We just received a long letter from our tax planner going over all of the Federal & State tax increases. Some of the Federal increases are contingent upon what happens with the "Bush Tax Cuts". Others, however, mostly associated with ObamaCare, are certain. Then comes the Prop. 30 increases on the State level.
I could go over all of these MASSIVE tax increases by number, but I don't think many of us really pay all that much attention (as evidenced by the voting). So let's suffice it to say this:
If you were kind of rich... you won't be much longer.
If you hoped to be rich....forget about it.
http://www.usgovernmentspending.com/year_spending_2013USbn_13bs1n_4047#usgs302 Obamacare alone will add $200B/year to this spending. Look, we don't let our poor starve in the U.S. (obesity is a bigger problem than starvation amongst our poor), and we are not going to balance the budget by cutting back on food stamps. My point is that, across the board, the Obama (and Moonbeam) plans call for increases in taxes on top earners only, making increased spending "free" at the margin for all others. The false choice presented is: cut backs or soak the rich. The real solution is cut spending and grow the economy--- and probably raise taxes for everyone.
Good bye National debt, hello surplus. It is long past due. Hell, if we can revamp the Moraga Town Council, we can certainly be the "ji" of the creation of the 'Flat Tax" Just imagine the corruption and manipulation that would be sent packing. Where would the lobbyists go, the unemployment line? The IRS proper employs about 100,000. Figure in the related agencies and I'm sure it approaches 1M. The entire Federal Gov employs about 2.2M with about 800,000 of that going to the Military. The tax code is a beheman labyrinth so complex as to be incomprehensible and unenforceable. So dump it and all its manipulators and finaglers. Just budget in 10%. The Feds will have so much cash, they can underwrite the states on a prorata basis with plenty to spare. So, no more state income tax (for those that have it). Time to puncture this outrageous bubble and get simple. People that haul in $300,000 and whine about being 'poor' (or is that un-rich) had better manage a bit more closely. We're not complaining. Time for a little perspective folks. Even at those numbers, many, if not most, live beyond their means. Do Be Do Be Do.
as for the discussion at the federal level, the talk of increasing the top tax rate is political rhetoric with no basis in economic fact. if you want to soak the rich (who as a percentage of overall taxes collected are currently paying the highest percentage they ever have), the dumbest way to do it is to raise the top rate...much smarter to limit or eliminate some deductions/credits to get rid of some of the complexity and inefficiency of the tax code. i fear that at the federal level we are going to try to cure most of our spending problem with tax increases, and badly designed ones at that...which will mimic the disaster that we have foisted on ourselves in calfornia. if we want a smart solution, just implement bowles/simpson as it stands.
Middle class folks like to smirk about the ease of pulling one's self up by your bootstraps. Well, it just is not that easy. So you say, Stop paying them! Then there is a transition to crime to avoid starvation. Most of the socio-economics referred to herein would like to believe the underclasses simply do not exist. Flash: They do.
My view is that we should purge the fiction of SS as universal pension, get rid of payroll deduction and simply fund it through a revenue-neutral increase in income tax rates across the board, and change SS into a means-tested safety net for destitute seniors. But, realistically, we need a transition period--- which we need to start ASAP.
We don't cap taxes that go to other welfare, even though benefits are capped. By pretending it is not a tax, we hide a massive additional income tax burden. Better to treat all flows to the gov't as income taxes and set priorities in broad daylight.
Most importantly, teach families it's their responsibility to pay for grandma, not the rest of us.
The economic productivity of the median unemployed 30 year old is much higher than an average 80 year old, so why use the same labels/stigma/incentives. Beyond the surface, I think you and I are saying the same thing: reset expectations (I would have a transition period) that individuals and families are accountable for cradle-to-grave care, and that government programs will be minimal and unpleasant safety nets.
Government accumulated these deficits by over-promising in order to buy votes over several decades. This was not the fault of today's young people. The pain needs to be spread everywhere, including today's beneficiaries. Treat it as the bankruptcy it is and give everyone a haircut, including grandma. Looking at it objectively, grandma will still have gotten a much better deal than her children or grandchildren.
undefined How about everyone in on this SS discussion educate yourselves about Social Security Retirement Benefits and Supplemental Security Income (SSI) including how they work, who is eligible and why, etc. And while you are at it, take a go at Medicare and Medi-Cal. Then be the first to offer to give up all of the above benefits for yourselves, parents, and children - should any of them/you qualify at any point- (including paying for nursing home care and selling the family home/s). It's easy to judge, curse and stigmatize others until it's your turn.
In a world of unlimited money, keeping those promises would be the best and most fair choice. In the real world, scaling back those promises (by haircuts to all) is better than suddenly ending them in a financial collapse. No fair option is available. Within the constraint of financial reality there are only unfair options to choose from. Ask the Hostess Teamsters, who agreed to a pay cut to save their jobs. Because the other union refused a similar deal, everyone lost their jobs. This is exactly the kind of choice we face with many government benefits promised to retirees. The numbers need to add up or the whole thing crashes. You can hit the brakes now or hit the wall later. Continuing to drive at full speed is an available option, but its outcome will be horrible.
The agency includes 10 regional offices, eight processing centers, some 1,300 field offices, and 37 Teleservice Centers. About 62,000 people work for the SSA. The Social Security Act—as it is formally known—was created out of the devastating effects from the Great Depression. Millions of Americans lost their jobs, savings disappeared and the elderly were often left without a source of income. The SSA provides benefits to retirees and disabled workers. It is a “pay-as-you-go” program in which current workers fund benefits for current retirees and disabled Americans. In most cases, a worker must have 10 years of covered employment to be eligible for retirement benefits. The rest can be found (for what it is worth: http://www.cnbc.com/id/43840296/Social_Security_CNBC_Explains Fortunately, my life does not hang in that balance!
At a 6% annual ROR you would have over $1 million in the account within 30 years. Anybody look at their SS account statement recently? Amazing what little happens when government has your money, isn't it?
Another irony of the "Robin Hood" approach i that when you target any policy objective other than GDP growth, all boats are lowered. Risk taking behavior in pursuit of growth (and after-tax returns) is what drives investment returns. If we make a series of policy decisions that lowers long-term real returns from say 6% to say 4%, think how much worse off we'll all be in 40 years...
The problem with our current system now is that too many of the mis-alignment of stakeholders. It's really easy for 10 people contributing nothing to gang up on one guy paying for it all.... especially when it's one vote one person.
In short, if we all would just rat hole at least 10% of every dollar we ever made, and buy even T-bills with it....we'd all be "rich" by 40 and wouldn't give the same rat's arse about Social Security. Still wouldn't change the fact that we can't trust government with our money.