OP ED

OP-ED English 1A.8

What About Taxes

By Yessica Valverde

Published April 30, 2011

Let’s think about the long run instead of the short run for few quick seconds. How can America get out of this financial crisis that was started by bad decision making from banks, loan lenders, real state sellers, wall street, board of directors, subprime mortgages, stock derivatives, the government, and even the consumers? Let me first say that America’s financial crisis and the causation of it should teach us that everyone gets greedy when there is giving a chance to make more money.

Well first lets analyses the main reason that cause this financial crisis, which is selfishness and greed. People made wrong choices because they were only thinking about there own personal well-being. In other words, everyone was just thinking about making that “mullah”, especially the banks, board of directors, and the investors. In the article “Trading Financial Risk and Jobs” by David Barboza, he states, “this financial system has made credit more available and increased borrowing and consumer spending, causing the U.S. consumer debt to triple since 1988”. Banks were giving out loans to home buyers even when the bank loan lender knew the home-buyer could not afford the monthly payments or the house period, but yet, they gave out undisclosed loans to pretty much anyone that was asking for one. Once again this an example how greedy everyone was; the lender was thinking about the points s/she was making on all this undisclosed loan transactions which at the end of the day would be rewarded with more money by the board of directors. The real state sellers were making huge amounts of profits because they were selling house like hot bread. The banks and real state companies were teaming up working together to make as much transactions as possible.

Wall Street drove the board of directors on bad greedy decision-making. In the article Structured Finance states “wall street created a system of structured finance that involved lending without using capital (money), enabling a small amount of money to leverage (control) bigger and bigger investments”.  There were so many loans to keep track of. The big picture was you had a bunch of a loans, which was investors money, that were thrown in a bucket which than was sold to another investor. The investor who bought the bucket of loans was giving an estimated probability of high chance of returned profit. What the bank didn’t mention to these investors was that these loans were basically giving to anyone who asked for one and the probability of people paying back the loans was unknown. The results of that were home owners losing their homes, investors losing their money, banks closing down, businesses going bankrupt, the government spending huge amounts of tax money on helping out these banks, job lost, consumer debt, and many mad people; in other words, our financial crisis. Everyone was spending more than what they had/made.

The solution to our financial crisis is an increase on taxes, which would be direct on top incomes, middle-income, and everyone else.

Increasing taxes will create more jobs and reduce unemployment. Many people don’t realize this but the roads we drive on and policeman who secure are personal belongings are all being pay by the tax money our government collects. If we reduce taxation as the “Ryan Proposal” says than we will have less money to fund organizations, union jobs like fireman, construction jobs, policeman, and more. If we increase taxes, like the “people’s Budget” from the congressional caucus proposes, we would all benefit from it if the government actually distributes the money properly. The sad reality is that even if  we do raise taxes there is high chance that the government will make wrong decisions in what areas to fund, because everyone gets greedy.