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Taxing Speeches: Political Points, Little Real Effect

The following commentary comes from an independent investor or market observer as part of TheStreet's guest contributor program, which is separate from the company's news coverage.

NEW YORK ( Fisher Investments) -- It's an election year, which means we should all expect plenty of tax policy, debt and deficit rhetoric. And rhetoric can get heated -- but before getting swept away, here are some important factors to keep in mind.

First, as we've written in the past, if put in context, the U.S.'s debt and deficit aren't as alarming as many fear. Our debt level has been relatively elevated lately, but our debt interest costs are low -- historically so.

In fact, U.S. debt interest costs are much lower now than they were at any point in the 1990s -- generally a period of vibrant economic growth and strong stock market times. When it comes to debt, what matters most is the debtor's ability to repay the principle and interest, not the full balance in one fell swoop.

Meaning, in short, the U.S. isn't anywhere near like Greece when it comes to our debt situation, despite many media headlines implying a fearsome parallel.

As for tax policy in 2012, expect a lot of acrimony but little action. The GOP recently released its budget proposal, including a tax plan -- primarily aimed at lowering and overall simplifying the tax code for individuals and corporations. In general, we agree lower and more transparent is the way to go with taxes -- and we believe the private sector is overall and on average a far more efficient and effective spender than the government.

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New tax schemes also effectively change money ownership, which can lead to uncertainty and legislative risk -- two things markets don't historically like too much. So a simpler and overall lower tax code would likely help ease some of those concerns, minimizing one (of myriad) possible sources of market discomfort.

But like or hate the GOP plan, it's not likely to be enacted this year -- given Democrats control the Senate. What's more, in election years historically, politicians have typically been hesitant to legislate sweeping change. By the same token, that means Democratic proposals are also unlikely to pass this year.

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