The voters of the state of Oregon have decided to raise taxes on companies and individuals who have higher salaries. Clark understands perfectly well that right now it's very popular to soak the rich and get them to pay more tax…but that does not make it a good idea for the long run.

Oregonians chose to increase taxes on individuals who earn $250,000 annually (the so-called Obama rich) and -- get this -- to tax companies that lost money!

This approach flies in the face of conventional economic wisdom about the value of low taxes. Low tax states usually have the highest rate of economic growth, while high tax states typically experience low economic growth and population loss as people flee.

All states are facing the challenges of providing social services through a recession. The real answer, Clark believes, is the Taxpayers Bill of Rights (TABOR). Under TABOR, state spending is capped at the rate of population growth plus the rate of inflation. That means you rein in spending during the boom years in order to have a better chance of making it through lean times.

States should be particularly wary of taxing entrepreneurs too heavily for fear of driving them away. Small businesses are what create economic growth and jobs. Scare those people off and the jobs go away too.

How much do you value a nickel? Washington D.C. is the latest community to adopt a five-cent tax on all plastic bags for environmental reasons.

Washington is an extremely affluent town. So how has the tax affected plastic bag use? The Washington Post reports use is down by about half. Retailers are shocked. The city's Anacostia River is reportedly much cleaner because there are fewer plastic bags on the streets.

Isn't it amazing that five cents is enough to change someone's behavior? The article has anecdotes about people dropping food from their arms because they refuse to pay for a bag! Of course, many retailers now sell reusable bags.

Clark is impressed that people in D.C. -- who don't seem to care about the cost of anything -- actually care about this!

We'll leave the question of whether government should use its influence to change behavior in this way to the political talk show hosts!

CLARKONOMICS: If you're a business struggling to make a profit selling your widgets at $5, the solution must be to raise the price to $10, right?

Wrong, as students of economics and now local government are finding out! Classic economics posits that raising the price is more likely to drive sales down than to boost revenue.

The City of Oakland, California mistakenly tried a similar move to boost its budget. The city had parking meters that were active until 6 p.m. each day and reasoned they'd get a windfall of profit by extending the hours of operation to hit the nightlife crowd.

The result, however, was that people simply stopped going to restaurants and other nightlife attractions. The San Francisco Chronicle reports that revenues for nightspots declined 30 percent immediately and stayed down. Some businesses even had to close their doors. The plan completely backfired and now the city has rolled back the meters to operate only during normal business hours.

If you are an entrepreneur, you should be wary about raising your prices to hit revenue targets.

The idea that you might raise taxes to bring in more revenue -- sometimes called "static analysis" -- fails to account for people changing their behavior to avoid those increased taxes. That's why states that tax the least have the greatest amount of economic growth.

If you're like Clark, you've probably made an online purchase in the past instead of going to a traditional retail store. One benefit in doing so is that web purchases come without sales tax.

However, you still actually owe the sales tax!

North Carolina has been the most aggressive in trying to collect Internet sales taxes. They want residents to fill out a form that details what you bought online during the past year and then remit your payment to the state.

In most other states, however, they're simply green with envy over the revenue that's not coming in. In fact, state tax collections are at the lowest level they've been in 50 years.

Yet The New York Post now reports there's a coordinated effort by the states to introduce legislation into Congress that would tax all Internet purchases.

The consumer champ has really enjoyed the Internet sales tax holiday, but its day may be over. The big reason is that the economy is doing so poorly. States are seeking funds to cope with budget gaps and have decided to target e-shoppers.

Want your say on this topic? Be sure to vote in our current poll!

If you've seen any of The Bourne Identity films, you may recall actor Matt Damon going into a Swiss bank and being brought to a room to access a secret account. This may seem like a Hollywood dramatization, but there actually are secret accounts in Switzerland set up by people around the world for the purposes of hiding money.

A major Swiss bank called UBS had a special program where they hid money for wealthy Americans who were engaging in tax evasion. The U.S. government is now trying to compel the Swiss government and UBS to disclose the names of those Americans. Those who would be exposed have resorted to filing anonymous John Doe lawsuits to keep their identities secret so they can continue to evade the law.

Clark is no fan of our tax code, but he believes that if you create your wealth in the United States, you must follow the code whether you like it or not. He's also not mincing words when he says prison is suitable for these tax evaders.

Meanwhile, the whole question of tax evasion -- a criminal act where you purposely avoid taxes -- is important to distinguish from tax avoidance.

There is a point at which you can raise taxes so much that you mysteriously create no more revenue. Why is that? Tax avoidance. Clark believes that's what will happen with Pres. Obama's plan to raise tax rates on those who make $250,000 or more annually.

Here's a real world example: There's a side street near the studio where Clark broadcasts. It used to have every parking space filled because it was free to park. But now every space is empty. Some brainiac thought that parking meters would drive up revenue for the local government. Instead, nobody parks there anymore; they simply park further away where it's still free and walk to work.

This is the mistake we make in government when we raise taxes to bring in more money. The money doesn't show up because people change their behavior and use every possible legal means to get into a tax shelter.

Instead, we should have our tax rate at a level where people will be able to participate. What kind of rate do you think should be levied on those who make over $250,000? Be sure to vote in Clark's poll to let him know.

Have you looked at the competing tax proposals from McCain and Obama? McCain wants to make Bush's tax cuts permanent, while Obama wants to cut taxes on everybody except those who earn more than approximately $250,000.

Clark thinks both candidates are just trying to be elected president. Neither is willing to tell us what we really need to know: The federal budget deficit is approaching $500 billion by next year, which is more like $1 trillion when you factor in Social Security and Medicare.

The real question should not be whether McCain or Obama is better qualified to rearrange the deck chairs on the Titanic. The question should be what are you willing to give up to have lower taxes? That's the topic of Clark's poll this week. Vote and let us know!

Clark has a bias in favor of states that run a fiscally efficient house. He believes that's the way to position your state for growth and prosperity over time. Texas is one place that really fits the bill; there is no state income tax. That creates a favorable environment for businesses to set up shop. Let's face it, states compete with each other for employers and jobs just like nations.

Is it any wonder that the Lone Star State has more Fortune 500 companies than any other? The tax issue isn't the only determining factor, but Clark believes it's the most important one. That's why ultra-high tax state New York -- traditionally the center of business and finance -- has seen an exodus of major corporations for years. The Empire State's loss has been Texas' gain, as the latter has been a major job growth center for the last 8 years.

If you're a business owner, you want to go to a place where the government won't take too much of your paycheck. Look at talk radio, for example. Many hosts reside in Florida regardless of where their show originates. That's because Florida is also a no state income tax domicile. By comparison, New York City and state taxes can eat up some 11% of your paycheck.

One corollary of note: If you reduce taxes, you must take the bitter pill of also reducing spending. Part of our federal mess is that the president and Congress reduced taxes while increasing spending. If you want one, you've got to do the other.

Clark loves found money. When he and his associate producer Joel went to lunch today, they used a BOGO coupon for Whataburger that someone at KRLD gave them.

Right now, far too many Americans have left found money on the table when it comes to the federal government's economic stimulus payment. USA Today reports that 5 million veterans and retirees of all stripes have failed to do the simple paperwork required to get the $300. This is low-hanging fruit that they should pick.

Be sure to help out your elderly relatives if they haven't filed yet to get the payment. Even if they don't normally file taxes, this year they've got to do so. They just need to show that they owe no money, and then they'll get in the system and trigger a disbursement. It's not too late.

Don't panic if you're among those still waiting for your check in the mail. The IRS says to hold tight for a little bit longer.

Why does New Hampshire have a higher rate of economic growth than neighboring states like Massachusetts or Vermont? Clark thinks the answer is obvious -- taxation. The Boston Globe's Robert Gavin recently penned an article lamenting the fact that Mass. has no job growth and the second worst economy in the United States. But the story has no mention of the fact that heavy taxation can cause economic decline. After all, they don't call the state "Taxachusetts" for nothing! Michigan is also suffering because they're always raising taxes too. When you do that, people vote with their feet and leave for greener pastures. Take the case of Derek Jeter. The Yankees baseball player is being sued by New York City and State because he had the good sense to move from the Empire State to Florida. In doing so, he fled a place where he was faced an 11.2 percent tax to a place where the tax is zero!

Clark has a recipe for Mass., Mich., NY and any other tax-happy states: Control and cut government spending where you can. Don't play Santa Claus to everybody. NY has a long tradition of the government helping everybody out whether the city is run by Republicans or Democrats. Look at Texas. The Lone Star State has passed NY to be the second most populous state in the nation. It's also has one of the lowest taxes in the nation. Most politicians lack the fortitude to say that in order to cut taxes, we should be cutting government spending. But the government can no longer be our sugar-daddy. You've got to cut the sugar!

Fred Thompson is one presidential hopeful who got off to a great start and then promptly disappointed a lot of people. But there have been two instances when Thompson really impressed Clark. The first was when he laid out his proposal for overhauling Social Security. Now Thompson's flat income tax plan has interested Clark. The idea itself is not new; we briefly had a flat tax back in 1986. Back then most Americans paid a flat fee of 15 percent, while the ultra-rich paid 28 percent. It was that easy and streamlined. Thompson is proposing 10 and 25 percent, respectively. This proposed flat tax would be voluntary. If you still want to subject yourself to the arcane current tax system, you'd be welcome to do so. Or you could switch and fill out your streamlined tax return in about a minute! There wouldn't be any changes year to year in how you're taxed. Many of the world's most robust economies have simple, clean and clear tax systems. Having transparency builds creditability and confidence. As an added bonus, people don't cheat as much on their taxes when there's a flat tax system. Clark wants to stress that this is not a political show, and this should not be construed as an endorsement of Thompson. Clark just likes that Thompson had the guts to propose a flat income tax.

As listeners know, Clark steers away from political talk on his show. But columnist Jonah Goldberg recently wrote an op-ed piece about government spending that really interested Clark. Goldberg analyzed how spending grew in the 25 years following Reagan's 1981 inauguration. During that time the U.S. population grew around 30 percent, yet government spending rose almost 90 percent after adjustments for inflation. The reason behind the surge in government spending growth is pretty simple really. Human nature dictates that there's a natural tendency to want a "free lunch" from the government. That's an inclination that goes beyond whether you live in a red or a blue state. We as a nation need to decide what we're about; so far we've been about wanting it all. We have become some of the highest taxers in the world, Clark says, and that's irrespective of party affiliation. So there's a question we must ask ourselves: Do we want to grow our economy and have more in the long run, or do we want to curtail growth in order to have more money to redistribute to people? Colorado has been particularly effective in controlling the growth of government spending with their Taxpayer's Bill of Rights, which limits spending to the growth in population plus inflation. There's a difficult balance to be struck here. Clark thinks we may be tying one hand behind our backs with our spending, and we're growing weaker and weaker compared to other capitalist economies.

The slumping housing market is causing unusual problems that one might not normally consider. For example, states are going to be pinched in the wallet because people simply aren’t buying homes. In addition, people who have homes are having a harder time paying for them and may end up in foreclosure. As a result, money from property taxes and other fees are not coming in. If you live in an area where homes have declined in value or aren’t going up in value, you may be paying more property tax than you should be. Clark has been over-assessed on several occasions and he has appealed every time. Grounds on which you can appeal include the following: when other homes similar to yours in your area have sold for lower than the amount assessed and when you have just purchased your home and you’re being assessed for more than the value of the home. Clark was once assessed at 25 percent more than the amount for which he’d just bought the home. He appealed and won. It takes a little work, but it will pay off in taxes you don’t have to pay.

If you are a regular churchgoer, you need to listen up to keep your finances in order. The government believed that people were routinely lying about their “walking around donations.” These include the money you drop into a Salvation Army kettle or what you put on a church collection plate. You now have to have a receipt for the smallest of donations, so churches are changing how they take donations. Churches are billing people regularly, and each year members get a statement showing how much they donated. It’s making churches a lot more money, as a result. Some churches have been doing this for years, but for some people it will be unusual. Just remember to always keep your receipts. When donating to the Salvation Army or Good Will, make sure that your donations are in good shape. Otherwise, you can’t claim them.

Many states are holding “sales tax holidays” because it’s back-to-school time. Depending on the state, that means backpacks, clothing and school supplies are all available with not sales tax. A lot of states are running huge budget surpluses, so this is a politically popular way of raising money without changing taxes long-term. But, is it a deal? Except for basic clothing, be careful buying clothes before your kids are back in school. Kids want to fit in and wear the latest fashions, and clothes are not on sale right now. So, it can cost you a lot. Worse yet, what if your kid gets to school and the fashions don’t fit in? The Clark Smart way to approach it is to wait until your child is back in school. They can size up what kids are wearing and, by the time you’re ready to buy, prices have gone back down. What about school supplies? Unless your child’s school issues a list of exactly what he or she needs, don’t buy things ahead of time. Backpacks, in particular, should be purchased later. Retailers mark up backpacks a significant amount before school. With many textbooks, it’s the same material from edition to edition. So, you can save about 90 percent buying a previous edition. Professors and even some students don’t like this idea, but it can be done if you want to save.

A proposed tax law about to go into effect has both some positives and negatives Clark wants to tell you about. First of all, there is a new gift for 2010 that could be potentially great for you. If you have money in an IRA or 401k from an old job, you can now convert that to a Roth. You will pay the tax bill over 2011 and 2012 and then it grows tax free. That means that if someone has a $50,000 converted IRA and they give it as an inheritance, it will have an ultimate value of $41 million. That’s $41 million TAX FREE! Why would Congress do this? It’s all in an effort to make the budgets appear like they’re giving people a break now. People will make up for it in 2011 and 2012, when they pay tax. But it’s still a great deal for consumers. You will want to discuss with your accountant whether you should do a non-deductible IRA. In addition, there is a “kid tax,” a punitive tax that affects children who have inherited money. It used to affect kids up to age 15, but it’s been raised to 18. It basically punishes kids who have jobs. If they save too much on what they earn, they will be subject to the kiddy tax. There are ways to get around it, but talk to your accountant. One way is to transfer money from that account to a 529 plan. Read more on the bill here.

What we pay in taxes frustrates Clark quite a bit, but not as much as how the current tax system works. Last year, he and his wife spent 11 hours organizing their paperwork so their CPA could sort through it. Then, they had to pay the CPA to do their taxes and had to go over the paperwork again when the forms can back for signing. Today’s tax code is a joke. Special preference items for companies and special interests have confused the code into a mockery of its original purpose. It’s so confusing that most people either make mistakes or cheat on their taxes. A number of proposals have been floating around to fix the current system. These include the flat tax, the fair tax and a national sales tax. Well, the powers that be on Capitol Hill have now decided that there will be no chance of creating a national sales tax or it’s cousin, the VAT (value added tax). Instead, the President’s Tax Commission is looking at reducing the mortgage tax deduction for people who buy big houses. It’s a solid idea because the country has been providing a massive subsidy for these people instead of encouraging lower income families to buy homes. Secondly, the commission is planning to change the way people buy health coverage in the country. These are all good ideas, but we still need to do something about the tax code. Clark doesn’t care if it’s a flat tax, a VAT, or a sales tax as long as we simplify the code and create a more logical and fair way to do our taxes. Maybe the answer is the "X" tax!

Neal Boortz, a fellow talk show host, has written a book about eliminating income tax all together. Instead, Boortz wants to start a sales tax at the national level. The sales tax would be 23 to 27 percent, and basically the idea is that you only pay tax on what you spend not on what you make. Boortz’s book is No. 1 on the NYT Best Seller list because it’s such a simple concept compared to our current system. In the other camp is Steve Forbes, who advocates a national flat tax. Forbes ran for president, you may recall, and he runs the magazine Forbes. Clark loves the idea of simplifying our current tax code so that people are in two or three simple tax brackets. It would mean that tax returns take just a few minutes and people could easily understand – and be more honest about – the taxes they’re paying. That system was corrupted and perverted over time by politics, and now it’s harder than ever to do your taxes. Clark is not partisan on this issue. But he worries that over time a flat tax could be corrupted again. The beauty with the sales tax is that there is nothing to mess up. Politicians can’t get in and change it around.

Clark talked last year about an experiment going on in the state of Oregon, whereby people would be taxed based on the number of miles they drive. Right now, when people fill up their tanks at a gas station, they pay a certain amount of tax for each gallon. The amount depends on the state. But what happens when people buy a fuel efficient automobile? They’re going to pay fewer taxes and the amount of money the government gets is reduced. In Oregon, state officials are testing out a system that will tax people based on the number of miles they drive. Basically, it’s a road tax. We asked asked in a Clark’s weekly poll how you felt about the initiative. About 75 percent said they were not in favor of it. The most popular reasons why were that people didn’t want government involvement and they didn’t like the idea of being tracked. GPS systems would be installed in cars to track the number of miles people drive. But, apparently, this taxation idea is taking shape and the Feds are now setting up a commission to look into it further, according to the San Francisco Chronicle. Theoretically, it makes sense to tax people on the miles they drive. But for people like Clark, who drive fuel efficient cars, the tax burden would be doubled. In addition, the current system encourages people to drive more fuel efficient cars, which reduces our dependence on foreign oil sources. But Congress is going to have its say in this.

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Speaking of fuel costs, how much fuel do you think you waste sitting at traffic lights? It’s in the billions of dollars at this point. The sad part is that it’s preventable. Smart lights, which can tell when cars are approaching or in the area, would help that problem immeasurably. There are simple ways to address this issue, and we need to look into that.

Property taxes are up about 30 percent in the past few years, according to the Census Bureau. That can severely hurt a new homeowner who may already be “house poor” from buying a home. The important thing to remember is that those property taxes may be wrong. Some local governments have raised property taxes as a way to increase their spending. Also, home values in some areas of the country have increased rapidly. So, appraisers are assessing the value of these homes, and sometimes they can be wrong. Appraisers are just making guesses on the value of a home, and, as you may or may not know, it has a direct effect on your property taxes. So, if you’re trying to get your assessment changed before your local government, you have to do your homework. Find out how much homes are selling for in your area. When presenting your case, assume you are the odd man out and remember to be polite and stay on target during the discussion. Talk only about the facts of your house or others houses around you, especially if they are assessed at a lower value than yours. That plays well in your favor. Home values are also online very often from your local government these days, so it’s much easier to look up.

Property taxes are up about 30 percent in the past few years, according to the Census Bureau. That can severely hurt a new homeowner who may already be “house poor” from buying a home. The important thing to remember is that those property taxes may be wrong. Some local governments have raised property taxes as a way to increase their spending. Also, home values in some areas of the country have increased rapidly. So, appraisers are assessing the value of these homes, and sometimes they can be wrong. Appraisers are just making guesses on the value of a home, and, as you may or may not know, it has a direct effect on your property taxes. So, if you’re trying to get your assessment changed before your local government, you have to do your homework. Find out how much homes are selling for in your area. When presenting your case, assume you are the odd man out and remember to be polite and stay on target during the discussion. Talk only about the facts of your house or others houses around you, especially if they are assessed at a lower value than yours. That plays well in your favor. Home values are also online very often from your local government these days, so it’s much easier to look up.

Clark mentioned a while back that everyone focuses on what the Feds are doing with our taxes. But the states are actually taking more money out of your taxes, while the Feds are taking less. There have been state income taxes increases in several states and sales tax increases in almost every state that has them. But the real snake in the grass is the increase local and state governments have given to property taxes. As property values increase, these governments realize they can get more of your money. These governments are supposed to “roll back” taxes when values get higher and taxes get out of hand, but they have not been doing that. So, in some states, citizens have passed initiatives that will cap or restrict the amount of property tax elected officials can charge. Clark is very much in favor of that. But politicians don’t want to give up their power. So, in many states they have outlawed the chance for citizens to put these initiatives on the ballot. People need to realize that some of their very own elected officials are restricting their rights by doing this. You can change that if you get to know more about the politics in your area.