(Please note the headline above is the one given to this piece today in the local paper in the op-ed section–KSH).
“The United States faces a fundamental disconnect between the services that people expect the government to provide, particularly in the form of benefits for older Americans, and the tax revenues that people are willing to send to the government to finance those services,” Douglas Elmendorf, director of the non-partisan Congressional Budget Office, writes in a May 17 blog post.
Addressing the current tax and spending gap to make fiscal policy sustainable is “an urgent task for policy makers,” Elmendorf says.
“The United States faces a fundamental disconnect between the services that people expect the government to provide, particularly in the form of benefits for older Americans, and the tax revenues that people are willing to send to the government to finance those services,â€
I don’t believe that “one size fits all statement” to be universally true. Sure, the 50% of households who pay no income tax may fall into that segment, but speaking for the 50% who pay a boatload of income tax, I have a few suggestions to make:
1. Cut the Federal Govt down to those things delegated to it in the Constitution. Everything else goes to the states. Each state can then decide what social programs they want to fund.
2. Secure the borders, demand true energy independence, and then cut the foreign entanglements
3. Dump the UN and most foreign aid.
After a horrendus transition, we will have budget surpluses that can be plowed back into further tax relief for working Americans which will free more money for private investment and growth.
As one who has and continues to pay a “boatload” of taxes like the Capt in #1, I would make the plea that none of us particularly want or wanted the government to be a part of our retirement plans. But the tax burden we carried throughout our careers and the tax burden of social security, medicare and medicaid, especially, have basically forced us to depend on social security for part of our retirement plans (of course, the law gives us no choice as to medicare, after 65 – look for more fun things from this Administration when the national healthcare policy finally kicks in). And I would suggest that if Congress had kept its mitts off of our money in that SS Trust Fund, instead of “borrowing” from it for social programs and pet projects, we would have a much smaller government and much less deficit problems than we do now.
I would phrase it differently: There is no longer any possible collective solution. Each family, business, and individual must look after its own interest, as well (perhaps) as those of close associates.
This means absolutely maximizing legitimate tax avoidance — convert that IRA to a Roth, yesterday — including such things as disputing every bit of property tax possible, developping trade and barter relationships, and doing more for yourself.
If you have a business of any sort, please, do not borrow money to “become profitable.” Expand only if you [i]are[/i] profitable, and use retained earnings to do it. Otherwise, governments will tax away your expected gains.
It all has come down to a (presently) bloodless fight between the political and administrative elite — who bring home compensation more than 50% higher than equivalent workers in the real world — and those whom they expect will continue to support them in the style to which they’ve become accustomed.
Parasites [i]versus[/i] producers. Be warned.
To add to Bart’s prescription, which I endorse by the way, we have taken a cold, hard look at charitable giving this year. There are options available in the tax code which I won’t detail here that give you a rock solid return of 30% on every dollar you divert to meet the code requirements. In 2010, that is a better monetary return than charitable giving for many of us when you finally understand your true level of taxation after deductions. But, that’s only good for 2010, because in 2011 your taxes are going up dramatically and so charitable giving will again be a wash.
We are still supporting local needs, but the long-distance stuff is off the list this year to minimize our federal tax burden.
I would phrase it differently: There is no longer any possible collective solution. Each family, business, and individual must look after its own interest, as well (perhaps) as those of close associates.
This means absolutely maximizing legitimate tax avoidance—convert that IRA to a Roth, yesterday—including such things as disputing every bit of property tax possible, developping trade and barter relationships, and doing more for yourself.”
I would agree with Bart. However instead of converting that IRA to a Roth, I would if at all possible, get your 401k/IRA/Roths money out NOW before it gets confiscated. Right now the penalty is only 10%, which is WAY less than what it will be in a year. Use the money to pay off all debts, and to buy business (paid off) that you could use to support yourself and your family. But most of all pay off ALL debts including so called “good debt” like mortgage and college.
Please note, that it is ALREADY much harder to withdraw money from your 401k, and will become impossible very soon. As noted below, many 401k accounts have simply “frozen” all funds due to “economic conditions”. The Obama administration is for this.
http://401khelpforums.yuku.com/topic/2375/t/account-frozen-due-to-economic-conditions.html