Tag Archives: taxes

What Do NBC News and Barack Obama Have in Common? Neither One Understands the Deficit

Last night I watched in utter disbelief as a news report on NBC Nightly News claimed the President was going to shave $4 trillion from the $14 trillion deficit over the next ten years. Why is this shocking? Because the $14 trillion isn’t a deficit (an annual shortfall in revenues compared to spending) but rather the nation’s debt (outstanding monies owed). Furthermore, the President’s campaign speech – I mean detail deficient “plan” – doesn’t cut one penny from the $14 trillion national debt. Instead it merely cuts $4 trillion from planned future spending over the next 12 years.

[Side note: this is the first time any Washington nitwit has gone out 12 years with a budget (it’s normally ten) and, of course, was done to pretty-up a very ugly picture.]

I can hear you now, “$4 trillion is nothing to sneeze at”. Well, look at it this way – that’s only $340 billion per year and when you’re going backwards $1.5 trillion per year as we are now, that’s not going to even make a dent in this crisis. Politician’s talk in these big numbers over many years because it obscures the truth and they know it. They do silly things like tell you they’ll fix this massive crisis by raising taxes on the rich as the President did yesterday.

Newsflash, Mr. Obama – According to the IRS, the entire income of all Americans earning over $100,000 in 2008 was about $1.58 trillion. Even if  we taxed them all at 100%, it wouldn’t fix the problem. And, of course, taxing them at 100%, even 50% isn’t feasible as it will kill investment, economic growth and job creation; so please, I know it makes good campaign fodder, but can we drop that charade already? I’m begging you!

So, whether you’re NBC and are going to claim to be a national news service, or you are Barack Obama and claim to be qualified to be President, it would perhaps be good if you had ANY idea what you were talking about when it comes to the fiscal matters of this country. Feel free to call me if you need some help!

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Filed under Financial, Taxation

Is There a Journalist In the House?

For those who don’t know “Teabagging” is a relatively disgusting sexual expression that conveniently for the comedians impersonating journalists at CNN and MSNBC doesn’t happen to be banned by the FCC, although most people would find the act it describes more repugnant than many sexual innuendos the FCC does restrict. You’ll have to Google it for more information; my mother occasionally reads this blog.

On Wednesday both “news” networks chose to use this off-color humor (CNN example, MSNBC example) to insult a group of citizens expressing their political views, something I was under the impression we encouraged in this country. When you repeatedly insinuate that tens of thousands of your fellow citizens have genitalia in their mouths, you irrefutably demonstrate your complete disregard for anyone with a conservative perspective and exactly why calling yourself a journalist is out of the question, not to mention your complete lack of class!

These hacks went on to insinuate, as Nancy Pelosi did yesterday, that the entire Tea Party concept and events were organized and promoted by Fox News and/or America’s wealthy to keep the conversation on taxes. What they failed to do (heck, they failed to even attempt to do it) was to support this claim with any actual reporting. They didn’t interview anyone who could validate the claim. They didn’t produce any emails or letters from an organizer to support the claim. No, they didn’t even pretend to have an unnamed source that could corroborate their version of reality. Just throw it out there – some people will fall for it, right.

Meanwhile, in a slightly subtler but significantly more deceptive tact, both networks talked repeatedly about the events as if they were protests of high federal income taxes and how ridiculous that is because the President just lowered everyone’s taxes. Of course, they knew better than this, but the truth doesn’t fit their agenda. The truth is these were protests about out-of-control government spending first and foremost. They were protests of Congressional earmarks and bank bailouts and illegal immigration. And yes, they were protests of higher taxes; maybe not today, but in the years to come. Is there anyone out there so delusional as to think all this spending will get paid for by taxing just the “rich”? This is a simple bait and switch by the Obama administration – it’s the “offer” from the credit card company to skip your next 3 payments, meanwhile the interest keeps accruing. Average Americans will pay for this spending in the end!

CNN and MSNBC know this. At least I don’t think their so stupid as to not know it. But, it doesn’t fit the agenda. So they’ll keep insulting conservative minded Americans, giving a major nationwide political rally limited coverage and dropping perverted sexual innuendos; anything to distract you from the glaring lack of actual journalism.

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How Much Does the Government Get?

Lately there has been a lot of discussion about the wealthy needing to pay more taxes. This always raises the question for me, why don’t the people doing all this talking make a donation to the welfare program of their choice if they feel so passionately about it? But, nope, they want to force others to do something they aren’t willing to do themselves. Then there’s the recent rash of the President’s nominees who were discovered to have not even met their minimum tax obligation, let alone paid any extra – they want to raise taxes on others, but they won’t even pay their own? Something seems wrong here.

But, I digress. The topic for today is how much does the government actually take from every dollar you or I earn, so let’s take a look. I will start with a nice round $100,000 in salary to make things easy. Now assuming you’re not self-employed, your employer will be paying 6.2% of your salary to Social Security and 1.45% to Medicare. That’s $7,650 above and beyond the $100,000 that your employer has to cough up in your name (keep that in mind the next time they turn you down for a raise – they could have paid you another $600 a month, but it went to the government). Of course, you have to match those contributions via Soc. Sec. and Medicare withholding, so that leaves you with $92,350.

Don’t get excited, we’re just getting started. Let’s move on to the big leagues – income tax. If you’re single and have no children to claim, the government will take a bite to the tune of $20,124 in income tax withholding (maybe they should call it hold-up instead of withholding) leaving you with $72,226. Next, your state will take a bite. In my state of Massachusetts that bite will cost you 5.3% or another $5,300 leaving you with $66,926. If you live in one of the major U.S. cities you’ll likely get hit with a city income tax as well, but we’ll leave that alone for now. So, to this point the government has received $40,724 and your clutching $66,926 of your hard earned money.

But, we’re not finished, not even close.  Here are a few more taxes most Americans pay and to generalize I’ve used the amounts I paid in 2008 as examples:

  • Property tax – $3,100
  • Communications (phone, cable, cell phone) -$138
  • Gasoline (average 35¢/gallon -18.4¢ goes to the feds, the rest to your state) – $263
  • Sales tax (assume 5% and $10,000 a year in purchases) – $500

There goes another $4,001 leaving you with $62,925.  But, there are still more taxes. Capital gains is a fun one; it’s where if you manage to save some of these after-tax dollars, and are brave enough to invest it, and are lucky enough to make a little profit, they have the audacity to take a percentage of that too! There are cigarette and alcohol taxes, travel taxes (many times 10% or more on hotels, airfare, rental cars, etc.), and the list goes on and on.

So, in the end your $100,000 salary nets you roughly $60,000 and your government rakes in $47,650. Seems like a pretty good deal for them since you did all the work. But, here’s the best part… You or I must find a way to pay our bills and save for retirement out of the $60,000. But, the government doesn’t bother with any of that; instead, they spend Trillions more than they take in resulting in a national debt that you will someday end up paying for. Better put some of that $60,000 aside just in case!

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Filed under Financial, Taxation

You Can Not Make This Stuff Up!

In the latest sign that the apocalypse is upon us the United States government is now providing free cell phones to people on welfare. I AM NOT KIDDING! Apparently a monthly check, free medical insurance, free or subsidized housing and food stamps is not enough.  No, now the American taxpayer is being forced to pay for free cell phones and free monthly minutes for qualifying welfare recipients. Since no rational person would believe this, here is some information from the site:

Lifeline Assistance is part of a program that was created by the government to provide discounted or free telephone service to income-eligible consumers. To help bring you this important benefit, SafeLink Wireless is proud to offer Lifeline Service. Through our Lifeline Service you will receive FREE cellular service, a FREE cell phone, and FREE Minutes every month! SafeLink Wireless Service does not cost anything – there are no contracts, no recurring fees and no monthly charges.

Any Minutes you do not use will roll-over. Features such as caller ID, call waiting and voicemail are all also included with your service. If you need additional Minutes, you can buy TracFone Airtime Cards at any TracFone retailer Walmart, Walgreens, Family Dollar, etc). SafeLink Airtime Cards will be available soon.

Your exact benefits, including the number of free Minutes you will receive, depend on the state you live in. Please enter your ZIP code to get the details for your state.

My favorite part is the free roll-over minutes.  My carrier doesn’t offer that benefit and my wife and I pay more than $200 per month!

No one is going to argue that those on welfare are living in the lap of luxury, and certainly some people genuinely need assistance for a period of time to stabilize their lives, but this takes all Common Sense and tosses it out the window. The U.S. is more than 11 Trillion Dollars in debt and has decided that giving out free cell phones is a good use of the money it doesn’t have. Well, at least everyone will be able to communicate as the Country spins down the drain.

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Filed under Government Spending, Random Senselessness, Welfare

Are There Any Democrats Who Pay Their Taxes?

Does this make six now? I have honestly lost count, but it was reported today that another Obama nominee failed to pay taxes owed. Today’s tax dodging democrat is Kansas Governor and Secretary of Health and Human Services nominee, Kathleen Sebelius. The irony runs deep on this one since she was the back-up pick and supposed safe choice after Democratic Senator Tom Daschle withdrew from consideration for this same position when it was discovered that he owed some $140,000 in back taxes due to “oversights”. So, let’s recap.

  • Tom Daschle – Democrat – former Senator from So. Dakota – nominated as Sec. of HHS – withdrew due to oweing $140,000 in back taxes.
  • Tim Geithner – Democrat – former NY fed chairman – nominated for Treasury Secretary (yup, the one that’s in charge of tax collection) – Nomination approved by the Senate even though he underpaid his taxes by nearly $30,000. The man in charge of all U.S. tax collection couldn’t manage to properly file his own taxes using Turbo Tax!  I am not making this stuff up!
  • Ron Kirk – Democrat – former Dallas Mayor – nominated to be U.S. Trade Representative – Nomination approved even though he had failed to pay some $10,000 in taxes.
  • Nancy Killefer – Democrat – nominated to be the first ever nation’s Chief Performance Officer (oh the irony) – withdrew to avoid embarassment. You see the city of D.C. had to place a lien on her home to get her to pay a past tax bill.
  • Hilda Solis – Democrat – Congresswoman from California – nominated to be Labor Secretary – also approved despite her failure to appropriately pay her taxes.

and last, at least for the time being, there’s

  • Kathleen Sebelius – Democrat – Governor of Kansas – nomination pending for Secretary of HHS – plan on her being approved as well.

So, yes, that does make six Obama nominees, all Democrats, who failed to pay their taxes appropriately. Here is the problem for the President; this is an either, or situation.  Either these people are criminals who were purposely avoiding paying their fair share of the tax burden as U.S. citizens, or they are morons who can’t figure out how to file a tax return and apparently can’t manage with all their connections to find an accountant who knows how to file taxes either.

Think about that for a minute.  On the one hand, you have the very socialists who are screaming that the rich (which all of these folks are by the way) should pay more taxes, cheating on their tax returns to avoid doing what they expect the citizens they govern to do.  Or, on the other hand, you have people with every conceivable connection and resource, a U.S. Senator, a Fed Chairman, a U.S. Congresswoman, a Governor, a Mayor of a major U.S. city who aren’t bright enough to properly file a proper tax return or hire someone who can?  That is simply not believable. After all, these are people who know they are in the spotlight, who know that an inaccurate tax return could come back to haunt them.

But, where’s the outrage at this? American citizens are outraged that AIG employees received legally earned bonuses, but don’t seem to care that their leaders don’t pay their share of taxes???  Where’s the great American media?  Where’s CNN?  Do you honestly believe that had a Republican President nominated 6 members of his party who were tax-dodging thieves, that story would have ever gone away? Perhaps the most compelling question is this – if this high a percentage of Obama’s nominees aren’t properly paying their taxes, how many more politicians owe us money? If the people in charge of the tax code aren’t going to follow it, why should the citizenry?

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Filed under Ethics & Corruption, Taxation

Shouldn’t We Have Seen This Coming?

The new tax policies haven’t even taken effect yet and already the tax avoidance maneuvering has begun. In a Reuters article this week it was reported that, “A wave of energy companies has in the last few months announced plans to move to Switzerland — mainly for its appeal as a low-tax corporate domicile that looks relatively likely to stay out of reach of Barack Obama’s tax-seeking administration.” Gee, I never would have expected that.

Common Sense tells you that when you raise taxes the incentive to avoid taxation goes up.  The greater the incentive (higher taxes) the greater the lengths companies and individuals will go to avoid them.  Let me emphasize my point through some good old fashioned exaggeration…

Most of us pay 10-20% of our wages in income tax (I’m referring to the net number after deductions – more on taxation another time), and the vast majority of us don’t go to any exceptional lengths (certainly not any illegal lengths) to avoid paying those taxes.  Now imagine that beginning in 2010 your tax rate was 80% or 90% or even 99% (of course I’m exaggerating, but do you see where this is going), what would you do?  Call me crazy but it seems quite obvious; a person would either get very creative in avoiding taxation or simply throw their hands up and stop earning all together cause what’s the point, right?

So, in the end the argument isn’t about whether to tax the rich or tax the poor or tax corporations.  Those are the proverbial weeds the politicians try to mire you down in to obscure the real story.  And what’s that story?

THEY’RE SPENDING MORE THAN THEY’RE TAKING IN!

And they’re doing it EVERY YEAR!

The real discussion that needs to take place is how to raise the necessary revenue (and we better start reducing that “necessary” number) yes fairly, but more importantly, effectively.  If you raise taxes and taxpayers change their behaviors to avoid the tax, a government can actually end up generating less revenue rather than more.  If the government raises taxes on corporations such as the energy companies mentioned in the Reuters article and those companies move overseas the tax increase that was sold to the American people as a solution actually makes things worse.  The Treasury loses the tax revenue they were collecting.  Americans working for the companies are likely to lose their jobs and the Treasury loses the resulting income tax.  The real estate these companies were renting in the U.S. is now vacant leading to lost income for the landlord, or lost property tax revenue for the local community or both.  And the list goes on and on and on and on with a trickle down effect of lost jobs and lost tax revenue on all the supporting services that surround a major employer – gas stations, restaurants, coffee shops, etc. etc.

So, the next time you hear a politician tell you that they’re going to fix everything by raising taxes on somebody else, stop and think for a minute about what the consequences of that tax increase might actually be.  Because, I’m telling you, people with Common Sense should see this stuff coming!

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Tax the Rich, That Will Fix Everything

When are people going to realize the lunacy of this strategy?  Let’s take a tiny segment of the population and charge all (or at least the vast majority) of the costs of our society to them while everyone else consumes more and more services for which they pay a smaller and smller percentage of the cost.

As this op-ed in the Wall Street Journal points out, the top 3.8 million earners in the United States (those with incomes of more than $200,000) already pay 62% (yes, you read that correctly, sixty-two percent of all the income tax paid in this country.  Let’s do some simple arithmetic – that means that the other 98% of taxpayers carry only 38% of the burden.   But, look at this chart taken from the IRS website, because it gets even worse.  The top half of wage earners are paying 97% of the income taxes.

Percentiles Ranked by AGI

AGI Threshold on Percentiles

Percentage of Federal Personal Income Tax Paid

Top 1%

$388,806

39.89

Top 5%

$153,542

60.14

Top 10%

$108,904

70.79

Top 25%

$64,702

86.27

Top 50%

$31,987

97.01

Bottom 50%

<$31,987

2.99

Note: AGI is Adjusted Gross Income
Source: Internal Revenue Service

Keep in mind this is only tracking the people who pay taxes and says nothing about the millions who are too young, too old or too “sneaky” to contribute anything.  So, we have a system where significantly less than half of the citizens make ANY financial contribution. How long do you suppose that is sustainable?

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