Monday, May 5, 2008

Econ 101 - Taxes

Whatever happened to personal responsibility? When did people start being raised with the attitude that the government will take care of them if hard times come? When did this attitude become acceptable? Whatever happened to hard work and perseverance leading to pride in oneself? Don’t you want to continually better yourself and your family? Doesn’t that generally come from hard work? I realize that good contacts help but sometimes innovation gets you farther than fancy contacts. I know from personal experience.

Why is it that people don’t ask the one fundamental question when politicians start promising them the fairytale for free? That question you ask. “Since nothing is free, how do you plan to pay for it?” Well with taxing the rich. Sounds great because surely you’re not classified as rich. Well let’s think through this logically because remember this one fundamental truth; if it sounds too good to be true, it probably is too good to be true. Back to taxing the rich;

Who is classified as rich? Possible answers; leaders of “big business”, trust fund babies, venture capitalists, celebrities. That about covers the gamut right?
How many of these people get regular monthly salaries? Because remember to pay income tax, you must earn income. Answer; CEOs, but lets not forget much of their salary package is tied up in company stocks– and to stretch, celebrities however not necessarily regular in all cases.
How does the federal government get taxes on the rest of that group whose money is tied up in investments? Answer; Every time they realize a capital gain.

So then the tax happy politician’s strategy is two fold. First he’s going to crank up the capital gains tax to cover that group. Second he’s going to go ahead and crank up the top tier of income earners because after all they won’t miss it. They don’t really need to take home that much money to survive. The next set of questions you should be asking yourself are;

What right is it of prince politician to determine how much money a rich person needs if he earned it fair and square? Answer; It should be that they have no right.
How much does one have to make to be classified in the top tier of income earners? Answer; $349,700 and up for married couples and single filers in 2007
Will the increased capital gains taxes discourage people from realizing their capital gains? Answer; Yes as soon as they know this is about to happen they will either liquefy enough assets to whether the tax storm or move assets offshore if they aren’t already there.
Will this cause a problem to the planned federal income level needed to sustain my fairytale? Answer; Big time
What will my prince of a politician do about this?; Spread the tax burden to the next several tiers of income earners.
How much do you have to make to be classified in these tiers? Answer; Tier 2: $195,850-$349,700 married filing and $160,850-$349,700 for single filers. Tier 3: $128,500-$195,850 married filing and $77,100-$160,850 for single filers. And because raising taxes on tiers 1-3 still won’t be quite enough to cover your fairytale, let me go ahead and give you the next 2 tiers. Tier 4: $63,700-$128,500 married filing and $31,850-77,100 for single filers. Tier 5: $15,650-$63,700 married filing and $7,825-$31,850 for single filers. The next tier goes down to $0 for both.

So most of us with personal responsibility probably fall in tiers 3-5. The more you make, the more you pay. Actually many of those without personal responsibility fall in those tiers as well but due to loopholes and irresponsibility they are somehow still able to qualify for government assistance programs or at the very least not pay much or any taxes and they make more than you or I do.

Next set of questions you should be asking yourself;
Do I really want to pay for someone’s irresponsibility? Answer; if your answer is yes then may I suggest you write a check of your own free will to the IRS and mark it donation for any wasteful program that perpetuates irresponsibility. If you’re like me, your answer is not just no but HECK NO!!
Does that make me a bad person? Answer- that depends, If you’re like me, you understand that people fall on hard times and there is a time and a place for temporary assistance. But that is best left to the non-profit organizations like churches and hopefully very low overhead charities to handle. And it is for me to decide what or how much I want to give not the government. And I do feel a duty to give to these organizations so in that case no, that doesn’t make one a bad person. Although just because you choose not to give, it doesn’t make you a bad person either. Maybe just selfish. But we are all selfish in one way or another.
Is the fairytale just away to take power out of my hands and give it to the government? Answer; Darn tootin it is!!!! Now you’re starting to get the hang of this.
Don’t I need my money to pay my bills, buy a house, feed my family, and save for my future thereby teaching my kids to take personal responsibility for themselves? Answer; of course you do. And the more taxes you have to pay the less you have to perpetuate personal responsibility.
Do I really want to vote for this politician who is trying to buy my vote and the votes of others with MY money? You have to answer that for yourself.

Let the voter be ware. When a politician promises to raise corporate taxes to “stick it to ‘big business,’” corporations aren’t capable of “paying taxes.” Corporations are merely an infrastructure that provides a means of paying workers, providing goods and services, and collecting taxes from the sale of goods and services, and income tax and transferring them to the IRS. I may have left out a few things but the point is a corporation is driven by it’s workers and its customers. These are real people and these real people are who are paying the taxes. If the corporate tax level is increased, that gets passed on to the consumers with higher prices or to the workers with lower wages. How is that good for the people? How is less money in the hands of real people good for the economy? What are the consequences of raising corporate taxes? Business will look for other countries which will offer them lower tax rates. This in turn takes jobs away from Americans sending the unemployment rate up and taking money out of the U.S. economy and putting it somewhere else. And the government doesn't raise as much tax revenue as they'd planned, so they again raise the taxes of the individuals. Make sure you understand what that politician is promising you, me, and your family and friends.

Just remember a politician can’t offer anything for free. They are trying to buy people’s votes with your money. You have to decide what programs you think are worth paying for out of YOUR pocket and what aren’t and find a candidate who most closely agrees with you.

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