Income Tax

A List Of 97 Taxes Americans Pay Every Year

TaxesIf you are like most Americans, paying taxes is one of your pet peeves.  The deadline to file your federal taxes is coming up, and this year Americans will spend more than 7 billion hours preparing their taxes and will hand over more than four trillion dollars to federal, state and local governments.  Americans will fork over nearly 30 percent of what they earn to pay their income taxes, but that is only a small part of the story.  As you will see below, there are dozens of other taxes that Americans pay every year.  Of course not everyone pays all of these taxes, but without a doubt we are all being taxed into oblivion.  It is like death by a thousand paper cuts.  Our politicians have become extremely creative in finding ways to extract money from all of us, and most Americans don’t even realize what is being done to them.  By the time it is all said and done, a significant portion of the population ends up paying more than half of what they earn to the government.  That is fundamentally wrong, but nothing will be done about it until people start demanding change.  The following is a list of 97 taxes Americans pay every year…

#1 Air Transportation Taxes (just look at how much you were charged the last time you flew)

#2 Biodiesel Fuel Taxes

#3 Building Permit Taxes

#4 Business Registration Fees

#5 Capital Gains Taxes

#6 Cigarette Taxes

#7 Court Fines (indirect taxes)

#8 Disposal Fees

#9 Dog License Taxes

#10 Drivers License Fees (another form of taxation)

#11 Employer Health Insurance Mandate Tax

#12 Employer Medicare Taxes

#13 Employer Social Security Taxes

#14 Environmental Fees

#15 Estate Taxes

#16 Excise Taxes On Comprehensive Health Insurance Plans

#17 Federal Corporate Taxes

#18 Federal Income Taxes

#19 Federal Unemployment Taxes

#20 Fishing License Taxes

#21 Flush Taxes (yes, this actually exists in some areas)

#22 Food And Beverage License Fees

#23 Franchise Business Taxes

#24 Garbage Taxes

#25 Gasoline Taxes

#26 Gift Taxes

#27 Gun Ownership Permits

#28 Hazardous Material Disposal Fees

#29 Highway Access Fees

#30 Hotel Taxes (these are becoming quite large in some areas)

#31 Hunting License Taxes

#32 Import Taxes

#33 Individual Health Insurance Mandate Taxes

#34 Inheritance Taxes

#35 Insect Control Hazardous Materials Licenses

#36 Inspection Fees

#37 Insurance Premium Taxes

#38 Interstate User Diesel Fuel Taxes

#39 Inventory Taxes

#40 IRA Early Withdrawal Taxes

#41 IRS Interest Charges (tax on top of tax)

#42 IRS Penalties (tax on top of tax)

#43 Library Taxes

#44 License Plate Fees

#45 Liquor Taxes

#46 Local Corporate Taxes

#47 Local Income Taxes

#48 Local School Taxes

#49 Local Unemployment Taxes

#50 Luxury Taxes

#51 Marriage License Taxes

#52 Medicare Taxes

#53 Medicare Tax Surcharge On High Earning Americans Under Obamacare

#54 Obamacare Individual Mandate Excise Tax (if you don’t buy “qualifying” health insurance under Obamacare you will have to pay an additional tax)

#55 Obamacare Surtax On Investment Income (a new 3.8% surtax on investment income)

#56 Parking Meters

#57 Passport Fees

#58 Professional Licenses And Fees (another form of taxation)

#59 Property Taxes

#60 Real Estate Taxes

#61 Recreational Vehicle Taxes

#62 Registration Fees For New Businesses

#63 Toll Booth Taxes

#64 Sales Taxes

#65 Self-Employment Taxes

#66 Sewer & Water Taxes

#67 School Taxes

#68 Septic Permit Taxes

#69 Service Charge Taxes

#70 Social Security Taxes

#71 Special Assessments For Road Repairs Or Construction

#72 Sports Stadium Taxes

#73 State Corporate Taxes

#74 State Income Taxes

#75 State Park Entrance Fees

#76 State Unemployment Taxes (SUTA)

#77 Tanning Taxes (a new Obamacare tax on tanning services)

#78 Telephone 911 Service Taxes

#79 Telephone Federal Excise Taxes

#80 Telephone Federal Universal Service Fee Taxes

#81 Telephone Minimum Usage Surcharge Taxes

#82 Telephone State And Local Taxes

#83 Telephone Universal Access Taxes

#84 The Alternative Minimum Tax

#85 Tire Recycling Fees

#86 Tire Taxes

#87 Tolls (another form of taxation)

#88 Traffic Fines (indirect taxation)

#89 Use Taxes (Out of state purchases, etc.)

#90 Utility Taxes

#91 Vehicle Registration Taxes

#92 Waste Management Taxes

#93 Water Rights Fees

#94 Watercraft Registration & Licensing Fees

#95 Well Permit Fees

#96 Workers Compensation Taxes

#97 Zoning Permit Fees

Yet despite all of this oppressive taxation, our local governments, our state governments and our federal government are all absolutely drowning in debt.

When the federal income tax was originally introduced a little more than 100 years ago, most Americans were taxed at a rate of only 1 percent.

But once they get their feet in the door, the social planners always want more.

Since that time, tax rates have gone much higher and the tax code has exploded in size.

Why do we have to have the most convoluted tax system in the history of the planet?

Why can’t things be simpler?

In a previous article entitled “24 Outrageous Facts About Taxes In The United States That Will Blow Your Mind“, I listed a number of reasons why our federal income tax system has become a complete and utter abomination that is entirely out of control…

1 – The U.S. tax code is now 3.8 million words long.  If you took all of William Shakespeare’s works and collected them together, the entire collection would only be about 900,000 words long.

2 – According to the National Taxpayers Union, U.S. taxpayers spend more than 7.6 billion hours complying with federal tax requirements.  Imagine what our society would look like if all that time was spent on more economically profitable activities.

3 – 75 years ago, the instructions for Form 1040 were two pages long.  Today, they are 189 pages long.

4 – There have been 4,428 changes to the tax code over the last decade.  It is incredibly costly to change tax software, tax manuals and tax instruction booklets for all of those changes.

5 – According to the National Taxpayers Union, the IRS currently has 1,999 different publications, forms, and instruction sheets that you can download from the IRS website.

6 – Our tax system has become so complicated that it is almost impossible to file your taxes correctly.  For example, back in 1998 Money Magazine had 46 different tax professionals complete a tax return for a hypothetical household.  All 46 of them came up with a different result.

7 – In 2009, PC World had five of the most popular tax preparation software websites prepare a tax return for a hypothetical household.  All five of them came up with a different result.

8 – The IRS spends $2.45 for every $100 that it collects in taxes.

9 – According to The Tax Foundation, the average American has to work until April 17th just to pay federal, state, and local taxes.  Back in 1900, “Tax Freedom Day” came on January 22nd.

10 – When the U.S. government first implemented a personal income tax back in 1913, the vast majority of the population paid a rate of just 1 percent, and the highest marginal tax rate was just 7 percent.

If it was up to me, I would abolish the income tax and shut the IRS down.

But neither major political party in the United States is even willing to consider such a thing.

So the monstrous system that we have created will continue to get even bigger and even more complicated.

We are literally being taxed into oblivion, and most Americans don’t even seem to care.

During The Best Period Of Economic Growth In U.S. History There Was No Income Tax And No Federal Reserve

The American Free Market System At WorkHow would America ever survive without the central planners in the Obama administration and at the Federal Reserve?  What in the world would we do if there was no income tax and no IRS?  Could the U.S. economy possibly keep from collapsing under such circumstances?  The mainstream media would have us believe that unless we have someone “to pull the levers” our economy would descend into utter chaos, but the truth is that the best period of economic growth in U.S. history occurred during a time when there was no income tax and no Federal Reserve.  Between the Civil War and 1913, the U.S. economy experienced absolutely explosive growth.  The free market system thrived and the rest of the world looked at us with envy.  The federal government was very limited in size, there was no income tax for most of that time and there was no central bank.  To many Americans, it would be absolutely unthinkable to have such a society today, but it actually worked very, very well.  Without the inventions and innovations that came out of that period, the world would be a far different place today.

It is amazing what can happen when the government just gets out of the way.  Check out all of the wonderful things that Wikipedia says happened for the U.S. economy during those years…

The rapid economic development following the Civil War laid the groundwork for the modern U.S. industrial economy. By 1890, the USA leaped ahead of Britain for first place in manufacturing output.

An explosion of new discoveries and inventions took place, a process called the “Second Industrial Revolution.” Railroads greatly expanded the mileage and built stronger tracks and bridges that handled heavier cars and locomotives, carrying far more goods and people at lower rates. Refrigeration railroad cars came into use. The telephone, phonograph, typewriter and electric light were invented. By the dawn of the 20th century, cars had begun to replace horse-drawn carriages.

Parallel to these achievements was the development of the nation’s industrial infrastructure. Coal was found in abundance in the Appalachian Mountains from Pennsylvania south to Kentucky. Oil was discovered in western Pennsylvania; it was mainly used for lubricants and for kerosene for lamps. Large iron ore mines opened in the Lake Superior region of the upper Midwest. Steel mills thrived in places where these coal and iron ore could be brought together to produce steel. Large copper and silver mines opened, followed by lead mines and cement factories.

In 1913 Henry Ford introduced the assembly line, a step in the process that became known as mass-production.

When hard working, industrious people are given freedom to pursue their dreams, great things tend to happen.  The truth is that we were all designed to create, to invent, to build, and to trade with one another.  We all have something that we can contribute to society, and when families are strong and the invisible hand of the free market is allowed to work, societies tend to prosper.

It is not a coincidence that the greatest period of economic growth in U.S. history was between the Civil War and 1913.  The following information comes from Wikipedia…

The Gilded Age saw the greatest period of economic growth in American history. After the short-lived panic of 1873, the economy recovered with the advent of hard money policies and industrialization. From 1869 to 1879, the US economy grew at a rate of 6.8% for real GDP and 4.5% for real GDP per capita, despite the panic of 1873.  The economy repeated this period of growth in the 1880s, in which the wealth of the nation grew at an annual rate of 3.8%, while the GDP was also doubled.

Wouldn’t you like U.S. GDP to double over the course of a decade now?

So why don’t we go back to a system like that?

In 1913, the Federal Reserve and a permanent national income tax were introduced.  Today, the unelected central planners at the Federal Reserve totally run our financial system and the U.S. tax code is about 13 miles long.  The value of our currency has declined by more than 96 percent since 1913, and the size of our national debt has gotten more than 5000 times larger.

Meanwhile, control freak bureaucrats seemingly run everything.  Almost every business decision is heavily influenced either by taxes or by the millions of laws, rules and regulations that are sucking the life out of our economic system.

My favorite example of how suffocating red tape in America has become is the magician out in Missouri that was forced by the Obama administration to submit a 32 page “disaster plan” for the rabbit that he uses during his magic shows for kids.

It is no wonder why we don’t have any economic growth.  The central planners in the federal government are killing our economy.

And the central planners over at the Federal Reserve are killing our financial system.  In school we are taught that the Fed was created to bring stability to our financial system, but the truth is that they have been responsible for financial bubble after financial bubble, and now Federal Reserve Chairman Ben Bernanke has created the largest bond bubble in the history of the world.  When that thing bursts, and it will, we are going to see financial carnage on an unprecedented scale.

Unfortunately, the truth is that the Federal Reserve never has been looking out for the interests of the American people.  It was created by the big banks and it has always worked very hard to benefit the big banks.  During the Fed era, the big banks have become the most powerful economic entities on the entire planet.  Our entire economy is now based on debt, and the big banks are at the very center of this debt spiral.  The following is an excerpt from a recent article by Paul B. Farrell…

Today’s world includes four Wall Street banks each with assets over $1 trillion, each more than Goldman. Plus eight other big global banks each have over $2 trillion total assets, including, among the 100 largest, Barclays, HSBC, Deutsche, ICB-China and Japan’s Mitsubishi.

Yes, this new world is changing fast. Back in 2008 the world’s financial banks were in ruins. Wall Street sunk into virtually bankruptcy. Goldman and its Wall Street too-big-to-fail co-conspirators had trashed the global economy, triggered a virtual depression, and Wall Street’s casinos lost over $10 trillion of Main Street retirement funds.

And as we saw back in 2008, the Federal Reserve is going to do whatever is necessary to prop up Wall Street.  Most Americans never even heard about this, but during the last financial crisis the Fed secretly loaned 16 trillion dollars to the big banks.  Those loans were nearly interest-free and those banks knew that they could get basically as much nearly interest-free money as they wanted from the Fed.

So how much nearly interest-free money did the Fed loan to normal Americans?

Not a single penny.

That would be bad enough, but it is also important to remember that since 2008 the Fed has actually been paying banks NOT to lend money to the rest of us.

What is it going to take for the American people to start demanding that the Fed be abolished?  They are absolutely destroying our financial system.

Meanwhile, the central planners in the Obama administration have been doing their part as well.  During the second quarter of this year, the number of Americans working between 30 and 34 hours per week fell by 146,500.  During that same time period, the number of Americans working between 25 and 29 hours rose by 119,000.

Why is this happening?

Well, the Obamacare employer mandate will apply to workers that work at least 30 hours each week, so employers are starting to cut back on the hours their employees are getting in order to comply with the law.

But this is just one example out of thousands, and most Americans already know that the U.S. economy has been crumbling for many years.

In fact, things have gotten so bad that even 53 percent of all Democrats believe that the American Dream is dead even though Barack Obama is residing in the White House.

But this is just the beginning.  Things are going to get much, much worse.  We are going down the same path that Greece has gone, and the unemployment rate in Greece has just hit a new all-time record high of 27.6 percent.

That is where the U.S. is headed eventually.  Decades of very foolish decisions are catching up with us.

The primary reason why all of this is happening is debt.  As a society, we simply have way, way, way too much debt.

The biggest offender, of course, is the federal government.  Since 1970, federal spending has grown nearly 12 times as rapidly as median household income has, and since the year 2000 the size of the U.S. national debt has grown by more than 11 trillion dollars.

When government debt gets too large, it has a profoundly negative effect on an economy.  The following is an excerpt from an outstanding article by Lacy H. Hunt, a Ph.D. economist…

*****

Here are the studies, starting with the one with the broadest implications:

  1. “Government Size and Growth: A Survey and Interpretation of the Evidence,” from Journal of Economic Surveys. Published in April 2011, Swedish economists Andreas Bergh and Magnus Henrekson (both of the Research Institute of Industrial Economics at Lund University) found a “significant negative correlation” between size of government and economic growth. Specifically, “an increase in government size by 10 percentage points is associated with a 0.5% to 1% lower annual growth rate.”
  2. “The Impact of High and Growing Government Debt on Economic Growth: An Empirical Investigation for the Euro Area,” in European Central Bank working paper, Number 1237, August 2010. Cristina Checherita and Philipp Rother found that a government-debt-to-GDP ratio above the threshold of 90-100% has a “deleterious” impact on long-term growth. Additionally, the impact of debt on growth is nonlinear – as the government debt rises to higher and higher levels, the adverse growth consequences accelerate.
  3. The Real Effects of Debt, published by the Bank for International Settlements (BIS) in Basel, Switzerland in August 2011. Stephen G. Cecchetti, M. S.Mohanty, and Fabrizio Zampolli determined that “beyond a certain level, debt is bad for growth. For government debt, the number is about 85% of GDP.”
  4. “Public Debt Overhangs: Advanced-Economy Episodes Since 1800,”by Carmen M. Reinhart, Vincent R. Reinhart, Kenneth S. Rogoff, Journal of Economic Perspectives, Volume 26, Number 3, Summer 2012, pages 69-86. The authors identified 26 cases of “debt overhangs,” which they define as public-debt-to-GDP levels exceeding 90% for at least five years. In spite of the many idiosyncratic differences in these situations, economic growth fell in all but three of the 26 cases. All of the instances, which lasted an average of 23 years, are included in the paper. They found that average annual growth is 1.2% lower for countries with a debt overhang than for countries without. The long duration of such episodes means that cumulative shortfall from the debt excess—i.e., several years in a row of subpar economic growth—is potentially massive.

*****

But it isn’t just federal government debt that is the problem.  The rest of us have way too much debt as well.

If you can believe it, the ratio of private debt to GDP was 273.3% for the twelve months ending in the first quarter of 2013.

That is an astounding figure.

And as Hunt explained, having too much private debt is also very bad for an economy…

In Too Much Finance, published by the United Nations Conference on Trade and Development (UNCTAD) in March 2011, Jean Louis Arcand, Enrico Berkes, and Ugo Panizza found a negative effect on output growth when credit to the private sector reaches 104-110% of GDP. The strongest adverse effects are for credit over 160% of GDP.

The second is the 2011 BIS study authored by Cecchetti, Mohanty, and Zampolli. They found that private debt levels become “cancerous” (in BIS economic advisor Cecchetti’s own words) at 175% (90% for corporations and 85% for households)—just slightly more than the UNCTAD study.

When you add our private debt to GDP ratio of 273 percent to our federal debt to GDP ratio of 101 percent, you get a grand total of 384 percent.

This is how we have funded the false prosperity of the past couple of decades.  Essentially, we have been putting our good times on a credit card.

And as anyone that has ever tried to live on credit knows, the good times eventually run out.

But this is what the Federal Reserve was designed to do.  It was designed to get the U.S. government trapped in a debt spiral from which there would never be any escape.

It is not an accident that our national debt has gotten more than 5000 times larger than it was when the Fed was originally created.  This is what the bankers wanted the system to do.

They wanted a system that would extract wealth from all of us through taxes, transfer it to the government, and then transfer it to them through interest payments.

We never needed a central bank, we never needed the IRS and we never needed an income tax.  America would be doing just fine without any of them.

But instead, America chose to go down the path of collectivization and central planning, and now we are heading toward the biggest economic disaster in the history of mankind.

100 Years Old And Still Killing Us: America Was Much Better Off Before The Income Tax

100 Years Old And Still Killing UsDid you know that the greatest period of economic growth in American history was during a time when there was absolutely no federal income tax?  Between the end of the Civil War and 1913, there was an explosion of economic activity in the United States unlike anything ever seen before or since.  Unfortunately, a federal income tax was instituted in 1913, and this year it turned 100 years old.  But there was no fanfare, was there?  There was no celebration because the federal income tax is universally hated.  Sadly, most Americans just assume that there is no other option to an income tax.  Most Americans just assume that it has always been with us and that it will always be with us.  This year, the American people will shell out approximately $4.22 trillion in state and federal income taxes.  That amount is equivalent to approximately 29.4 percent of all income that Americans will bring in this year, and that does not even take into account the dozens of other taxes that Americans pay each year.  At this point, the U.S. tax code is about 13 miles long, and those that are honest and pay their taxes every year are being absolutely shredded by this system.  But wouldn’t the federal government go broke if we didn’t have a federal income tax?  No, actually the truth is that the federal government did just fine before there was an income tax.  In fact, the U.S. national debt has gotten more than 5000 times larger since the federal income tax and the Federal Reserve were created by Congress back in 1913.  As I have written about previously, the Federal Reserve system was actually designed to trap the United States in a debt spiral from which it could never possibly escape, and the federal income tax was needed to greatly expand the size of the federal government and to soak the American people of the funds necessary to service that debt.  But it doesn’t have to be this way.  America was once much better off before the income tax and the Federal Reserve were created, and we could easily go to such a system again.

What we desperately need to do is to teach the American people a little history lesson.  The truth is that the greatest period of economic growth in U.S. history was between the Civil War and 1913 when there was no federal income tax at all.  The following is from Wikipedia…

The Gilded Age saw the greatest period of economic growth in American history. After the short-lived panic of 1873, the economy recovered with the advent of hard money policies and industrialization. From 1869 to 1879, the US economy grew at a rate of 6.8% for real GDP and 4.5% for real GDP per capita, despite the panic of 1873.  The economy repeated this period of growth in the 1880s, in which the wealth of the nation grew at an annual rate of 3.8%, while the GDP was also doubled.

Sadly, most Americans cannot even conceive of an economy like that.  Most Americans cannot even imagine having a nation without a massively bloated federal government and without an unelected central bank centrally planning our financial system.

But you know what?

It worked.  In fact, it worked fantastically well.

The period between the Civil War and 1913 propelled the United States to greatness.  Just check out all of the good things that Wikipedia says happened for the U.S. economy during those years…

The rapid economic development following the Civil War laid the groundwork for the modern U.S. industrial economy. By 1890, the USA leaped ahead of Britain for first place in manufacturing output.

An explosion of new discoveries and inventions took place, a process called the “Second Industrial Revolution.” Railroads greatly expanded the mileage and built stronger tracks and bridges that handled heavier cars and locomotives, carrying far more goods and people at lower rates. Refrigeration railroad cars came into use. The telephone, phonograph, typewriter and electric light were invented. By the dawn of the 20th century, cars had begun to replace horse-drawn carriages.

Parallel to these achievements was the development of the nation’s industrial infrastructure. Coal was found in abundance in the Appalachian Mountains from Pennsylvania south to Kentucky. Oil was discovered in western Pennsylvania; it was mainly used for lubricants and for kerosene for lamps. Large iron ore mines opened in the Lake Superior region of the upper Midwest. Steel mills thrived in places where these coal and iron ore could be brought together to produce steel. Large copper and silver mines opened, followed by lead mines and cement factories.

In 1913 Henry Ford introduced the assembly line, a step in the process that became known as mass-production.

But if we didn’t have an income tax, how did we fund the government?  Well, we mostly did it with tariffs and excise taxes.  The following is from a recent article by Thomas R. Eddlem…

Prior to ratification of the 16th (income tax) Amendment in February 1913, the federal government managed its few constitutional responsibilities without an income tax, except during the Civil War period. During peacetime, it did so largely — or even entirely — on import taxes called “tariffs.” Congress could afford to run the federal government on tariffs alone because federal responsibilities did not include welfare programs, agricultural subsidies, or social insurance programs like Social Security or Medicare. After the Civil War, tariff revenues sometimes suffered under a protectionist policy ushered in by the Republican Party that supplemented federal income via excises on alcohol, tobacco, and inheritances. But before the war, the need for tariff revenue to finance the federal government generally kept the tariff at reasonable levels. During wartime throughout early American history, the Founding Fathers were able to raise additional revenue employing a different method of direct taxation authorized by the U.S. Constitution prior to the 16th Amendment. These alternative taxing methods gave the young American nation embarrassing peacetime budget surpluses that several times came close to paying off the national debt.

So why didn’t we stick with that system?

Well, early in the 20th century the “progressives” and the social planners started to take control in Washington.

And one of the things that “progressives” and social planners love is an income tax.  In fact, the second plank of the Communist Manifesto is a “heavy progressive or graduated income tax”.

Of course they promised us that income tax rates would always remain low.  And at first they were quite low.  The following is from an article by Adam Young…

The presidential election of 1912 was contested between three advocates of an income tax. The winner, Woodrow Wilson, after the ratification of the Sixteenth Amendment, called a special session of Congress in April 1913, which proceeded to pass an income tax of 1% on incomes above $3,000 and applied surcharges between 2% and 7% on income from $20,000 to $500,000.

But once the “progressives” and the social planners get their feet in the door, they always want more.

And we have seen how things have worked out.  Today, the American people are being taxed into oblivion.

In a previous article entitled “Show This To Anyone That Believes That Taxes Are Too Low“, I listed dozens of other taxes that the American people pay each year in addition to federal and state income taxes…

#1 Building Permit Taxes

#2 Capital Gains Taxes

#3 Cigarette Taxes

#4 Court Fines (indirect taxes)

#5 Dog License Taxes

#6 Drivers License Fees (another form of taxation)

#7 Federal Unemployment Taxes

#8 Fishing License Taxes

#9 Food License Taxes

#10 Gasoline Taxes

#11 Gift Taxes

#12 Hunting License Taxes

#13 Inheritance Taxes

#14 Inventory Taxes

#15 IRS Interest Charges (tax on top of tax)

#16 IRS Penalties (tax on top of tax)

#17 Liquor Taxes

#18 Luxury Taxes

#19 Marriage License Taxes

#20 Medicare Taxes

#21 Medicare Tax Surcharge On High Earning Americans Under Obamacare

#22 Obamacare Individual Mandate Excise Tax (if you don’t buy “qualifying” health insurance under Obamacare you will have to pay an additional tax)

#23 Obamacare Surtax On Investment Income (a new 3.8% surtax on investment income that goes into effect next year)

#24 Property Taxes

#25 Recreational Vehicle Taxes

#26 Toll Booth Taxes

#27 Sales Taxes

#28 Self-Employment Taxes

#29 School Taxes

#30 Septic Permit Taxes

#31 Service Charge Taxes

#32 Social Security Taxes

#33 State Unemployment Taxes (SUTA)

#34 Tanning Tax (a new Obamacare tax on tanning services)

#35 Telephone Federal Excise Taxes

#36 Telephone Federal Universal Service Fee Taxes

#37 Telephone Minimum Usage Surcharge Taxes

#38 Telephone State And Local Taxes

#39 Tire Taxes

#40 Tolls (another form of taxation)

#41 Traffic Fines (indirect taxation)

#42 Utility Taxes

#43 Vehicle Registration Taxes

#44 Workers Compensation Taxes

Yet even with all of these taxes, our local governments, our state governments and our federal government are all absolutely drowning in debt.

In another previous article entitled “24 Outrageous Facts About Taxes In The United States That Will Blow Your Mind“, I listed a number of reasons why our federal income tax system has become a complete and utter abomination that can never be fixed…

1 – The U.S. tax code is now 3.8 million words long.  If you took all of William Shakespeare’s works and collected them together, the entire collection would only be about 900,000 words long.

2 – According to the National Taxpayers Union, U.S. taxpayers spend more than 7.6 billion hours complying with federal tax requirements.  Imagine what our society would look like if all that time was spent on more economically profitable activities.

3 – 75 years ago, the instructions for Form 1040 were two pages long.  Today, they are 189 pages long.

4 – There have been 4,428 changes to the tax code over the last decade.  It is incredibly costly to change tax software, tax manuals and tax instruction booklets for all of those changes.

5 – According to the National Taxpayers Union, the IRS currently has 1,999 different publications, forms, and instruction sheets that you can download from the IRS website.

6 – Our tax system has become so complicated that it is almost impossible to file your taxes correctly.  For example, back in 1998 Money Magazine had 46 different tax professionals complete a tax return for a hypothetical household.  All 46 of them came up with a different result.

7 – In 2009, PC World had five of the most popular tax preparation software websites prepare a tax return for a hypothetical household.  All five of them came up with a different result.

8 – The IRS spends $2.45 for every $100 that it collects in taxes.

9 – According to The Tax Foundation, the average American has to work until April 17th just to pay federal, state, and local taxes.  Back in 1900, “Tax Freedom Day” came on January 22nd.

10 – When the U.S. government first implemented a personal income tax back in 1913, the vast majority of the population paid a rate of just 1 percent, and the highest marginal tax rate was just 7 percent.

11 – Residents of New Jersey pay $1.64 in taxes for every $1.00 of federal spending that they get back.

12 – The United States is the only nation on the planet that tries to tax citizens on what they earn in foreign countries.

13 – According to Forbes, the 400 highest earning Americans pay an average federal income tax rate of just 18 percent.

14 – Warren Buffett had an effective tax rate of just 17.4 percent for 2010.

15 – The top 20 percent of all income earners in the United States pay approximately 86 percent of all federal income taxes.

16 – Sadly, as Bill Whittle has shown, you could take every single penny that every American earns above $250,000 and it would only fund about 38 percent of the federal budget.

17 – The United States has the highest corporate tax rate in the world (35 percent).  In Ireland, the corporate tax rate is only 12.5 percent.  This is causing thousands of corporations to move operations out of the United States and into other countries.

18 – Some tax havens are doing a booming business in setting up sham headquarters for U.S. corporations.  For example, the city of Zug, Switzerland only has a population of 26,000 people but it is the headquarters for 30,000 companies.

19 – In 1950, corporate taxes accounted for about 30 percent of all federal revenue.  In 2012, corporate taxes will account for less than 7 percent of all federal revenue.

The wealthy have become absolute masters at avoiding taxes, and the poor are not able to pay much.

So who always gets squeezed?

The middle class does.

No matter what our politicians promise us, the hammer is always brought down on the middle class.

And now, according to The Huffington Post, the IRS says that it can even read our old emails without a warrant to make sure that we are paying all of the taxes that we should be…

The IRS apparently interprets that authority very broadly, the documents show: as long as you’ve stored your email in a cloud service like Google Mail, and as long as those emails haven’t been deleted after a few months, the agency thinks it doesn’t need a warrant to read them.

The idea of IRS agents poking through your email account might sound at the very least creepy, and maybe unconstitutional. But the IRS does have a legal leg to stand on: the Electronic Communications Privacy Act of 1986 allows government agencies to in many cases obtain emails older than 180 days without a warrant.

That’s why an internal 2009 IRS document claimed that “the government may obtain the contents of electronic communication that has been in storage for more than 180 days” without a warrant.

It should be noted that the IRS is claiming that it does not use emails “to target” specific taxpayers, but notice that they are not promising not to use old emails against taxpayers once they are officially being audited or investigated…

“Contrary to some suggestions, the IRS does not use emails to target taxpayers. Any suggestion to the contrary is wrong.”

In any event, the truth is that we have one of the most complicated and one of the most intrusive tax systems in the history of the world.

Don’t the American people deserve better?

What do you think?

Should America go back to a system where there is no income tax and no Federal Reserve?

Please feel free to share what you think by leaving a comment below…

America Is Broke

Abolish The Income Tax: You Won’t Believe Who Is Getting Away With Paying Zero Taxes While The Middle Class Gets Hammered

Abolish The Income Tax - You Won't Believe Who Is Getting Away With Paying Zero Taxes While The Middle Class Gets Hammered - Photo by TravisThe federal income tax is a bad joke and it needs to be abolished.  All over the nation, hard working American families are being absolutely crushed by oppressive levels of taxation, and our politicians are constantly coming up with new ways to extract money from all of us every single year.  Meanwhile, many ultra-wealthy Americans and many of the most profitable corporations in the country pay little to nothing in taxes.  In fact, as you will see below, there are dozens of very prominent corporations that make billions of dollars in profits and yet don’t pay a dime in taxes.  Tax avoidance has become a multi-billion dollar industry in the United States.  Those that have the resources to “play the game” use shell companies, offshore tax havens and the thousands of loopholes in our tax code to minimize their tax burdens as much as possible.  Meanwhile, the rest of us get absolutely hammered.  This is fundamentally unfair.  The federal income tax system is irreversibly broken at this point, and it is time to abolish it.  If you think that the federal income tax system can be “fixed”, then you probably have never studied it.  Our tax code is nearly 4 million words long and it is absolutely riddled with thousands of loopholes that favor big corporations and the ultra-wealthy.  We should come up with a better, fairer way to fund the government.  The United States once prospered greatly without a federal income tax, and it could do so again.

Many people simply do not believe that it is possible for corporations inside the United States to make billions of dollars in profits each year and not pay a dime in income taxes.

Well, according to a report put out by Public Campaign, that is exactly what is happening.  Posted below are numbers that come directly from their report.  30 large corporations are listed, and 29 of them had a tax burden for 2008 through 2010 that was less than zero even though they all made enormous profits.  And all 30 of them spent more on lobbying than they did on taxes.

The numbers that you are about to see are for 2008, 2009 and 2010 combined.  For “taxes paid”, please note that for 29 of the corporations a negative number is given.  That means that the net tax liability for 2008 through 2010 was actually less than zero.

After seeing these numbers, is there anyone out there that is still willing to claim that our tax system is “fair”?…

General Electric
U.S. Profits: $10,460,000,000
Taxes Paid: ‐$4,737,000,000

PG&E Corp.
U.S. Profits: $4,855,000,000
Taxes Paid: ‐$1,027,000,000

Verizon Communications
U.S. Profits: $32,518,000,000
­Taxes Paid: ‐$951,000,000

Wells Fargo
U.S. Profits: $49,370,000,000
­Taxes Paid: ‐$681,000,000

American Electric Power
U.S. Profits: $5,899,000,000
­Taxes Paid: ‐$545,000,000

Pepco Holdings
U.S. Profits: $882,000,000
­Taxes Paid: ‐$508,000,000

Computer Sciences
U.S. Profits: $1,666,000,000
Taxes Paid: ‐$305,000,000

CenterPoint Energy
U.S. Profits: $1,931,000,000
Taxes Paid: ‐$284,000,000

NiSource
U.S. Profits: $1,385,000,000
­Taxes Paid: ‐$227,000,000

Duke Energy
U.S. Profits: $5,475,000,000
­Taxes Paid: ‐$216,000,000

Boeing
U.S. Profits: $9,735,000,000
Taxes Paid: ‐$178,000,000

NextEra Energy
U.S. Profits: $6,403,000,000
­Taxes Paid: ‐$139,000,000

Consolidated Edison
U.S. Profits: $4,263,000,000
­Taxes Paid: ‐$127,000,000

Paccar
U.S. Profits: $365,000,000
­Taxes Paid: ‐$112,000,000

Integrys Energy Group
U.S. Profits: $818,000,000
Taxes Paid: ‐$92,000,000

Wisconsin Energy
U.S. Profits: $1,725,000,000
Taxes Paid: ‐$85,000,000

DuPont
U.S. Profits: $2,124,000,000
Taxes Paid: ‐$72,000,000

Baxter International
U.S. Profits: $926,000,000
­Taxes Paid: ‐$66,000,000

Tenet Healthcare
U.S. Profits: $415,000,000
Taxes Paid: ‐$48,000,000

Ryder System
U.S. Profits: $627,000,000
­Taxes Paid: ‐$46,000,000

El Paso
U.S. Profits: $4,105,000,000
­Taxes Paid: ‐$41,000,000

Honeywell International
U.S. Profits: $4,903,000,000
­Taxes Paid: ‐$34,000,000

CMS Energy
U.S. Profits: $1,292,000,000
­Taxes Paid: ‐$29,000,000

Con-­way
U.S. Profits: $286,000,000
Taxes Paid: ‐$26,000,000

Navistar International
U.S. Profits: $896,000,000
­Taxes Paid: ‐$18,000,000

DTE Energy
U.S. Profits: $2,551,000,000
­Taxes Paid: ‐$17,000,000

Interpublic Group
U.S. Profits: $571,000,000
­Taxes Paid: ‐$15,000,000

Mattel
U.S. Profits: $1,020,000,000
­Taxes Paid: ‐$9,000,000

Corning
U.S. Profits: $1,977,000,000
­Taxes Paid: ‐$4,000,000

FedEx
U.S. Profits: $4,247,000,000
Taxes Paid: $37,000,000 (a rate of less than 1%)

Total
U.S. Profits: $163,691,000,000
­Taxes Paid: ‐$10,602,000,000

Just look at that combined total again.

Those 30 companies had combined profits of more than 163 billion dollars during those three years, and yet the combined net tax liability of those companies was negative 10.6 billion dollars.

I wish I could make my taxes look like that.

Another company that is making headlines because of their taxes these days is Facebook.

It turns out that Facebook made more than a billion dollars in 2012 but did not pay a single dime in federal or state income taxes.  The following is from a report that was just released by Citizens for Tax Justice…

Earlier this month, the Facebook Inc. released its first “10-K” annual financial report since going public last year. Hidden in the report’s footnotes is an amazing admission: despite $1.1 billion in U.S. profits in 2012, Facebook did not pay even a dime in federal and state income taxes.

Instead, Facebook says it will receive net tax refunds totaling $429 million.

According to Businessweek, Facebook has an additional 2 billion dollars in tax credits that it will be able to use in future years…

Facebook says that it anticipates reducing its tax liability in the future by an additional $2.17 billion by using further net operating loss carry-forwards that it has banked.

And of course when it comes to abusing the tax system, the big Wall Street banks are some of the worst offenders.  The following is an excerpt from a report put out by the office of U.S. Senator Bernie Sanders…

—–

Here are just a few examples of how the corporations and Wall Street banks these CEOs work for have significantly harmed our economy and the federal budget:

1. Bank of America CEO Brian Moynihan

Number of Offshore Tax Havens in 2010? 371.

In 2010, Bank of America operated 371 subsidiaries incorporated in offshore tax havens. 204 of these subsidiaries are incorporated in the Cayman Islands, which has a corporate tax rate of 0%.

Amount of federal income taxes Bank of America would have owed if offshore tax havens were eliminated? $2.5 billion.

Bank of America has stashed $18.5 billion in offshore tax havens to avoid paying U.S. income taxes. Bank of America would owe an estimated $2.5 billion in federal income taxes if its use of offshore tax avoidance was eliminated.

Amount of federal income taxes paid in 2010? Zero. $1.9 billion tax refund.

Bank of America received a $1.9 billion tax refund from the IRS in 2010, even though it made $4.4 billion in profits.

Taxpayer Bailout from the Federal Reserve and the Treasury Department? Over $1.3 trillion.

During the financial crisis, Bank of America received a total of more than $1.3 trillion in virtually zero interest loans from the Federal Reserve and a $45 billion bailout from the Treasury Department.

2. JP Morgan Chase CEO James Dimon

Number of Offshore Tax Havens in 2010? 83.

In 2010, JP Morgan Chase operated 83 subsidiaries incorporated in offshore tax havens.

Amount of federal income taxes JP Morgan Chase would have owed if offshore tax havens were eliminated? $4.9 billion

JP Morgan Chase has stashed $21.8 billion in offshore tax haven countries to avoid payng income taxes. If this practice was outlawed, it would have paid $4.9 billion in federal income taxes.

Taxpayer Bailout from the Federal Reserve and the Treasury Department? $416 billion

During the financial crisis, JP Morgan Chase received a total of more than $391 billion in virtually zero interest loans from the Federal Reserve and a $25 billion bailout from the Treasury Department, while Jamie DImon served as a director of the New York Federal Reserve.

3. Goldman Sachs CEO Lloyd Blankfein

Amount of federal income taxes paid in 2008? Zero. $278 million tax refund.

In 2008, Goldman Sachs received a $278 million refund from the IRS, even though it earned a profit of $2.3 billion that year.

Number of offshore tax havens in 2010? 39.

In 2010, Goldman Sachs operated 39 subsidiaries in offshore tax haven countries.

Amount of federal income taxes Goldman Sachs would have owed if offshore tax havens were eliminated? $3.32 billion.

Goldman Sachs has stashed $20.63 billion in offshore tax haven countries to avoid paying income taxes. If this practice was outlawed, it would have paid $3.32 billion in federal income taxes.

Taxpayer Bailout from the Federal Reserve and the Treasury Department? $824 billion.

During the financial crisis, Goldman Sachs received a total of $814 billion in virtually zero interest loans from the Federal Reserve and a $10 billion bailout from the Treasury Department.

—–

Are you starting to get the picture?

The big banks and the big corporations make billions, but they pay nothing or next to nothing.

The rest of us bust our rear ends to try to get ahead, and we get gouged by dozens of different taxes.

Over time, the percentage of the overall tax burden shouldered by corporations has gotten smaller and smaller.

Back in 1950, corporate taxes accounted for about 30 percent of all federal revenue.  In 2012, corporate taxes accounted for less than 7 percent of all federal revenue.

These days, large corporations have become absolute masters at avoiding taxes.  In fact, there are many international tax havens that are doing a booming business in setting up sham headquarters for U.S. corporations.  For example, the city of Zug, Switzerland only has a population of 26,000 people but it is the headquarters for 30,000 companies.

But corporations are not the only ones doing this kind of thing.

The ultra-wealthy have also mastered the art of legally not paying taxes.

As I mentioned in a previous article, it has been reported that the global elite have up to 32 TRILLION dollars stashed in offshore banks around the globe.

With that amount of money, you could pay off the entire U.S. national debt and still have enough money left over to buy every product and service produced in the United States during an entire year.

It is time to admit that our tax system is broken.

Congress has had decades to fix it, and yet the abuses just keep getting worse.

What we are doing is not working.

We need to abolish the income tax.

If you are still not convinced that the federal income tax is an abomination and that we need to abolish it, here are some more shocking facts about our tax system from one of my previous articles about taxes…

1 – The U.S. tax code is now 3.8 million words long.  If you took all of William Shakespeare’s works and collected them together, the entire collection would only be about 900,000 words long.

2 – According to the National Taxpayers Union, U.S. taxpayers spend more than 7.6 billion hours complying with federal tax requirements.  Imagine what our society would look like if all that time was spent on more economically profitable activities.

3 – 75 years ago, the instructions for Form 1040 were two pages long.  Today, they are 189 pages long.

4 – There have been 4,428 changes to the tax code over the last decade.  It is incredibly costly to change tax software, tax manuals and tax instruction booklets for all of those changes.

5 – According to the National Taxpayers Union, the IRS currently has 1,999 different publications, forms, and instruction sheets that you can download from the IRS website.

6 – Our tax system has become so complicated that it is almost impossible to file your taxes correctly.  For example, back in 1998 Money Magazine had 46 different tax professionals complete a tax return for a hypothetical household.  All 46 of them came up with a different result.

7 – In 2009, PC World had five of the most popular tax preparation software websites prepare a tax return for a hypothetical household.  All five of them came up with a different result.

8 – The IRS spends $2.45 for every $100 that it collects in taxes.

9 – According to The Tax Foundation, the average American has to work until April 17th just to pay federal, state, and local taxes.  Back in 1900, “Tax Freedom Day” came on January 22nd.

10 – When the U.S. government first implemented a personal income tax back in 1913, the vast majority of the population paid a rate of just 1 percent, and the highest marginal tax rate was just 7 percent.

11 – Residents of New Jersey pay $1.64 in taxes for every $1.00 of federal spending that they get back.

12 – The United States is the only nation on the planet that tries to tax citizens on what they earn in foreign countries.

13 – According to Forbes, the 400 highest earning Americans pay an average federal income tax rate of just 18 percent.

14 – Warren Buffett had an effective tax rate of just 17.4 percent for 2010.

15 – The top 20 percent of all income earners in the United States pay approximately 86 percent of all federal income taxes.

16 – Sadly, as Bill Whittle has shown, you could take every single penny that every American earns above $250,000 and it would only fund about 38 percent of the federal budget.

Please share this article with as many people as you can.  We have now entered a time of the year when tens of millions of Americans will be filling out their tax returns, and the pain of going through that process will make people even more receptive than normal to the truth about how broken our system is.

So what do you think?

Do you think that it is fair for the ultra-wealthy and hugely profitable corporations to get away with paying zero taxes while you get hammered?

Do you believe that it is time to abolish the income tax?

Please feel free to post a comment with your thoughts below…

No Federal Income Tax

If Obama Can Just Create A Trillion Dollar Coin, Then Why Do We Have To Pay Taxes?

If Obama Can Just Create A Trillion Dollar Coin, Then Why Do We Have To Pay TaxesIf Barack Obama can “solve” the debt ceiling crisis by printing up some trillion dollar coins, then why does the federal government need our money?  As another debt ceiling showdown approaches, many in the liberal media are suggesting that if Congress does not raise the debt ceiling that Obama should just have the U.S. Treasury create a trillion dollar platinum coin and use it to pay our bills.  It sounds crazy, but many notable voices (including Paul Krugman of the New York Times) are supporting this idea.  But if the federal government has had the power to create trillion dollar coins out of thin air all this time, then why do we have to pay taxes?  Not only that, why do we have a national debt?  If the federal government can just create money whenever it wants, then why does the federal government ever have to borrow it from others?  The U.S. Constitution actually grants Congress the power to “coin money”, so why is the Federal Reserve doing it?  Those are some very important questions.  Most Americans don’t even realize that the U.S. government never actually needed to borrow a single penny from anyone else.  The U.S. Congress has the authority to create debt-free money whenever it wants to.  Conceivably, the entire federal government could be funded without ever borrowing a single dollar and without ever receiving a single dollar from any of us in taxes.  Just imagine that – a nation without a single penny of national debt, no income tax and no IRS.  What a wonderful world that would be.  Of course there would be other potential dangers under such a system (such as runaway inflation), and those dangers would have to be addressed.  But the truth is that we don’t have to have an income tax or 16 trillion dollars of government debt.  We only have those things because we have chosen to have those things.

Sometimes, a crisis can illuminate options that most people had not considered previously.  As another debt ceiling crisis draws closer, many are looking for ways for the U.S. government to be able to continue to pay its bills if Congress does not authorize an increase in the debt ceiling.

If a debt ceiling agreement is not worked out, the U.S. government will soon only be able to pay about half the bills that are coming due after interest payments on the national debt (which will almost certainly be prioritized) are made.

That is why a lot of people on the left are pushing the “trillion dollar coin” alternative.  So how would this work exactly?  The mechanics were recently explained by Jim Pethokoukis on his American Enterprise Institute blog…

There are limits on how much paper money the U.S. can circulate and rules that govern coinage on gold, silver, and copper.  BUT, the Treasury has broad discretion on coins made from platinum.  The theory goes that the U.S. Mint would create a handful of trillion dollar (or more) platinum coins.  The President would then order the coins deposited at the Fed, who would then put the coin(s) in the Treasury who now can pay all their bills and a default is removed from the equation.  The effects on the currency market and inflation are unclear, to say the least.

In my opinion, if anyone in the federal government is going to be creating money out of thin air, it should be the U.S. Congress.  After all, according to Article I, Section 8 of the U.S. Constitution, it is the U.S. Congress that has been granted the authority to “coin Money, regulate the Value thereof, and of foreign Coin, and fix the Standard of Weights and Measures”.

But those that are pushing Obama to create a “trillion dollar coin” point to a law that Congress passed that allows the U.S. Treasury to mint platinum coins.  The following is from a recent CNN article…

Normally, the Federal Reserve is charged with issuing currency. But U.S. law, specifically 31 USC § 5112, also grants Treasury permission to “mint and issue platinum bullion coins and proof platinum coins.”

This section of law was meant to allow for the printing of commemorative coins and the like. But the Treasury Secretary has the authority to mint these coins in any denomination he or she sees fit.

But it wouldn’t quite be that easy.  According to a recent ABC News article, some elements of the coin design would have to be determined by legislation…

The more difficult part comes sometime after the decision is made to coin the platinum and before the Mint gets to work in sculpting the pieces.

At that point, the American people must decide whose face will adorn the trillion dollar trinket. The process to determine the “specs” of the coin, U.S. Mint Public Affairs Specialist Genevieve Billia warns, must be “determined by legislation,” creating the potential for another congressional impasse.

So we would likely end up back at square one.

But if printing up a “trillion dollar coin” does not work out, Paul Krugman of the New York Times has come up with another option…

Don’t like the platinum coin option? Here’s a functionally equivalent alternative: have the Treasury sell pieces of paper labeled “moral obligation coupons”, which declare the intention of the government to redeem these coupons at face value in one year.

It should be clearly stated on the coupons that the government has no, repeat no, legal obligation to pay anything at all; you see, they’re not debt, and therefore don’t count against the debt limit. But that shouldn’t keep them from having substantial market value.

Of course there is a very, very low probability that any of these wild ideas will ever be tried, but this debate has raised some very interesting points.

The truth is that we do not have to have a system where more money is only created when more debt is created.  We could have a system where the federal government directly creates debt-free money that is spent directly into circulation by the federal government.

In fact, this has happened before.

As I have written about previously, during the presidency of JFK a limited number of debt-free United States Notes were issued by the U.S. Treasury and spent by the U.S. government directly into circulation without any new debt being created.  In fact, each bill said “United States Note” right at the top.

Unfortunately, after JFK’s presidency no more debt-free United States Notes were ever issued.

But even before JFK, there were times when debt-free United States Notes were being used.  According to Wikipedia, United States Notes were first used during the Civil War….

They were originally issued directly into circulation by the U.S. Treasury to pay expenses incurred by the Union during the American Civil War. Over the next century, the legislation governing these notes was modified many times and numerous versions have been issued by the Treasury.

So why are we using debt-based Federal Reserve Notes today instead of debt-free United States Notes?

If the Federal Reserve did not exist and the U.S. government directly created money instead of borrowing it, it is conceivable that we could have a national debt of $0.00 today instead of $16,432,707,263,449.56.

Which option do you think our children and our grandchildren will wish that we had opted for?

In a system where the government directly created money, it is also conceivable that we could completely do away with the income tax and the IRS completely.  The U.S. once prospered greatly without an income tax, and it could do so again.

And the truth is that our system of taxation is broken beyond repair.  If you doubt this, just read this article.

So what would the downside be to such a system?  Well, of course rampant inflation would be a huge danger.  Allowing Congress to print up money whenever they wanted to would be playing with fire.  That is why it would be imperative for there to be a hard cap on what the federal government could spend.  For example, you could set the cap on spending by the federal government at 20 percent of GDP.  That way we would hopefully never end up looking like the Weimar Republic.

And the current federal debt could be paid down a little at a time using newly created debt-free currency.  This would have to be done slowly to keep inflation under control, but it could be done.

Of course if you wanted to continue to fund the federal government through taxation, there are other options that would still allow you to do away with the income tax.  For example, one of the ways that our founders intended for the federal government to be funded was through tariffs, and we could definitely raise a lot of money that way.  Plus, that would have the added benefit of making American companies much more competitive again and it would reduce the flow of American jobs out of the country.

So am I in favor of having Barack Obama create a trillion dollar coin to get around the debt ceiling crisis?

Most definitely not.  If it does not violate the letter of the Constitution (which I believe it does), it sure does violate the spirit of it.

But if the U.S. Congress decided to shut down the Federal Reserve and the IRS and they decided to abolish the income tax, and instead they started directly issuing debt-free currency directly into circulation, that is something I would very much be in favor of.

Yes, that system would not be perfect either, but it would be far more preferable to what we have today.

So what do you think?  Should we keep our current system of debt-based money, or would a system of debt-free money be better?

Please feel free to post a comment with your opinion below…

Trillion Dollar Coin?

There Is Not Going To Be A Solution To Our Economic Problems On The National Level

For those waiting for our economic problems to be solved, you can quit holding your breath.  There is simply not going to be a solution to our economic problems on the national level.  So why is that the case?  Well, it is because the economic policies of both major political parties are very, very similar when you take a close look at them.  Yes, that statement may sound downright bizarre to many Americans, but it is true.  Both major political parties supported the Wall Street bailouts, both of them fully support the job-killing “free trade” globalization agenda, both of them have dramatically increased the national debt when in power, both of them fully support the currency-killing policies of the Federal Reserve, and neither major political party would get rid of the income tax and the IRS.  And that is just for starters.  Yes, there are some minor differences when it comes to taxing and spending between the two parties, but the truth is that they are a lot more similar on economic issues than they are different.  What we desperately need on the national level is a fundamental change in direction when it comes to economic policy, but we simply are not going to get that from either the Democrats or the Republicans.  That means that there is no hope that the economic storm that is coming will be averted.

So why are the Democrats and the Republicans so similar on these issues?  Well, a big reason is because of who they are trying to please.

The reality of the matter is that most politicians do not really care about what you or I have to say.  Instead, what they are really concerned about is getting as much money for their campaigns as possible so that they can keep getting elected.

When you take a close look at the results of federal elections over the past several decades, it quickly becomes apparent that the candidate that raises the most money almost always wins.

So most politicians have learned to please those that fund their campaigns so that the money will keep rolling in.

Yes, there are a few candidates that are willing to rebel against “the system”, but they are few and far between and the major parties tend to marginalize them.

Once again in 2012, political races will overwhelmingly be won by those that raise the most cash.  The following is from Politifact….

In congressional races in 2010, the candidate who spent the most won 85 percent of the House races and 83 percent of the Senate races, according to the Center for Responsive Politics. That’s a large percentage, but it’s lower than what the sign indicated.

Indeed, the percentage for 2010 was lower than it had been in recent election cycles. The center found that in 2008, the biggest spenders won 93 percent of House races and 86 percent of Senate races. In 2006, the top spenders won 94 percent of House races and 73 percent of Senate races. And in 2004, 98 percent of House seats went to candidates who spent the most, as did 88 percent of Senate seats.

Once you understand how Washington works, it becomes easier to understand why our politicians do such stupid things.

For example, big corporations tend to donate large amounts of money to political campaigns and they love the “free trade” globalization agenda.

They love to import massive quantities of super cheap foreign goods so that they can undercut the prices of goods made in the United States.

They love to set up manufacturing facilities on the other side of the globe where it is legal to pay slave labor wages to workers.

The “free trade” agenda is great for the largest corporations, but it is horrible for the average American worker.

According to the Economic Policy Institute, the U.S. economy loses approximately 9,000 jobs for every $1 billion of goods that are imported from overseas.

Trade with other countries can be good as long as it is balanced.  Unfortunately, the U.S. trading relationship with the rest of the world is tremendously imbalanced.

In 2011, the United States bought more than 550 billion dollars more stuff from the rest of the world than they bought from us.

This trade deficit has enormous consequences that most Americans simply do not understand.

Over the past decade, tens of thousands of businesses, millions of jobs and trillions of dollars have left our country.

Our industrial base is being dismantled and we are rapidly becoming poorer as a nation.

According to U.S. Representative Betty Sutton, an average of 23 manufacturing facilities a day closed down in the United States during 2010.

Just think about that.

Every single day we lost 23 more.

Overall, America has lost a total of more than 56,000 manufacturing facilities since 2001.

Why do you think cities like Detroit are dying?

The truth is that we killed them with our idiotic policies.

America has a trade imbalance that is more than 5 times larger than any other nation on earth has.  We are losing wealth, jobs and businesses at a pace that is absolutely astounding.

It is neither “conservative” nor “liberal” to commit national economic suicide.

Our trade imbalance with China is particularly bad.  The U.S. spends about 4 dollars on goods and services from China for every one dollar that China spends on goods and services from the United States.

Does that sound fair to you?

China slaps huge tariffs on many of our products, they deeply subsidize their own national industries, the brazenly steal technology from us, and they manipulate currency rates so that their products end up being significantly cheaper than ours.

Our trade deficit with China in 2011 was nearly 300 billion dollars.  That was the largest trade deficit that one country has had with another country in the history of the world.

Yet both major political parties refuse to do anything about it.

Back in 1985, the U.S. trade deficit with China was only 6 million dollars for the entire year.

In 2011, our trade deficit with China was more than 49,000 times larger.

The consequences of this trade deficit with China are being felt all over the United States every single day.

For example, the United States has lost an average of 50,000 manufacturing jobs per month since China joined the World Trade Organization in 2001.

Do you support losing more than half a million manufacturing jobs a year?

If not, then you should be for “fair trade” instead of “free trade” where other nations can cheat us blind as often as they want.

The Economic Policy Institute says that since 2001 America has lost approximately 2.8 million jobs due to our trade deficit with China alone.

Do you think that the U.S. economy could use an extra 2.8 million jobs right now?

Sadly, if current trends continue things are going to get a lot worse.

According to Professor Alan Blinder of Princeton University, 40 million more U.S. jobs could be sent offshore over the next two decades.

So why won’t our politicians do something?

The United States has run a trade deficit every single year since 1976.

During that time, America has had a total trade imbalance of more than 7.5 trillion dollars with the rest of the world.

That 7.5 trillion dollars could have gone to support U.S. jobs and U.S. businesses.

Taxes could have been paid on that 7.5 trillion dollars.

Instead, it went out of the country and made foreigners wealthier.

So what is Barack Obama doing about all of this?

Well, Obama has been aggressively pushing for even more “free trade” agreements.  The Obama administration has inked deals with Panama, South Korea and Colombia and the Obama administration is making the Trans-Pacific Partnership (“the NAFTA of the Pacific“) a very high priority.

Well, Mitt Romney must be criticizing these moves, right?

No, Romney has actually criticized Obama for not pushing for more “free trade” fast enough.

Mitt Romney wants to make it even easier for jobs to go out of the country and for other countries to drain our wealth.  The following quote comes directly from the Romney campaign website….

Access to foreign markets is crucial to growing our economy. We must reassert American leadership in international negotiations, follow through on commitments we have already made, and push aggressively for advantageous new agreements.

So we are not going to see a change in direction in trade policy no matter who wins the next election.

Well, what about the national debt?

Are there differences between the two parties on this issue?

Sadly, there are only minor differences.

Both major political parties are packed with big spenders that have been spending us into oblivion.

Since Barack Obama entered the White House, the U.S. national debt has increased by $5,027,761,476,484.56.

That comes to $16,043.39 for every man, woman and child living in the United States.

What the Obama administration and the Democrats are doing to future generations is absolutely criminal.

So what about the Republicans?

Well, when the Republicans have had control of the White House they have run up debt “like a drunken sailor” as well.

If the Republican Party wants to have any credibility when it comes to fiscal issues, it needs to publicly admit that George W. Bush was a horrible failure when it came to the federal budget.

George W. Bush was a “big government” politician that dramatically increased the size of the federal government and spent money like it was going out of style.

He was not a conservative when it came to fiscal issues, and that is the truth.

Sadly, neither political party is proposing to balance the federal budget any time soon.  There are a few politicians that have suggested doing this, but they have been marginalized.

So why don’t our politicians support living within our means?

Well, the truth is that if the federal government balanced the budget today, it would result in a catastrophic drop in living standards inside the United States.  We are currently living in an era of debt-fueled “false prosperity”, and if that false prosperity were to disappear there would be riots in the streets of our major cities within months.

It is much easier for our politicians to continue to pile up more debt and to continue to kick the can down the road.

But this party cannot go on too much longer.  Already, the United States has more government debt per capita than Greece, Portugal, Italy, Ireland or Spain.

As you can see from the chart below, we are in a whole lot of trouble….

Our foolishness will catch up to us in a big way eventually.

Another area where the two major political parties agree is that they both fully support the Federal Reserve.

The Federal Reserve is supposed to keep inflation low, but the truth is that the Fed has absolutely killed the value of the U.S. dollar.  Just check out the chart below which was produced by the Fed itself.  It shows how dramatically the purchasing power of the U.S. dollar has declined over the years….

Keep in mind that the chart above is using official government numbers which actually downplay how much the U.S. dollar has been debased.

If inflation was measured the exact same way that it was back in 1980, the annual rate of inflation would be more than 10 percent right now.

By any measure, the Federal Reserve has been a colossal failure for the American people.  Since the Fed was created, our currency has lost more than 95 percent of its value and our national debt has gotten more than 5000 times larger.

The current Federal Reserve Chairman, Ben Bernanke, has a track record of failure that is legendary.  If you doubt this, just read this article, this article and this article.

But Barack Obama just loves Bernanke.  He nominated him for another term as Fed Chairman and he never criticizes anything that he does.

Thanks Obama.

So will things be any different under Mitt Romney?

Of course not.

During one Republican debate, Mitt Romney actually had the gall to try to explain to all of us why “we need to have a Fed“.

Mitt Romney says that he is “not going to take my effort and focus on the Federal Reserve“.

But the Federal Reserve is at the very heart of our economic problems.

Doesn’t Mitt Romney understand that?

The mainstream media is already telling us not to expect any significant changes at the Fed if Romney wins.  A recent Reuters article had the following headline….

“Analysis: A Romney win would likely change little at Federal Reserve”

Are you starting to understand why I am saying that there is not going to be a solution to our economic problems at the national level?

A great economic cataclysm is coming, and there is very little hope that it can be averted.

So what does that mean?

It means that we all need to start preparing to weather the coming storm on an individual level.

The nation as a whole may not change course, but as individuals and as families we can change course.

All of us can work to reduce our expenses, get out of debt, build up a six month financial cushion, learn to grow a garden and slowly become more independent of the system.

Both political parties are leading us down a road that will only end in economic disaster.

Instead of waiting for a “national solution” that is never going to come, you need to focus on being your own solution.

Time is short, so you better get ready.

Taxed Into Oblivion

In the United States today, we are being taxed into oblivion, yet it is being done so stealthily that most Americans don’t even realize what is happening.  Most people are fixated on federal income tax rates, but the federal income tax is only one of the dozens of different taxes that each of us pay each year.  The politicians have learned that people get really upset when income tax rates are raised, so they have found hundreds of other ways to raise taxes on us.  What most taxpayers in the United States today are facing is “death by a thousand cuts”.  When you add up all forms of taxation from all levels of government, approximately 40 percent of all the income in the country is taken in as taxes by government.  Large numbers of Americans end up paying well over 50 percent of their income in taxes, and many of them don’t even realize that it is happening.  We truly are being taxed into oblivion, and yet the politicians just keep coming back for more.

On all levels, government just keeps growing, and all of this government has got to be paid for somehow.  Politicians have become masters at finding ways to tax us so that we won’t even feel it.  They have an endless hunger to spend more money, and they depend on us to feed that addiction.  Today, the combination of federal government spending, state government spending and local government spending now accounts for a larger share of U.S. GDP than at any other time in our history.

Yes, federal income tax rates were significantly higher 30 or 40 years ago.  But virtually every other tax you can think of has gone way up since then or did not exist back then.

Federal income taxes definitely still hurt, but the reality is that where we really get hit is in all of the other taxes that we pay.  American families pay Social Security taxes, Medicare taxes, state income taxes, sales taxes, property taxes, death taxes, various excise taxes, gasoline taxes, tire taxes, utility taxes, liquor taxes, telephone taxes and cigarette taxes just to name a few.  The truth is that there are dozens and dozens of different taxes that most Americans pay each year, and there are a whole bunch of others that get passed on to us through businesses that we deal with.

Speaking of cigarette taxes, there is legislation in Congress right now that would send taxes on tobacco products absolutely skyrocketing yet again.

I don’t smoke and I never will smoke, but I find the attack on smokers by our politicians to be seriously offensive.  If smoking is legal, then leave them alone.  Don’t tax them into oblivion just because you don’t like what they are doing.

An excerpt from S. 1403 (The IDEA Full Funding Act) is posted below.  You will notice that a portion of this legislation even refers to itself as the “Saving Lives by Lowering Tobacco Use Act”.  They are openly admitting that they want to make tobacco so expensive that people cannot afford to use it….

SEC. 3. TOBACCO TAX INCREASE AND PARITY.

(a) Short Title- This section may be cited as the ‘Saving Lives by Lowering Tobacco Use Act’.

(b) Increase in Excise Tax on Small Cigars and Cigarettes-

(1) SMALL CIGARS- Section 5701(a)(1) of the Internal Revenue Code of 1986 is amended by striking ‘$50.33’ and inserting ‘$100.50’.

(2) CIGARETTES- Section 5701(b) of such Code is amended–

(A) by striking ‘$50.33’ in paragraph (1) and inserting ‘$100.50’, and

(B) by striking ‘$105.69’ in paragraph (2) and inserting ‘$211.04’.

(c) Tax Parity for Pipe Tobacco and Roll-Your-Own Tobacco-

(1) PIPE TOBACCO- Section 5701(f) of the Internal Revenue Code of 1986 is amended by striking ‘$2.8311 cents’ and inserting ‘$49.55’.

(2) ROLL-YOUR-OWN TOBACCO- Section 5701(g) of such Code is amended by striking ‘$24.78’ and inserting ‘$49.55’.

(d) Clarification of Definition of Small Cigars- Paragraphs (1) and (2) of section 5701(a) of the Internal Revenue Code of 1986 are each amended by striking ‘three pounds per thousand’ and inserting ‘four and one-half pounds per thousand’.

(e) Clarification of Definition of Cigarette- Paragraph (2) of section 5702(b) of the Internal Revenue Code of 1986 is amended by inserting before the final period the following: ‘, which includes any roll for smoking containing tobacco that weighs no more than four and a half pounds per thousand, unless it is wrapped in whole tobacco leaf and does not have a cellulose acetate or other cigarette-style filter’.

(f) Tax Parity for Smokeless Tobacco-

(1) IN GENERAL- Section 5701(e) of the Internal Revenue Code of 1986 is amended–

(A) in paragraph (1), by striking ‘$1.51’ and inserting ‘$26.79’;

(B) in paragraph (2), by striking ‘50.33 cents’ and inserting ‘$10.72’; and

(C) by adding at the end the following:

‘(3) SMOKELESS TOBACCO SOLD IN DISCRETE SINGLE-USE UNITS- On discrete single-use units, $100.50 per each 1,000 single-use units.’.

You can view the full text of this legislation right here.  Please notice that some of the tax increases are absolutely mind blowing.  For example, the tax rate on pipe tobacco is going from 2.8311 cents to $49.55.

Now that is a tax increase you can really sink your teeth into.

We are seeing “quiet” tax increases like this happen on every level of government all over the United States.

Of course I haven’t even mentioned all of the fines and fees and “registration” charges that state and local governments are hitting us with.

Have you gone to renew your car registration lately?  In some states (such as California) the fees have gotten absolutely ridiculous.

Speaking of California, it looks like they are getting ready to target cellphone users once again.

According to USA Today, California is getting ready to seriously jack up the fines for talking on a cellphone while driving….

The state Senate has sent a bill to Gov. Edmund G. Brown Jr. raising the basic fine for a first automotive offense from $20 to $50, the Sacramento Bee reports. For subsequent offenses, the fine would rise from $50 to $100. That’s not the worst of it: by the time state and local assessments are added on, the total for a first offense rises to between $208 to $328. For additional tickets, make that $328 to $528.

Yes, talking on a cellphone while driving is dangerous.  But hitting people with tickets of $300, $400 or even $500 is not about safety.  It is all about revenue generation.

Right now we are seeing an epidemic of speed traps all over the country.  State and local governments are desperate for money, and they see speeders as an easy source of revenue. You can read more about this phenomenon right here.

Speaking of “revenue”, that seems to have become Barack Obama’s new favorite word lately.  He seems absolutely obsessed with raising more money for the federal government.  The Obamacare law was absolutely packed to the gills with new taxes, but now he wants even more.

Yes, it is true that the wealthy are getting away with murder under our current tax system.  I find it highly offensive that many people that make millions of dollars each year are able to find ways to pay much, much smaller percentages of their incomes in taxes than I do.

But raising tax rates isn’t going to solve the problem.  Those that are masters at avoiding taxes are going to continue to do so.  Meanwhile, middle class Americans and small businesses will continue to get bled to death.

Our current tax system is fundamentally broken and needs to be completely thrown out and replaced.

However, no system is going to work until the federal government gets a handle on its spending addiction.

In the past couple of years, spending by the federal government as a share of GDP has been the highest that it has been since World War II.

You would think that there should be plenty of fat to trim, but as the recent debt ceiling deal clearly demonstrated, our politicians do not intend to significantly reduce government spending.

They are just going to keep borrowing, spending and finding more ways to tax us.

All of this nonsense in Washington D.C. is part of the reason why Americans are so displeased with Congress at this point.  According to Gallup, 84 percent of Americans now disapprove of the way Congress is doing its job, which is a brand new all-time high.

The truth is that sending more money to Washington D.C. is not going to “fix” things.

The federal government has multiplied in size over the past several decades, and yet the number of poor people just continues to increase.

Giving the poor more handouts may ease their suffering for a little while, but it is not the solution to their problems.  What they really need are good jobs, but our politicians have very busy setting up unfair trade agreements that allow millions of our jobs to be shipped overseas, and they continue to suffocate businesses in this country with mountains of ridiculous regulations.

No, the people that truly benefit when more money flows to the federal government are the fatcats that live and work around Washington D.C.

The past few decades have been a bonanza for government contractors, lobbyists and lawyers in the D.C. area.

According to the Washington Post, those living in the Washington D.C. metropolitan area now have a higher median household income than anyone else in the country….

Washingtonians now enjoy the highest median household income of any metropolitan area in the country, and five of the top 10 jurisdictions in America — Loudoun, Howard and Fairfax counties, and Falls Church and Fairfax City — are here, census data shows.

The signs of that wealth are on display all over, from the string of luxury boutiques such as Gucci and Tory Burch opening at Tysons Galleria to the $15 cocktails served over artisanal ice at the W Hotel in the District to the ever-larger houses rising off River Road in Potomac.

There is a ton of money in the D.C. area.  I know.  I used to work there.  Approximately one third of the GDP of the region comes from spending by the federal government.  Even during this recent economic downturn, the Washington D.C. region continues to do really, really well.

So, no, raising taxes is not going to fix what ails us.  It would just feed the monster that we have created in Washington.

We are already being taxed into oblivion.  Middle class America can’t take much more of this.

We need to change our entire approach to taxation in this country, because right now our tax system is fundamentally unfair and it is not working.

So what do all of you think about our tax system?  Please feel free to post a comment with your opinion below….

 

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