A Bond By Any Other Name Is… a Tax

It’s election day and while I’m fairly clueless about those running for school board, one item on the ballot caught my eye.  The local community college has put up a bond measure for the vote to “upgrade facilities.”  You can probably guess how I’m going to vote on that.

If you know what a bond is, then ignore the rest of this e-mail, with my apologies.  However, from my brief stint as a financial planner, I discovered that most people do not know what bonds are.  Here’s a quick overview:

Bonds are loans.  When you vote on a bond measure, you are voting to borrow money and that money must be paid back, with interest.  Revenue bonds are issued by municipalities for projects that are projected to generate money and those funds will repay the loan.  E.g. if the muni bond was used to build an airport, income from the airport would be used to repay it, (unless the airport goes bankrupt and then the taxpayers must pay).  The other common type of municipal bond is the general obligation (or GO) bond.  With a GO bond, the taxpayers are on the hook for the money.  Period.  It’s used for things like high schools and such.  So when you vote on a GO bond, you’re increasing your town or city’s expenses down the road (plus interest) and you will pay.

Advertisements

About Mystic Cowgirl

I worked overseas in the aid game for longer than I'd like to admit and learned several important things: 1) Third World countries aren't poor because America is rich. They're impoverished due to socialist governments that provide neither rule of law nor basic infrastructures; 2) These socialist governments redistribute wealth from taxpayers to the government workers. There's no benefit to the poor or downtrodden, and certainly not to the general welfare in terms of infrastructure improvements. 3) America is moving toward the Third World model. Rule of law has been subverted because equality under the law is disappearing as special interests carve out exemptions to regulations and special favors under the law. The redistribution of wealth to government began decades ago -- total compensation for government employees now outpaces salaries in the private sector.
This entry was posted in California, Economy and tagged . Bookmark the permalink.

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s