Subject: Taxes (from an email forwarded to me)
I just can't wait to start paying more taxes!!!
Are you Democrat or Republican?
As Joe Friday used to say "Just the facts, ma'am, just the facts".
Whether you are a Democrat, Republican or Independent..... these are the facts .....
Taxes under Clinton 1999//Taxes under Bush 2008
Single making 30K - tax $8,400// Single making 30K - tax $4,500
Single making 50K - tax $14,000//Single making 50K - tax $12,500
Single making 75K - tax $23,250// Single making 75K -tax- $18,750
Married making 60K - tax $16,800// Married making 60K- tax
$14,500
Married making 75K - tax $21,000// Married making 75K - tax $18,750
Married making 125K - tax $38,750// Married making 125K - tax $31,250
If you want to know just how effective the mainstream media is, it is amazing how many people that fall into the categories above think Bush is screwing them and Bill Clinton was the greatest President ever. If any democrat is elected, ALL of them say they will repeal the Bush tax cuts and a good portion of the people that fall into the categories above can't wait for it to happen. This is like the movie The Sting with Paul Newman; you scam somebody out of some money and they don't even know what happened.
Your Social Security
Just in case some of you young whippersnappers (& some older ones) didn't know this. It's easy to check out, if you don't believe it. Be sure and show it to your kids. They need a little history lesson on what's what and it doesn't matter whether you are Democrat of Republican. Facts are Facts!!!
Franklin Roosevelt, a Democrat, introduced the Social Security (FICA) Program. He promised:
1.) That participation in the Program would be Completely voluntary,
2.) That the participants would only have to pay 1% of the first $1,400 of their annual Incomes into the Program,
3.) That the money the participants elected to put into the Program would be deductible from their income for tax purposes each year,
4.) That the money the participants put into the independent "Trust Fund" rather than into the general operating fund, and therefore, would only be used to fund the Social Security Retirement Program, and no other Government program, and,
5.) That the annuity payments to the retirees would never be taxed as income.
Since many of us have paid into FICA for years and are now receiving a Social Security check every month -- and then finding that we are getting taxed on 85% of the money we paid to the Federal government to "put away" -- you may be interested in the following:
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Q: Which Political Party took Social Security from the independent "Trust Fund" and put it into the general fund so that Congress could spend it?
A: It was Lyndon Johnson and the democratically controlled House and Senate.
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Q: Which Political Party eliminated the income tax deduction for Social Security (FICA) withholding?
A: The Democratic Party.
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Q: Which Political Party started taxing Social Security annuities?
A: The Democratic Party, with Al Gore casting the "tie-breaking" deciding vote as President of the Senate, while he was Vice President of the U S.
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AND MY FAVORITE:
Q: Which Political Party decided to start giving annuity payments to immigrants?
A: That's right! Jimmy Carter and the Democratic Party. Immigrants moved into this country, and at age 65, began to receive Social Security payments! The Democratic Party gave these payments to them, even though they never paid a dime into it!
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Then, after violating the original contract (FICA), the Democrats turn around and tell you that the Republicans want to take your Social Security away! And the worst part about it is uninformed citizens believe it!
If enough people receive this, maybe a seed of awareness will be planted and maybe changes will evolve. Maybe not; some Democrats are awfully sure of what isn't so. But it's worth a try. How many people can YOU send this to? Actions speak louder than bumper stickers.
AND CONGRESS GIVES THEMSELVES 100% RETIREMENT FOR ONLY SERVING ONE TERM!!!
A government big enough to give you everything you want, is strong enough to take everything you have. - Thomas Jefferson
Monday, March 31, 2008
Friday, March 28, 2008
Federal Reserve Policy and Actions
By controlling the money supply and setting key interest rates, the Federal Reserve has a huge impact on the economy. It probably has more influence on the economy than the President, especially one that hasn’t been lowering or raising taxes, which also have huge impacts on the economy. (In effect its actions, though not all powerful, have a huge impact on both job creation/destruction and inflation).
Higher interest rates reduce economic incentive to borrow money for houses, cars, factories, stores, etc.. This depression of demand for products and services means we need less people employed to provide these goods and services. Keeping people employed who aren’t needed leads to lower profits and possibly bankruptcy, so layoffs grow and new hires shrink. This accelerates the lack of demand for products and services so that the providers/employers of them have little or no power to raise prices. This dampens price inflation, a necessary step to avoid a spiral of high inflation that can hurt the economy more than it helps. High inflation eventually puts prices of goods and services out of reach of more people, dampening demand and causing unemployment to rise and real wealth to fall.
When the economy is ‘too strong’ the Fed will attempt to raise interest rates to reduce the threat of inflation (note – also read my thoughts on the business cycle to understand the problem with an economy that has become too strong). Conversely, when the economy is too weak, the Fed will attempt to lower interest rates/increase money supply to stimulate the economy to grow. However, the impact of interest rates and money supply take six to twelve months and longer to show their full impact. There are other decisions besides interest rates to consider when businesses try to increase investment or people to buy houses, cars, etc.. Also, many loans already exist and may be immune to incentive to refinance at changed interest rates.
The delay between Fed action and its impact on the economy makes things very tricky for the Fed. It needs to look at current economic conditions which may not be where they want it to be yet and judge whether past Fed actions will get it there without further interference or whether additional steps need to be taken. It is easy to over shoot in either direction. The Fed has been exhibiting a bias to fight inflation above its other goal of high employment. This has led to recessions and forced the Fed to reverse course. Unfortunately, a reversal takes a year or more to get to where it’s needed.
It can be argued that the Fed has not paid sufficient attention to sustained growth in job productivity (i.e. if productivity is up say 4%, a 4% rise in wages is neutral, not inflationary) plus the favorable impact of reduced trade barriers (that force most businesses to become more competitive in price). In other words, the inflation bias has been too strong and the fight for full employment too weak.
Strategically, whenever the Fed targets something as out of whack (e.g. the stock market or housing as it has recently), the tools at its disposal (interest rates/money supply) are too wide impacting to target the ‘bubble’ it seeks to eliminate. It impacts the whole economy and is therefore too powerful a weapon to utilize to control only a segment of the economy. The damage caused is far reaching and can sometimes take years to undo.
Higher interest rates reduce economic incentive to borrow money for houses, cars, factories, stores, etc.. This depression of demand for products and services means we need less people employed to provide these goods and services. Keeping people employed who aren’t needed leads to lower profits and possibly bankruptcy, so layoffs grow and new hires shrink. This accelerates the lack of demand for products and services so that the providers/employers of them have little or no power to raise prices. This dampens price inflation, a necessary step to avoid a spiral of high inflation that can hurt the economy more than it helps. High inflation eventually puts prices of goods and services out of reach of more people, dampening demand and causing unemployment to rise and real wealth to fall.
When the economy is ‘too strong’ the Fed will attempt to raise interest rates to reduce the threat of inflation (note – also read my thoughts on the business cycle to understand the problem with an economy that has become too strong). Conversely, when the economy is too weak, the Fed will attempt to lower interest rates/increase money supply to stimulate the economy to grow. However, the impact of interest rates and money supply take six to twelve months and longer to show their full impact. There are other decisions besides interest rates to consider when businesses try to increase investment or people to buy houses, cars, etc.. Also, many loans already exist and may be immune to incentive to refinance at changed interest rates.
The delay between Fed action and its impact on the economy makes things very tricky for the Fed. It needs to look at current economic conditions which may not be where they want it to be yet and judge whether past Fed actions will get it there without further interference or whether additional steps need to be taken. It is easy to over shoot in either direction. The Fed has been exhibiting a bias to fight inflation above its other goal of high employment. This has led to recessions and forced the Fed to reverse course. Unfortunately, a reversal takes a year or more to get to where it’s needed.
It can be argued that the Fed has not paid sufficient attention to sustained growth in job productivity (i.e. if productivity is up say 4%, a 4% rise in wages is neutral, not inflationary) plus the favorable impact of reduced trade barriers (that force most businesses to become more competitive in price). In other words, the inflation bias has been too strong and the fight for full employment too weak.
Strategically, whenever the Fed targets something as out of whack (e.g. the stock market or housing as it has recently), the tools at its disposal (interest rates/money supply) are too wide impacting to target the ‘bubble’ it seeks to eliminate. It impacts the whole economy and is therefore too powerful a weapon to utilize to control only a segment of the economy. The damage caused is far reaching and can sometimes take years to undo.
Wednesday, March 12, 2008
Taxes
Less taxes collected by government, mathematically works out to more income for workers and their families. More money for us means more money spent on products and services. That translates into more jobs. More jobs start the cycle of more money for workers and families again. In other words, there is a positive multiplier effect. We saw this with the Kennedy tax cuts of the 1960s, the Reagan tax cuts in the 1980s and we saw it again with the Bush tax cuts of the last decade despite inheriting a recession and the financial impacts of 9/11.
Despite Katrina and Rita hurricanes that destroyed whole cities, despite the very expensive war on terror, the U.S. economy has been humming along at 3 to 3.5% growth rates for a long time. (Refer to my explanation of the Business Cycle- for an understanding of why this growth rate cannot stay constant forever and is in fact, currently stalling, but will be temporary).
When taxes are raised, we all have less money to spend, which means less products bought, and therefore fewer workers needed. The unemployment rate goes up and the cycle starts again. That’s right, increased taxes is a negative drag to the economy and it too has a multiplier effect. Don’t believe me, then look at the Western European countries with high tax rates and their double digit unemployment and stagnant economic growth.
Now look at the Eastern European countries plus England, who have cut their taxes to low rates and are surging economically. Need more proof. Look at the Great Depression of the 1930s. Governments tried to fix a recession by raising taxes to balance the budget and imposing trade restrictions. What happened? Greater taxes reduced spending and capital for investment, feeding the negative multiplier effect of these type of actions. Trade restrictions, adopted wholesale and at the same time by many countries including America to ‘protect’ domestic jobs instead destroyed immediately the domestic jobs dedicated to exports for all those nations. No jobs were gained from other nations because the domestic capital to create those industries “helped by the trade barriers” did not exist anymore.
Also, if there were capital available, it would take years to build the infrastructure (without any money coming in during construction) before the first job in that industry could be gained. Even if this could have happened (which it didn’t), all of us would have paid higher prices for those products and services, meaning we would have less money to spend on other products and services. Those people in the other fields where that money would have been spent would have lost their jobs and that would have again steam rolled another negative multiplier effect on the economy.
The Impact of Tax Cuts on Government Revenues:
We’ve all seen the statement that “Tax cuts reduce government revenues and increase budget deficits” –The Big Lie! That statement, in my opinion, is one of the worst, bald faced, self serving lies, perpetrated by the Democratic Party, that has ever been presented to the American public. It sounds logical which is why they use it, but the facts don’t support it. Facts are ultimately what matters. If you only look at the annual change in tax revenues after an income tax cut has occurred, you will see tremendous, often double digit growth in tax revenues collected by the government that continues for years. The extra revenue is generated due to job and income growth that occurs as a direct result of the tax cuts.
Then why, you ask, do federal budget deficits often increase after taxes have been cut? It’s simple. Now look at government spending after a tax cut. Amazingly, it too increases at tremendous rates, even greater than the rate of those big tax revenue increases. That’s the long and short of it. To make matters worse, at the state and local levels, whenever the ‘good times’ bring in revenue increases, instead of returning the surplus to the taxpayers or saving it for a ‘rainy day’, they too increase spending. Inevitably, (may be a few years in the future), the economy slows (see my piece on the business cycle), and federal, state, and local governments start to see large deficits with no easy solutions in sight. Our politicians, whether Democrats or Republicans, have demonstrated an insatiable appetite for government spending. They want to present to us ‘locals’ who elect them the ‘government goodies’ they ‘got for us’ as a reason to reelect them. Seemingly that works well because incumbents are generally hard to defeat in an election.
The second big lie also perpetrated by the Democratic party who truly covet spending the money you and I earn is the labeling of current, planned annual spending increases as spending ‘cuts’ because two or more years ago, the plan was to spend even more. To give some analogies, could a big corporation who increases spending from $100 million dollars last year to $105 million this year, state that they cut spending because two years ago they actually planned to spend $110 million? Of course not!
Also, if you are earning $30,000 a year and you were hoping for a $2,000 raise, but only received a $1,000 raise, would you think that your wages were cut? Of course not! However, according to the Democrats, those would be cuts. It’s just plain stupid and an insult to our intelligence to label spending increases over the previous year as spending cuts. Tell you the truth, the federal government needs to have some years in which spending actually is less than the previous year. You’d be surprised at how fast deficits would shrink and then grow to surpluses. Companies in financial trouble do this all the time. Why can’t the government, when in a financial mess, exercise the same discipline?
Despite Katrina and Rita hurricanes that destroyed whole cities, despite the very expensive war on terror, the U.S. economy has been humming along at 3 to 3.5% growth rates for a long time. (Refer to my explanation of the Business Cycle- for an understanding of why this growth rate cannot stay constant forever and is in fact, currently stalling, but will be temporary).
When taxes are raised, we all have less money to spend, which means less products bought, and therefore fewer workers needed. The unemployment rate goes up and the cycle starts again. That’s right, increased taxes is a negative drag to the economy and it too has a multiplier effect. Don’t believe me, then look at the Western European countries with high tax rates and their double digit unemployment and stagnant economic growth.
Now look at the Eastern European countries plus England, who have cut their taxes to low rates and are surging economically. Need more proof. Look at the Great Depression of the 1930s. Governments tried to fix a recession by raising taxes to balance the budget and imposing trade restrictions. What happened? Greater taxes reduced spending and capital for investment, feeding the negative multiplier effect of these type of actions. Trade restrictions, adopted wholesale and at the same time by many countries including America to ‘protect’ domestic jobs instead destroyed immediately the domestic jobs dedicated to exports for all those nations. No jobs were gained from other nations because the domestic capital to create those industries “helped by the trade barriers” did not exist anymore.
Also, if there were capital available, it would take years to build the infrastructure (without any money coming in during construction) before the first job in that industry could be gained. Even if this could have happened (which it didn’t), all of us would have paid higher prices for those products and services, meaning we would have less money to spend on other products and services. Those people in the other fields where that money would have been spent would have lost their jobs and that would have again steam rolled another negative multiplier effect on the economy.
The Impact of Tax Cuts on Government Revenues:
We’ve all seen the statement that “Tax cuts reduce government revenues and increase budget deficits” –The Big Lie! That statement, in my opinion, is one of the worst, bald faced, self serving lies, perpetrated by the Democratic Party, that has ever been presented to the American public. It sounds logical which is why they use it, but the facts don’t support it. Facts are ultimately what matters. If you only look at the annual change in tax revenues after an income tax cut has occurred, you will see tremendous, often double digit growth in tax revenues collected by the government that continues for years. The extra revenue is generated due to job and income growth that occurs as a direct result of the tax cuts.
Then why, you ask, do federal budget deficits often increase after taxes have been cut? It’s simple. Now look at government spending after a tax cut. Amazingly, it too increases at tremendous rates, even greater than the rate of those big tax revenue increases. That’s the long and short of it. To make matters worse, at the state and local levels, whenever the ‘good times’ bring in revenue increases, instead of returning the surplus to the taxpayers or saving it for a ‘rainy day’, they too increase spending. Inevitably, (may be a few years in the future), the economy slows (see my piece on the business cycle), and federal, state, and local governments start to see large deficits with no easy solutions in sight. Our politicians, whether Democrats or Republicans, have demonstrated an insatiable appetite for government spending. They want to present to us ‘locals’ who elect them the ‘government goodies’ they ‘got for us’ as a reason to reelect them. Seemingly that works well because incumbents are generally hard to defeat in an election.
The second big lie also perpetrated by the Democratic party who truly covet spending the money you and I earn is the labeling of current, planned annual spending increases as spending ‘cuts’ because two or more years ago, the plan was to spend even more. To give some analogies, could a big corporation who increases spending from $100 million dollars last year to $105 million this year, state that they cut spending because two years ago they actually planned to spend $110 million? Of course not!
Also, if you are earning $30,000 a year and you were hoping for a $2,000 raise, but only received a $1,000 raise, would you think that your wages were cut? Of course not! However, according to the Democrats, those would be cuts. It’s just plain stupid and an insult to our intelligence to label spending increases over the previous year as spending cuts. Tell you the truth, the federal government needs to have some years in which spending actually is less than the previous year. You’d be surprised at how fast deficits would shrink and then grow to surpluses. Companies in financial trouble do this all the time. Why can’t the government, when in a financial mess, exercise the same discipline?
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