of taxes, which the Simpson-Bowles Commission recommended, which Paul Ryan is recommending, and we're going to get this economy growing and we'll have more tax revenue.

    NEIL WEINBERG: The problem here is that the U.S. government is not Walmart. And if we're going to lower taxes to run up more debt, that's kind of like Walmart saying we're going to lose money on every product and make it up in volume - it's crazy. Until Washington shows it can live within its means, I don't think we should be cutting taxes.

    ELIZABETH MACDONALD: What's crazy is that the people in Washington who have no more sense than a flock of guess who don't look at the facts about how tax cuts do increase revenues. We saw for example in the Clinton administration when they hiked taxes on the upper bracket that brought in less than half of the revenue that cuts in capital gains tax or the death tax brought in.

    MORGAN BRENNAN: Revenues go up when tax rates go down - in the short term. Maybe in the next 2 years if we were going to do that it would have a good effect on the economy. I don't think cutting taxes is going to be enough for our longer term problems.

    DENNIS KNEALE: One reason that 30 years after the Reagan revolution we still have to have a fight over the idea that cutting taxes will bring in more revenue is because government has never truly cut spending to go along with that. And even during the Reagan era they spent so much more on defense you couldn't see the really good effect of that, if we could cut those taxes, but also cut spending. That's why even if the theory is wrong, even if tax revenue won't go up, let's cut taxes to force government to cut spending.

    THE FLIPSIDE: INFLATION FEARS ARE OVERBLOWN AMID RISING FOOD AND GAS PRICES

    DENNIS KNEALE: Look at a few reasons why inflation might not be coming. Here are a few reasons why it might not be as bad as what you think. One - oil prices are too high, we worry about that. You know what, we looked at 25-30 years of data, oil has never sparked inflation. Another thing - we worry about the Fed printing up a trillion dollars in money, it went into the Grand Canyon and fell, and it didn't go into circulation. Furthermore, you can't have inflation unless wages are going up and you have money to spend on stuff, when we spend more money at the pump, we just have less money to spend elsewhere. And finally, productivity is up and that means less inflation.

    RICH KARLGAARD: Dennis, this is kind of preposterous, you know it's great the cost of iPods and iPads are shrinking, but the fact of the matter is the stuff you really have to buy to live, food and energy are going up. It's a direct reflection of the cheapened dollar in the Federal Reserve's policy. They're secretly trying to inflate their way out of the debt problem, paying off debt in cheaper dollars that governments have done for years.

    KIM MCNICHOLAS: I'm really curious, until we actually see wages increase I'm not really concerned about inflation at all. I haven't seen a raise in a few years and until I actually see one, I'm not concerned at all. I do believe that by the end of the year the Fed will raise interest rates. It's all a game of chicken right now for them, they're trying to stimulate growth in the economy, they can't do that until they put money back in, of course that will cause a little bit of inflation.

    NEIL WEINBERG: I would like to remind Professor Kneale over here of something from the 1970s which we don't want back and that was stagflation. We are facing the risk of that right now, we have high unemployment, commodities are going up, food is going up, and energy is going up. Everything that will ultimately feed into other products is going up - stagflation.

    ELIZABETH MACDONALD: We don't have the rampant inflation right now that people are worried about. People are worried about food prices going up, I mean, you can't eat an iPad. Inflation is one of the most devious things out there, it hurts savers who are already facing microscopic savings rates. Wall Street firms are already cutting their GDP outlook growth rates because they are worried about inflation.

    NEW CALLS FOR A GREEN CAR TAX TO HELP MAINTAIN U.S. ROADS

    DENNIS KNEALE: The gas tax is supposed to pay for road maintenance. Those electric cars use up the road ways just as much as gas guzzlers do, it's bad enough that the federal government has decided that Americans aren't sufficiently green conscious enough to be willing to pay an extra $10,000 for electric cars so we have to give them tax breaks.

    ELIZABETH MACDONALD: I say no to this idea because the idea that this would go towards highway maintenance - look in the 5 or 6 decades since the highway gas taxes were put in place, less than half the time were those revenues used for highways or road maintenance at all. I think Dennis is right though, no tax breaks, no tax credits for green vehicles, let them stand on their own four wheels. And besides, owners of electric cars are going to see higher taxes through their utility bills to fuel the electricity into their cars.

    RICH KARLGAARD: I'm with Emac all the way, this is just an example of how corrosive this hugely complex tax code of ours is, it really demoralizes people who want to do the right thing, play the rules straight. It's demoralizing to investors and business owners more than anything else.

    NEIL WEINBERG: I'd love to waive my magic wand and we'd all have a flat tax, but unfortunately we don't. We have a system where we reward some behavior and punish some behavior. It makes no sense to give people tax breaks to buy electric cars and then slam them with a tax. When you try to create a new market, you give tax breaks - that's what we did with retailing on the Internet.

    MORGAN BRENNAN: I think this tax is a bit premature and I agree President Obama the tax hike king has been stimulating this industry with billions of dollars, not taxing it. Of the 3.2 million cars on the road in Oregon, less than 1,000 of those cars are electric vehicles and plug-in hybrids.

    TAX DAY IS MONDAY; PUT YOUR REFUND CHECK IN THESE STOCKS

    MORGAN BRENNAN: Home Depot (HD)

    DENNIS KNEALE: Guggenheim Timber ETF (CUT)

    NEIL WEINBERG: IDT Corporation New Preferred S (IDT)

    ELIZABETH MACDONALD: Walmart (WMT)