2011 Tax Increase : A Reality Check

July 17, 2010August 11, 2017 / L. M. Walker / 2 Comments

Income Tax Reality Check

Compiled by: Larry Walker, Jr.

“If you make less than $250,000, you will not see your taxes increase by one dime.” ~ B. H. Obama

Left-wing pundits are claiming that the Bush tax cuts were for the wealthy, which is simply not true. Next year when the 10% tax bracket disappears, and tax rates return to pre-2001 levels, will represent an across the board tax increase affecting every American. In addition, the child tax credit will return from $1,000 (per child under age 17) to $500 representing a tax increase for everyone who has children, not the wealthy. The fact is that the Bush tax cuts applied to every American at every level of income, and when they expire taxes will rise from the bottom up.

In 2011, if you make over a nickel in taxable income, your taxes will increase a minimum of 9%, and as much as 50%. Since our tax rates are progressive, taxes on the first $16,750 for couples ($8,375 for singles) will increase by 50%. Taxpayers who make under $8,375 in taxable income will see the largest tax increase at 50%. Middle income earners will see their taxes rise by no less than 9%. The contention that the Bush tax cuts only affected the wealthy is a bald-faced lie. Similarly, the contention that Obama’s tax increases will only affect the wealthy is nothing but a fairy tale. Americans are educated and can comprehend income tax tables. You can choose to believe whatever you want, but reality should not be optional.

Nickel over at fivecentnickel.com has projected how the 2011 income tax brackets may look. The commentary below is attributed to Nickel. I have retouched his 2011 table (below), and added the 2010 table (above) for comparison.

Income tax bracket changes for 2011 – In case you weren’t aware, the Bush tax cuts of 2001 and 2003 are set to expire at the end of 2010. Thus, if Congress doesn’t act, the relatively low income tax rates that we’ve been enjoying (hah! enjoying?) will soon be a thing of the past. They will be replaced by the pre-2001 tax brackets.

In other words, the 10%, 15%, 25%, 28%, 33% and 35% tax brackets that we’ve grown accustomed to will be replaced by 15%, 28%, 31%, 36%, and 39.6% brackets. It’s hard to say exactly where the income cutoffs will lie, but if we base the numbers on the 2010 income tax brackets and add 3% for inflation, the 2011 tax brackets might look something like this:

Capital gains tax changes in 2011 – Beyond the increased federal income tax brackets, the capital gains tax rates will also be changing (and not for the better). The top rate for long-term capital gains will be rising from 15% to 20%, and the 0% rate for those in the lowest tax brackets will be replaced by a 10% long-term capital gains rate.

Why worry about 2011 income tax changes? – Since the 2011 tax year is so far off, you might be wondering why we’re even talking about it right now. Well, as I noted above, the time to be planning for things like this is right now – before the changes go into effect as these potential income tax rates have the potential to take a big bite out of your savings account.

What sort of planning should you be doing? I can think of several things off the top of my head. For starters, if you’re in a position to accelerate income from 2011 into 2010, you might want to do so. In many cases this is easier said than done, but it’s worth exploring if you’d like to shield your income from the potentially higher rates.

Also, if you’re anything like me, you may wait until the end of the year to make your charitable donations. If so, then by waiting just a few more days (until January 1, 2011) to write that check, you could net a substantial tax savings. While you’d have to wait longer to claim the deduction, it might be worth it.

Similarly, if you anticipate selling investments to generate cash during 2011, you might consider moving that up to the end of 2010 to get in on the (presumably) lower capital gains tax rates.

Reference: http://www.fivecentnickel.com/2010/02/15/2011-federal-income-tax-brackets-irs-income-tax-rates/

2009 GDP | The Bottom Line

March 27, 2010August 19, 2017 / L. M. Walker / Leave a comment

2009 GDP

Real GDP decreased 2.4 percent in 2009 (that is, from the 2008 annual level to the 2009 annual level), in contrast to an increase of 0.4 percent in 2008.

The decrease in real GDP in 2009 primarily reflected negative contributions from nonresidential fixed investment, exports, private inventory investment, residential fixed investment, and personal consumption expenditures (PCE) that were partly offset by a positive contribution from federal government spending.

So now it’s time for a huge tax increase, right?

Couple the worst GDP results in decades along with unemployment hovering around 10%, then add to that 4.5 million foreclosure filings expected in 2010, and mix in personal incomes falling by an average of 1.7% in 2009, and you will begin to understand Obamanomics.

Time to end this nightmare! Vote them out.

By: Larry Walker, Jr.

References:

http://www.bea.gov/newsreleases/national/gdp/gdpnewsrelease.htm

Obama’s Tax Fallacy II: Updated

March 6, 2010August 19, 2017 / L. M. Walker / 3 Comments

By: Larry Walker, Jr.

[Updated]

Tax Fallacy II, 95% B.S.

According to the Tax Policy Center, there were 151 million tax units in 2009 (excluding dependents of other tax units). Out of those 151 million tax units, 65.6 million, or 43.4% had zero or negative tax liabilities here. This confirms that only 56.6% of those who file income tax returns actually pay income taxes. But that’s not the end of the story.

According to the IRS Statistics of Income Report here, at the end of 2008, there were 9.2 million tax units who filed tax returns with additional taxes due. At the end of 2008, although $28.4 billion had been collected, the balance still owed by these 9.2 million tax units was $94.4 billion.

Also according to the same IRS Statistics of Income Report here, at the end of 2008, there were 3.4 million tax units who had open delinquency investigation cases. The net amount of taxes owed by these taxpayers was $24.9 billion. Although $3.8 billion was collected when such returns were filed, the difference of $21.1 billion was still outstanding.

So far we have one report which reveals that there are a total of 151 million tax units within the United States. We also have proof that only 85.4 million (56.6%) of these pay income taxes, while 65.6 million (43.4%) pay none. Next we have statistics from the IRS which tell us that out of the 85.4 million who pay income taxes, 12.6 million (9.2 + 3.4) actually haven’t paid, and in fact, they still owe $115.5 billion ($94.4 + $21.1). Are you with me so far?

So out of the 85.4 million who pay income taxes, 12.6 million actually haven’t paid what they owe. This means that only 72.8 million out of a total of 151 million tax units actually file their tax returns on time, and pay their share of income taxes. Thus, in real terms, only 72.8 million out of 151 million tax units, or 48.2% pay income taxes, while 51.8% do not.

This makes moot the following quote: “I gave 95% of working families a tax cut.”

Although I admit the rhetoric sounds good, when one considers the national debt which is heading towards $19 trillion, one has to wonder whether this is even such a good idea. When one considers an unemployment rate of 10% to 19%, depending on who you believe, one has to wonder what that segment of society thinks about the “95% Fallacy”. Shall we subtract the unemployed from those who pay taxes and add them to those who don’t, or just leave well enough alone?

However you want to look at it, there is no way on earth that 95% of working families received a tax cut. In reality, roughly 51.8% don’t pay any taxes to cut. And between 10% to 19% received a cut alright, but it wasn’t a tax cut. What it works out to, in reality, is more akin to an additional tax burden on the ever shrinking 48.2% who actually do pay income taxes. I’m still waiting for the proof behind those grandiose words. Prove it!

Update:

And now we have news that 100,000 federal civilian employees owe just about $1 billion in unpaid federal income taxes. When you tack on retirees and military personnel, the number jumps to 276,000 who owe more than $3 billion. Oh for crying out loud, fire them all starting at the top. Where was it that the buck stops again?

See: Fire Fed Workers Who Don’t Pay Taxes

__________________

References:

IRS Statistics of Income

Tax Policy Center

TaxFoundation.org

Debt & Taxes: Obama’s Rate of Change

February 18, 2010August 19, 2017 / L. M. Walker / 1 Comment

Obama’s Rates of Change

By: Larry Walker, Jr. [Revised]

Today I am observing the rates of change embedded in Barack Obama’s budget projections. My objective is to determine whether Obama represents ‘change you can believe in’, and whether or not his policies are in line with his rhetoric. I will compare Obama’s 4 year budget projections during his first (and only) term, to the previous 16 year period. An observance of rates of change can provide assurance that the course charted is the one navigated. Here are a few observations.

During the 16 year period ending with fiscal year 2009, GDP achieved an average annual growth rate of 6.8%, while government revenues (taxes) grew at 4.5%, and the national debt grew at 10.3%. Summary: The national debt outpaced economic growth, while tax revenues lagged the economy.
In following Obama’s budget projections for the four year period ending in fiscal year 2013, GDP will grow at an average annual rate of 5.2%, while government revenues (taxes) will grow at 12.9%, and the national debt will grow at 9.2%. Summary: Tax revenues will more than double the pace of economic growth, while the national debt will continue to grow faster than the economy.

“Tax revenues will more than double the pace of economic growth, while the national debt will continue to grow faster than the economy.”

After decades of reckless government spending, the change I would have expected, and could have believed in, would have led to an increase in GDP, a reduction in income taxes, and a dramatic reduction in government spending. Instead, it appears that the change I will get will be as follows:

GDP will grow at an annual rate which is 23.5% slower than what we experienced over the last 16 years. This means that our wealth will be diminished.
Income taxes will increase by 186% over the next 4 years. Taxes will consume more of a shrinking economy.
Although the National Debt will grow at a slightly slower pace, it will: (a) grow 77% faster than GDP, and (b) continue to grow in spite of massive tax increases.

Conclusion: The course Obama has charted, is not the one being navigated. Obama talks about controlling the debt and deficits, cutting taxes for 90% of working families, and building a new foundation for economic growth. The only problem is that by following his budget, we will experience an increase in the national debt, higher income taxes, and lower economic growth. This is ‘change’, but it is the kind of change that I cannot, do not, and will never believe in.

Sources:

http://www.usgovernmentrevenue.com/downchart_gr.php?chart=F0-fed

http://www.treasurydirect.gov/govt/reports/pd/histdebt/histdebt.htm

Obama’s Tax Fallacy

January 28, 2010August 19, 2017 / L. M. Walker / 5 Comments

By: Larry Walker, Jr. [Updates in Red]

Barack Obama – “I gave 95% of all Working Families a tax cut…”

Really?

First of all 43.4% of Americans don’t pay any income taxes. That leaves the rest of us. So did 95% of the 56.6% who actually pay income taxes get a tax cut? I doubt it, but even if that were true, it’s not 95% of all Americans (or ‘working families’, whatever that means) [see Tax Fallacy II: 95% B.S. for more on this].

Is a refundable tax credit the same as a tax cut?

But the real fallacy lies in the fact that refundable tax credits are not tax cuts, but rather, they are subsidies. Subsidies are paid for by taking money from some Americans and giving it to others. This is also known as ‘spreading the wealth around’.

I’m not very cheery knowing that while I have been faithfully paying my mortgage, people are buying foreclosed houses down the street for $110K less than what I owe. And not only that, but the Government is giving them an $8,500 subsidy out of my tax dollars. It’s as if the $110K of potential equity wasn’t enough of a subsidy. Also, when the government refunds a person $8,500 to buy a house, it only applies to those who bought houses, not to 95% of all Americans.

The $400 ($800 for joint filers) Making Work Pay Credit is also a refundable tax subsidy. It is however only available in full to those (a) who made less than $75,000 ($150,000 for joint filers), (b) is reduced if income exceeds these amounts, (c) and it is not available at all for those making over $95,000 ($170,000 for joint filers) in 2009. Is it possible that 95% of Americans who actually pay income taxes made less than $95K ($170K for joint filers) and will get the full credit? Not when the top 50% of wage earners pay 96% of income taxes.

The earned income credit is a well known tax subsidy. If you made $10,000 and have a child, you will pay no taxes and will get back a $4,043 tax subsidy ($3,043 earned income credit, plus $1,000 child tax credit). This is not a tax cut, but rather a 40.43% bonus awarded for not trying very hard.

Non-refundable tax credits represent true tax cuts, as they can only be used to reduce the amount of tax actually owed, with the balance being lost. The child care credit is an example of a non-refundable tax credit, and has not changed in years. The retirement savings credit would be a good way to cut taxes, but unfortunately if you made over $27,750 ($55,500 for joint filers), you don’t qualify. The education credit used to be a way to cut taxes, yet it is already $2,500 per year, so nothing new was stated by Obama when he said he will give out a $10K credit over 4 years. Uh, we already have that, sir. [What is new, however, is that as of 2009, now 40% of the education credit has become a refundable tax subsidy.]

Another tidbit, right now, all three of my kids are in college. I’m divorced and they live with their mother out of state. I am paying part of the way for one while the other two have full scholarships. Because I don’t claim any of them as dependents, I am not allowed any credit for the tuition that I’m paying. I wonder how many others are in the same boat. It’s not that I want anything from the Government, but just want to let you know that there are cracks in the real world.

Capital Gains Tax Cut for Small Business?

Finally, Obama wants to give a Capital Gains Tax Cut for Small Business Investment. What does that mean? A capital gains tax cut only applies if someone has an appreciated asset to sell, which they have held for more than one year. So, first you have to have an appreciated asset. Then you have to either have a small business that buys and sells appreciated long-term assets, or would need to sell your business in order to benefit. The only problem with what Obama said is that the lower Capital Gains Tax rate that we already have, which is currently 0% for those in a 15% or lower tax bracket, already applies. Nothing new here.

As a small business owner I haven’t quite figured out how anyone can really use this one. And what kind of tax rate are we talking about anyway? He didn’t say anything specific. The only way I could use it is if I sold my business. But I don’t want to sell the business. And if I did sell my business I would already benefit from the Section 1244 exclusion or the low capital gains rate.

While you are applauding Obama’s words, you should stop and think about how a capital gains tax cut can benefit a small business. If anyone can explain it to me, I’ll be glad to listen, but to me, it’s just rhetoric.

In conclusion, all I heard from Obama tonight, regarding taxes, was the same class warfare, wealth redistribution rhetoric that I heard in 2008 when I cast my ballot for the other guy.

___________________________________________________

References:

http://www.taxpolicycenter.org/numbers/displayatab.cfm?Docid=2276&DocTypeID=7

Obama Stumbles on Glass-Steagall

January 22, 2010August 11, 2017 / L. M. Walker / Leave a comment

How Novel!

It looks like Barack Obama has reverted back to stage one of the Obama Learning Curve, ‘unconsciously insular’.

His latest bright idea involves re-instituting the Glass-Steagall Act of 1933. Could this possibly be the same kind of overreaction which helped to prolong the Great Depression? After all, the Depression didn’t officially end until 1941. Obama constantly blames the 8 year Presidency of George W. Bush for our current economic woes, yet Glass-Steagall was repealed in 1999. I mean all you hear from this guy is the same tired whine about the ‘failed policies of the Bush Administration’. But then what does he do? He reverts to the failed policies of the FDR Administration.

Background

“In 1933, in the wake of the 1929 stock market crash and during a nationwide commercial bank failure and the Great Depression, two members of Congress put their names on what is known today as the Glass-Steagall Act (GSA). This act separated investment and commercial banking activities. At the time, “improper banking activity”, or what was considered overzealous commercial bank involvement in stock market investment, was deemed the main culprit of the financial crash. According to that reasoning, commercial banks took on too much risk with depositors’ money…”

I thought our current dilemma was caused by a housing related bubble, not by commercial banks investing too much money in the stock market. In our time, banks took on too much risk by investing in risky home loans. Loans which were promoted by ‘liberal’ politicians under the false ideology that it was somehow a Natural, God-given, Right for everyone to own a home.

Reasons for the Act – Commercial Speculation

“Commercial banks were accused of being too speculative in the pre-Depression era, not only because they were investing their assets but also because they were buying new issues for resale to the public. Thus, banks became greedy, taking on huge risks in the hope of even bigger rewards. Banking itself became sloppy and objectives became blurred. Unsound loans were issued to companies in which the bank had invested, and clients would be encouraged to invest in those same stocks.”

Hmmm. This doesn’t even sound remotely related to our present woes.

Effects of the Act – Creating Barriers

“Senator Carter Glass, a former Treasury secretary and the founder of the U.S. Federal Reserve System, was the primary force behind the GSA. Henry Bascom Steagall was a House of Representatives member and chairman of the House Banking and Currency Committee. Steagall agreed to support the act with Glass after an amendment was added permitting bank deposit insurance (this was the first time it was allowed).”

It is interesting to note that even Glass himself moved to repeal the GSA shortly after it was passed, claiming it was an overreaction to the crisis.

An Overreaction to the Crisis?

It seems to me that all Obama has done is to stumble upon a method of prolonging the economic crisis. Instead of embracing obvious policies which have helped America out of every single recession since World War II (i.e. across the board tax cuts, and allowing the free market to correct itself), Obama has not only failed to come up with new ideas, he has ‘dug up’ the old tried and failed policies of the 1930’s. And this is the guy you were waiting for?

Barack ‘Carter Glass’ Obama could do us all a favor by just getting out of the way. If he would just sit down and hush up, the free market will eventually reach equilibrium. Sometimes it’s best not to meddle. You know what they say, “Jack of all trades; Master of none.”

Finally, what was it again which finally broke the Great Depression?

“Only when the federal government imposed rationing, recruited 6 million defense workers (including women and African Americans), drafted 6 million soldiers, and ran massive deficits to fight World War II did the Great Depression finally end.”

Is it possible that the War on Terror was our salvation, and not a mistake?

____________________________________

http://www.nps.gov/archive/elro/glossary/great-depression.htm

http://www.investopedia.com/articles/03/071603.asp

Capital Homestead Act: A Plan for 2012

January 17, 2010August 11, 2017 / L. M. Walker / 5 Comments

By: Larry Walker Jr.

“For a binary solution needed to restore free markets, private property and limited government, why not focus on getting political leaders to pass a Capital Homestead Act by 2012, the 150th anniversary of Lincoln’s Homestead Act?” – Norm Kurland

We have to cast down this insidious idea that a socialist (anti-free market) system is best, lest there be no free market left with which to institute Capital Homesteading. It is clear from the policies being implemented by the current administration, that Mr. Obama will not be our ally. We must work to defeat these anti-free market ideals in the 2010 and 2012 elections. And we will defeat them, one brick at a time.

But what do conservatives have to offer? There is a solution for saving Social Security and Medicare, for eliminating payroll taxes, and which will help all Americans to be able to provide for themselves. It’s called the Capital Homestead Act.

Summary

The Capital Homestead Act is a comprehensive national economic strategy for empowering every American citizen, including the poorest of the poor, with the means to acquire, control and enjoy the fruits of productive corporate assets.

This long-range agenda involves major restructuring of our tax system and our Federal Reserve policies to lift unjust artificial barriers to more equitable distribution of future corporate capital and faster growth rates of private sector investment. It would shift primary national income maintenance policies from inflationary wage and unproductive income redistribution expedients to market-based ownership sharing and dividend incomes.

The Capital Homestead Act’s central focus is the democratization of capital (productive) credit. By universalizing citizen access to direct capital ownership through access to interest-free productive credit, it would close the power and opportunity gap between today’s haves and have-nots, without taking away property from today’s owners.

The Goals of the Capital Homestead Act

As summarized below, the Capital Homestead Act is designed to:

Generate millions of new private sector jobs by lifting ownership-concentrating Federal Reserve credit barriers in order to accelerate private sector growth linked to expanded ownership opportunities, at a zero rate of inflation.
Radically overhaul and simplify the Federal tax system to eliminate budget deficits and ownership-concentrating tax barriers through a single rate tax on all individual incomes from all sources above basic subsistence levels. Its tax reforms would:

eliminate payroll taxes on working Americans and their employers;
integrate corporate and personal income taxes; and
exempt from taxation the basic incomes of all citizens up to a level that allows them to meet their own subsistence needs and living expenses, while providing “safety net” vouchers for the poor.

Give Me a Tax Cut, or Give Me Death II

December 20, 2009August 18, 2017 / L. M. Walker / 8 Comments

Small Business Tax & Toil

By: Larry Walker, Jr.

Small business owners, like myself, pay twice as much in Social Security and Medicare Taxes as regular employees. Yet when we ask for a payroll tax cut on our own pay, what we get from the government is a crackdown on regional banks to give us more loans. Aside from the fact that 140 of these banks have failed since January 16, 2009 (here), what Obama’s Cluelessian economists fail to understand is that wealth is not created through amassing debt.

If Obama wants to run the Federal Government based on the myth that wealth is created through debt, that’s one thing, but his attempt to sell this ideal to small business owners like myself makes him look inept. Small businesses are already in debt. Adding more debt does not translate directly into increased sales, but rather into higher monthly principal and interest payments (aka. ‘paying current expenses out of future income’). It’s one thing to borrow money to start a venture, or to secure lines of credit for working capital, but it’s entirely another to pile debt upon debt in a degenerating economy.

Wealth is created by increasing sales of products and services while maintaining or reducing expenses. Bankruptcy is achieved through maintaining or increasing expenses in the face of declining revenue. It is a fact, not a theory, that Obama’s reckless economic policies will lead to the latter.

So what is the Small Business solution? What could possibly help small business owners survive in the face of a colossal governmental failure? A payroll tax cut for one. And what is it that justifies a payroll tax cut for small business owners? As I pointed out in Part I, small business owners pay an unfair burden of Social Security and Medicare Taxes, and we receive nothing in return. By nothing, I mean that we will receive the same benefits as regular workers after having paid twice the amount of payroll taxes (see the chart below).

What we are asking for is fair. What we are asking for is economic justice. We want the Federal Government to stop unfairly burdening small businesses with an unjust burden of payroll taxes with no corresponding benefit. All we want back is some of our own hard earned money, produced from our own toil, in order to improve the future economic outlook of our communities and our nation.

If we get our desired tax cut, what will small business owners do? We will have been aided in paying our bills, in reducing our current debt, in not having to lay off additional workers, and in having survived for another day. And we will have done so with our own money, and not through a government handout.

Who will die? When I say, “give me a tax cut, or give me death”, it won’t be me or my fellow entrepreneurs who die. The first casualty will be the next laid off employee, and eventually the Federal Government. Every employee we lay off leads to negative government revenue, and reduced GDP. Most of us can scale back on spending and survive, but one can only cut so much before creditors are jeopardized. The Federal Government is well on the road that leads to death.

We will survive, but will the Federal Government? Small businesses have been cutting back on spending in the face of the economic decline. The Federal Government, on the other hand, has been increasing its debt. If Obama’s incompetent economic theory leads to the bankruptcy of the United States government, then that is just a natural consequence of spending more than annual revenue, year after year. Eventually the principal and interest payments will surpass revenue. But that’s Obama’s plan and not the road for me. As for me,

Give me a tax cut, or give me death!

—

Tips: 5 Ways To Manage Business Debt

Give Me a Tax Cut, or Give Me Death!

November 21, 2009August 18, 2017 / L. M. Walker / 5 Comments

Small Business Tax & Toil

By: Larry Walker, Jr.

I have been contemplating all the blood, sweat, and tears shed by Small Business owners such as myself. Having been in business for the past 9 years, I have come to the realization that:

I am paying a hell of a lot in Taxes (and government mandated fees), and
I am feeling mighty underappreciated.

The Federal Government, under the American Recovery and Reinvestment Act of 2009, chose to give a Social Security tax cut, the Making Work Pay Credit, to workers making under $75,000 per year. That’s all well and fine, but what about the Small Businesses who pay those wages? Small Business Owners have to pay double the amount of Social Security and Medicare taxes on our own pay, plus a matching amount on what we pay our employees.

As the owner of an S-Corporation, in order to write myself a paycheck I am hit with 25% in Federal Withholding Taxes, 15.3% for Social Security and Medicare (since as an owner-employee both halves come out of the same pocket), 5% for State Withholding Taxes and Federal and State Unemployment Taxes. Excluding Unemployment Taxes, I have to withhold and pay in 45.3% of my pay every month. On top of that, since I have employees, I also have to match 7.65% of their pay for Social Security and Medicare Taxes.

As a side note, I also have to pay County business license fees, Federal and State license fees, County property taxes, State Sales Taxes, Federal Excise taxes on telephone, cell phone and internet usage, interest and principal payments on a Federal SBA loan and other business debts, professional liability insurance, health insurance, matching retirement contributions, etc. … and then the actual operating expenses. When it’s all said and done, in return for my contribution to society, I get to keep about 20% of my gross income (toil). But lets just keep the focus here on Social Security, Medicare, and Income Taxes.

As an example, let’s say I have to write gross pay checks for myself and my employees of $8,000 per month. And let’s say $5,000 of that is for me, and the other $3,000 is for two employees. In order to pay myself $5,000 I have to set aside $2,265 for taxes ($5,000 * 45.3% = $2,265). In order to pay my employees $3,000 I have to set aside an extra $229.50 ($3,000 * 7.65% = $229.50) to match Social Security and Medicare.

So to summarize my gross pay started out at $5,000, but my net take home pay wound up being only just $3,117.50 (see the chart below). In the end, I have spent a total of $8,612.00. My employees took home $2,770.50, I took home $3,117.50, and the Government took home $2,724.00.

click to enlarge

When times are good and I can afford to take a full paycheck I have to fork over 45.3% of my earnings to the Government. When times are tough and I can’t afford to pay myself a full paycheck I still have to fork over 45.3% of my earnings to the Government. And when the business makes a profit, the Government will be standing there laying claim to another 30% or more of my toils (25% Federal Taxes and 5% State Taxes).

And now the Federal Government, through the Senate’s Health Care Bill, is proposing to:

Add an Excise Tax on Comprehensive Health Insurance Plans
Burden us with Employer Reporting of Health Insurance Costs on W-2 Forms
Hike Taxes on Health Savings Account Withdrawals by 10%
Raise the “Haircut” for Medical Itemized Deductions from 7.5% to 10% of AGI

(See How Does the Reid-Obama Health Bill Raise Taxes on Your Current Health Plan?).

If there is any common sense at all in Washington D.C., Congress and the President will realize that Small Businesses employ most of America, and that Small Business owners pay an unfair burden of Social Security and Medicare Taxes. And we receive nothing in return. By nothing I mean that business owners do not get double the Social Security and Medicare benefits for paying twice what the average worker pays into the system. When liberals start whining about tax cuts for the rich, perhaps they should try standing in the shoes of a small business owner. They would not last a week. They would die from their own complaining.

Do Small Business Owners deserve tax relief? You’re damned right! What can you do about it in Washington D.C.? Well, if you want Small Businesses to spend more, hire more, and stop the lay offs, then stop squeezing us.

Give small business Owners an immediate tax cut of 50% of the Social Security and Medicare Taxes on the wages that they pay themselves. This is not only fair, but it would be just that simple.
Or, if you really want to be fair, then give us a 50% tax cut on the Social Security and Medicare Taxes on all the wages that we have paid so far this year. It’s time to act.

Give me a tax cut, or give me death!

The IRS as Health Insurance Police

September 21, 2009August 11, 2017 / L. M. Walker / 1 Comment

No Health Insurance? You’re going to jail.

By: Larry Walker, Jr.

Many of us had ‘hoped’ for some simplification of the Internal Revenue Code, which has grown from 14 pages to over 17,000 pages since its inception. But it doesn’t look like that will happen anytime soon. H.R. 3200 will increase the burden of the income tax code by making the IRS the primary enforcer of Mandatory Health Insurance.

Did you hear that? You get your ‘mandatory’ health insurance, but you had better file your tax returns, and file them timely and correctly. Not only that, but you will have to determine what kind of health insurance you have and report it on your tax return, and if you don’t have it, or if it’s not acceptable, then a hefty penalty will be imposed.

It’s found in Title IV, Subtitle A, on pages 167-215 called Amendments to IRS Code of 1986. The expanded powers of the IRS in H.R. 3200 would empower the IRS to require taxpayers to show proof of health insurance coverage, collect fines on individuals and employers who did not have adequate proof of health insurance and determine whether your health insurance was a government approved plan.

So let’s see, will this make life easier, or more convoluted? My theory is that it will not only do the latter, but in the process will deprive all American’s of what if any liberty remains.

Linear thinkers, like Obama and others on the left, are incapable of seeing beyond the end of their noses, so it’s up to us to do our part to shed a little light.

According to Table 16 (below), courtesy of the IRS, at the end of 2008 approximately 9.2 million taxpayer cases were in inventory for filing income tax returns with additional taxes owed to the tune of $94.3 billion (including interest and penalties). And approximately 3.4 million taxpayer cases were in inventory for not filing income tax returns at all, and owe around $21.2 billion.

You don’t suppose there’s any chance that the same 12 million people who either don’t pay, can’t pay, or won’t file income tax returns are the same ones lacking health insurance? Imagine that, the very same people who may owe the government over $100 billion now begging for free health insurance. No I’m not blaming them, but I’m just saying, it may very well be that the tax code is too complicated, that penalties are too stiff, or that income taxes are just way too high. But let’s leave that for another century, and let’s entertain our Messiah’s plan to make taxes more burdensome through Government-run Health Insurance.

Now let’s consider some logic. The IRS, a government agency that allows around 15% to slip through the cracks, will be in charge of a health insurance system that lets around 15% slip through the cracks. What will be the outcome? Do you think it’s possible to achieve 100% compliance with the tax code? Just ask the Obama Administration (Geithner) about ‘that one’. And do you think it’s possible to achieve 100% participation in health insurance, or in anything else human?

Short of placing government security cameras in our houses, a micro-chip in our heads, and completely brainwashing us, 100% participation in anything is not a human attribute. The 80/20 principle is generally good enough for us mere mortals. So on that count, the human factor, the plan fails.

Most likely, the outcome of Obama’s far-left, linear, robotic health insurance plan will be one of the following:

The same 85% who currently comply with income tax laws and have health insurance will continue to comply with income tax laws and buy health insurance, while the same 15% remain on the sidelines. (Most likely)
More people will choose to comply with income tax laws, and more will choose to be covered by health insurance. (You wish)
Less people will choose to comply with income taxes, and less will choose to be covered by health insurance. (Probable)
The 85% who currently comply with income tax laws and have health insurance will revolt, and stop paying income taxes and for health insurance. (Possible)
The ridiculous plan will die in committee, or if passed will subsequently be repealed. (Best)

What do you think?

Sources:

http://www.irs.gov/pub/irs-soi/08db16co.xls

http://www.irs.gov/taxstats/article/0,,id=207457,00.html

http://www.wnd.com/index.php?fa=PAGE.view&pageId=109741