18% Taxes

Well it's tax day once again.  It seems the President and his party consistently ask that we pay our fair share.  In his most recent budget he makes an argument for more taxes to be collected.  He demonizes the other party (and maybe rightfully so) for not going along with his "revenue enhancements".  The Senate, controlled by his party, has not passed a budget in 5 years.  The Senate leadership wants us to pay our fair share.  The Affordable Health Care Act was supposed to reduce our costs, but now we are seeing that costs are going up, in some states almost double.  And no one, never that I have seen, will show the leadership to define just what the fair share is, just that they aren't paying it.  And the White House released the President's and Vice Presidents tax returns.  Mr. Obama paid 18% of his adjusted gross income in taxes.  Is that his fair share?

Here we have a family that lives rent free in the White House, has free security services, a chef, and has managed to sneak in almost a vacation a month this year, that is regarded as the most powerful man on the planet, and he only paid 18% in taxes.  I wonder if that includes the 5% rebate he is sending in from his salary? 

No matter what, former Presidents seem to do pretty good in retirement.  Just speaking engagements alone should help him put food on the table after he retires in a little over 3 years.  He will keep his security staff.  He will get a generous office budget.  And probably be able to play golf on military bases either free or extremely cheap.  Did I mention he gets a fairly decent retirement income as well?

This is exactly the problem I see with Washington Economics.  It never seems to apply to Washington.  During the current economic morass, Washington's economy has been booming.  A Congressman recently complained that her staff was unable to buy a bowl of soup for lunch.  How many of us would love a bowl of soup for lunch.  Instead we brown bag it to afford the gas to get to work in the first place.

And instead of focusing on the economy, something that is economically sensible, we have to have debates over the 2nd Amendment, or other economically unimportant things.  Note:  I do not think any amendment is unimportant, just from an economic sense, doing their jobs might actually help our situation.

It is not the tax rate that is charged.  And frankly, I don't care that he is paying only 18%, it is the hypocrisy that drives me crazy.  Looking at his family's income we find they showed adjusted gross income of $608,611.  When you look up the tax bracket, that level of income would be taxed at 39.6%.  Yet the President's family paid 18%, or less than half that rate.  Income levels for this percent would be much closer to $80,000 (or almost 8 times less than the President's income).  Why didn't he pay his fair share?  Another reason that tax rates are almost moot is that if the economy is down, so are tax collections, if the economy is up, tax collections go up too, regardless of the rate.

John F. Kennedy argued for lower rates, when the rates were lowered, collections went up, simply because the economy got a bump, remember the 1960s?  Then in 1980, Ronald Reagan argued for tax rate cuts.  When he got them, collections of taxes increased.  In both cases, the economy thrived after a rate cut.  The problem was that in both cases, when additional money came in, it was spent by Congress with no regard to the rainy day.  Remember Lyndon Johnson's war on poverty?  A noble undertaking, but it did little to help the poor.  President Johnson even figured out that the Social Security Trust Fund would be a great way to finance this war, and the other in Vietnam.  This is when they stopped saving money in the Social Security System, and started writing IOU's instead.  If any private equity firm treated 401K money the same way, they would go to prison.



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Is it not time we stopped the income jealousy?  After all, does it really matter what anyone makes, except you?  Is it time to admit that we have a spending problem?  When collections are up, why wasn't some of that money saved for the rainy day?  Then if we need stimulus, it doesn't cause a rapid and dangerous increase in the debt.  If we have saber rattling like now on the Korean peninsula, we could have the money to show our resolve.  If there is a disaster, we can use this fund to help alleviate the suffering.  Do we have to close the White House to tours, or can we find waste elsewhere to cut? 

We will probably never know.  As long as politics of welfare spending gets votes, neither side will have the stomach to change.  As long as the political elite circumvent the law, they will not feel the pain of deciding whether to buy healthier food for their kids, or shoes.  There is no incentive for them to change.  Unless the voters of this great nation make them.  We do have a choice, we can let these royals bankrupt us, or we can demand they steward our money to grow the economy.  Only time will tell.

Spend Well!