This Weekend’s Unanswered Questions (111905)

Another installment in a nearly-regular series of mysteries and pseudo-mysteries (usually 3-4) this inquiring mind would like to have answers for (some links included may require free registration):

QUESTION 1: Why is a slowdown in home price growth considered “going south” or “bursting the bubble”?

This is really irritating (near end of article):

Economists: U.S. Housing Market Heading South

Nationally, prices should flatten out over the next one to two years, according to some analysts’ predictions. But they could head lower in some of the hottest areas of California, Florida and the Northeast.

“It’s not like it’s going to be a lousy market for housing next year,” said Frank Nothaft, chief economist at Freddie Mac. “It will just be normal as opposed to these abnormal levels we’ve seen these last couple years.”

That’s the point. Getting back to normal is NOT “heading south” (except possibly in the spots noted). Nobody thinks that perpetual annual double-digit increases in home prices would be a good thing. It almost seems that if the business press can’t have the bubble burst it’s hoping for, it will just make it up.

QUESTION 2: Is Ford in As Much Trouble as GM?

Maybe not, but it’s serious:

Ford to cut 4,000 jobs in North America

NEW YORK (Reuters) - Ford Motor Co. (F), facing a deepening financial crisis, said on Friday it plans to eliminate 4,000 salaried jobs, or 10 percent of its North American white-collar work force, as part of a larger restructuring plan.

A majority of the job cuts — announced to employees in an e-mail distributed by Mark Fields, president of Ford’s Americas business — will be made in the first quarter of 2006, spokesman Oscar Suris said.

The cuts will come through attrition, layoffs and the elimination of some agency and contract positions, Suris said.

They will be in addition to the 2,750 job losses already announced by the automaker this year,

Ford lost $284 million in the third quarter and its automotive division is in the red. Its North American vehicle operations have lost more than $1.4 billion before taxes so far this year.

….. Ford Chairman and Chief Executive Bill Ford Jr. said last month that the automaker will announce its long-awaited restructuring plan — dubbed “Way Forward” — in January.

He also warned that the plan would include “significant plant closings” to help slash costs in North America.

Fields and his team are expected to present Bill Ford with the restructuring plan in December.

Given the urgency, it seems that Ford has taken way too much time to get their plan together.

QUESTION 3: How many federal taxpayers will opt to pay in more than they have to?

It seems like a silly question, but if this particular tax option goes into effect, we’ll find out:

H.O.T. Tax
If liberals want to pay higher taxes, here’s a way they can.

President George W. Bush’s bipartisan Advisory Panel on Federal Tax Reform should propose a measure to assist a neglected segment of society: the avowedly under-taxed. The H.O.T. Tax, or Higher-rate Optional Tax, would give those who think their levies are too low the ability to pay the steeper tax bills they say they deserve. This is the truly compassionate thing to do.

The H.O.T. Tax would offer relief to powerful Democrats and wealthy liberals who cannot stand it when Republicans cut their taxes.

….. The IRS simply would add a small box to the 1040 tax form beside these words: “If you believe you should be taxed at a rate above that assigned to your income bracket, please indicate here the higher rate you prefer. Kindly calculate your tax liability, and send it in.”

With that easy step, congressional liberals and residents of Malibu and Martha’s Vineyard no longer would have to keep the tax cuts conservatives keep throwing their way. Instead, they could send 50, 75, or even 99 percent of their incomes to Washington, so the GOP, Congress, and President Bush can spend it even better than they can.

Most people don’t know that this has been tried in several states. You can guess the results:

While this reform would increase taxpayer choice, it might generate little revenue. Arkansas, Massachusetts, and Virginia taxpayers already may pay above and beyond their usual top rates, though few do this. When Massachusetts cut its top tax rate to 5.3 percent in 2001, it let guilty liberals pay the old 5.85 percent rate if they wished. According to the Massachusetts Department of Revenue, as of June 15, only 930 taxpayers opted to do so on their 2004 returns generating an extra $246,505. In 2002, 2,215 taxpayers paid the higher rate, yielding $341,829. Among 3,218,572 returns filed in 2003, only 1,488 (or 0.046 percent) paid the voluntary higher rate, adding $209,216 to state coffers.

Big whoop. You didn’t really expect most of those who think everyone’s taxes should be higher to voluntarily fork out more, did you?

So if a H.O.T. tax gets passed at the federal level, don’t expect the budget deficit to disappear. But it will be worth it if the sanctimonious “my taxes are too low” whines from the likes of Paul Newman, Barbra Streisand, and Bill Clinton go away. After all, with the H.O.T. tax, it’s put up or shut up.