Tag Archives: Income Tax

VA Gov. McDonnell Suffering from Legacy Fever

VA Gov. Bob McDonnell does not see any reason why a comprehensive transportation package should not include corduroy roads.

VA Gov. Bob McDonnell does not see any reason why a comprehensive transportation package should not include corduroy roads.

Judging from Gov. Bob McDonnell preoccupation with liquids one would almost think he’s a naval man, rather than an Army reservist. First he tried to free demon rum from state control by privatizing Virginia’s liquor stores.

ABC privatization was DOA even with a Republican House of Delegates for reasons outlined here. Now Gov Bob is intent on reinforcing failure with his latest proposal to free gasoline from Virginia’s fuel tax.

Doesn’t the governor realize that as far as legacies go drinking and driving don’t mix?

Initiatives like these are the result of a severe case of legacy fever — a condition characterized by a politician’s feverish attempt to pass a law voters will remember after their term ends. Symptoms include policy delirium, proposal vomiting and head–count headaches.

Legacy fever doesn’t confine its damage to the infected politician. Visible scars include Obamacare, No Child Left Behind and The Great Society.

This is the last session of the legislature for McDonnell. And unless he wants to be smeared as “Gov. Ultrasound” for all time, he must convince the House and Senate to pass a major legislative proposal.

McDonnell wants his legacy to be a major transportation package that will inject $3.2 billion into Virginia’s transportation fund and give the Commonwealth enough money to both build and repair roads — a twofer that’s been missing in recent years.

The governor’s proposal eliminates the tax on gasoline, increases vehicle registration fees by $15, raises the sales tax by 0.8 percent, increases the portion of sales tax revenue dedicated to transportation by 50 percent and slaps a $100 fee on pretentious alternative fuel vehicles that burn French fry oil mixed with taxpayer subsidies.

In addition, Gov Bob is hoping for some kindness from strangers in DC. Part of the money comes from a tax he hopes Congress will authorize on internet sales, meaning those lazy shop–at–homers (who by the way aren’t cluttering up the roads) will be paying sales tax AND shipping on their purchases.

Unless additional money is found the fund for new construction will be completely empty by 2017 as every last penny goes to maintenance on roads already built.

Fortunately there is a simple solution to this problem. First index the state’s gas tax to inflation, since it has not been increased in 27 years. Then the increase from the gas tax should be offset by a decrease in the income tax making the result revenue neutral.

This also has the advantage of being the responsible conservative solution since people who buy gas tend to burn it on highways, in effect making it a user tax paid by those using the roads.

Unfortunately, we have a legislature dominated by irresponsible conservatives that refuse to raise any tax, regardless of need or justification. Grover Norquist speaks for them when he issued a fatwa against raising the gas tax ruling that voting in favor of indexing violates the No Tax Pledge.

Instead, Norquist says plenty of money for roads can be found by cutting spending in other areas of the budget. This is the policy equivalent of saying, “God bless you” after a sneeze. It does nothing to prevent the spread of germs but gives the speaker a benevolent glow without spending any time in theology school.

If it were possible to cut spending elsewhere to fund roads, it would have been done before now. The potholes you dodge and the gridlock you endure proves this is easier said than done.

McDonnell is obviously appreciates the value of a revenue neutral bill, but removing the tax from gasoline is a ham–handed attempt and profoundly unconservative. It means out of state drivers — which constitute 30 percent of the traffic on Virginia roads — pay nothing for the use of Virginia roads. In effect Virginia taxpayers will be subsidizing the beach traffic jamming our highways on summer weekends.

Transportation is a core government function, and if Gov Bob was certain Republicans would be in charge of government from now on, funding roads from the general fund might be marginally acceptable. But there is no guarantee Virginia voters won’t lose their mind and put Democrats back in charge.

Once you mingle transportation money with the rest of the general fund, it means that money is no longer earmarked for roads. Democrats have no problem raiding the transportation trust fund to spend on their social justice priorities, and they have done it in the past. Tinkering with the percentage of the sales tax that goes to roads will be child’s play for them.

On the other hand, when Republicans want to reverse the process and use general fund money on roads, the likes of Majority Leader Dick Saslaw (D–Spending) will accuse you of wanting to boil school children in asphalt.

My suggestion is the GOP leadership put a cold compress on the governor’s forehead and urge him to lie down in a darkened caucus room. Meanwhile, they can put all their efforts behind a transportation solution like mine that has the twin virtues of being both simple and conservative.

11 Deceptions About the Tax Debate

Below are the Whitehouse.gov’s “11 Facts About the Tax Debate.”  As usual, they are out of context, disproportioned, deceptive, and out right false briefing points.  Here are just a few reasons why they are nothing more than election year red herrings.  (A fitting expression for such socialist ideals.) WH.gov points are in italics.

1.     Nearly $1 Trillion would be added to our deficit over 10 years under the Republicans’ proposal to continue tax cuts exclusively to households making more than $250,000 a year and to the wealthiest estates.

Only 1 Trillion in 10 years?  That sure is a better than Obama’s plan strapping us with over 10 Trillion more debt in the past 4 years, and much more in the next 10.  Republican tax cuts to those who are producing jobs realistically stimulate the economy.  History tells us that lower tax rates produce greater employment thus greater tax revenue 100% of the time!  Are 100% to 0% not good enough odds?

2.     Only 2 percent of American households will benefit from the Republicans’ proposal to extend tax cuts for those with incomes higher than $250,00 a year.

Actually 100% of Americans will benefit.  Those 2% are the ones investing in America and want to do more so more people can be employed, pay taxes, spend and invest.  All studies of history and economic models show that the sweet spot is about 17% across the board.  I.e. a flat tax of 17% produces the maximum revenue by allowing maximum employment and investment.  Thus we’re killing our selves by trying to squeeze more money than we can afford, which kills our ability to earn more.

3.     Under President Obama’s proposal, only the wealthiest 3 in 1,000 estates would owe any estate tax.

So only the wealthiest 0.3% will pay estate taxes?  He’s bragging about this?  Notice he doesn’t compare it to a Republican plan; a sure sign they have a better idea.

4.     Over the past 4 years, a typical family making $50,000 a year has received tax cuts totaling $3,600 – more if they are putting a child through college.

The White House fails to mention that our average income decreased 3.02% from 2008 to 2010.  For a $50K household, a loss of 3.2% is $1,600.

Inflation due to the Fed creating money, “monetizing the debt,” “QE3,” “printing money,” “digitizing money,” you name it.  Inflation was 4.46% in 2011 alone.  That has lowered the value of $50K by $2,238.

Those two factors alone add up to $3,830.  So even if your “tax decrease” was real, your average $50K family lost $283 per year.  Does the WH call these bragging rights?

They also fail to mention that he’s just Nationalized ALL student loans, (so he can forgive a great proportion of them).  That will cost “average” taxpayers more money.  So there are several ways we all pay for other people’s children to go to school.  Obama said, “those making under $250,000 won’t see a tax increase.”  Yup, they just won’t see it.

5.     5 million families would no longer be eligible for the child tax credit under the Republicans’ tax proposal.

Truth be known, both parties support a modification to the Child Tax Credit.  It is due to expire, so the debate is only which plan to adopt.

Additionally, the Treasury Department reports that illegal immigrants filing tax returns using the Individual Tax Identification Number are receiving more than $1.5 billion each year from the federal government through the Child Tax Credit and the Additional Child Tax Credit.  Need a fix?

6.     Because Republican proposals cut the Earned Income Tax Credit, nearly 6 million working families with children would see their taxes increase – averaging $500 apiece.

The WH has cherry picked only the most conservative of many Republican plans.  Many, if not most, do not affect this Credit.  In support of those that do, this Credit pays able people for not working.  We have enough of that.  What is not mentioned is that this proposal also abolishes tax code exemptions and credits for the rich and big business.  Everyone who is able needs to pay something.  It keeps us all responsibly involved in government.

7.     The President’s plan includes almost $700 billion in tax credits to help middle class families pay for health insurance over the next 10 years through the Affordable Care Act.

Somehow we’re to believe we aren’t going to pay the $700 billion.  That $700,000,000,000 comes from taxes.  How many will loose jobs because companies are forced to cut employment or go bankrupt because they have to pay fines, (oops “taxes,” oh no “fees,” wait “taxes,” whatever)?  They’ll have to pay much more just to employ people.  That isn’t going to help employment or the tax base.

Thus Obama Care will increase the number of folks relying on taxes to support them and pay for their healthcare, thus driving that 700 billion estimate off the scale.  This is a “Cloward and Piven” plan, plain and simple.  “Overload the economic system through escalating the need for entitlements by the increased tax load to fund them.  Mr. Obama once taught the Cloward and Piven’s strategy to collapse capitalism.  Now he’s implementing it.

It has become common to name a Law the opposite of its worst feature to mask its true identity, i.e. ”The Federal Reserve” which is private and has no reserves.  Would you vote for the “Unaffordable but Compassionate Care Act”?

8.     The top 2 percent of households, with and average of $800,000, would see additional tax cuts under the Republican plan.

… as would most income brackets.  These wealthy people are already in the highest tax bracket.  This misleading information only mentions the cuts and not the main part of the plan that drastically removes tax exemptions in the first place.  Most Republican restructuring is designed not only to simplify taxes and reduce exemptions, but also to incite job creators.  Read the bills!

9.     Under the President’s plan, income tax rates for high income households would return to the same tax rates as in the ‘90s.  During that period, the United States created 23 million jobs and ran a budget surplus.

Remember the 17% rule?  Higher tax rates actually produce less revenue than lower rates above 17%.  When Bush lowered the tax rate in 2003, the tax revenue actually increased due to greater employment and higher wages.  Even Obama agreed to extend them for that reason.

It isn’t trickle down, it is flow down, and the government needs to be at the bottom of the flow, not the top.  Under the Republican plan everyone’s effective tax rate would be reduced, causing greater employment thus more tax revenue.  Businesses would be incented to locate and operate here in the US rather than overseas.

The government doesn’t create jobs, the people do.  Even government jobs are created out of the people’s tax dollars.  The government doesn’t build anything; we do, to include the government.  When the government uses our money to build inefficient, ineffective, failing, or just plain fraudulent institutions, we pay the price.

For example, the 90s is when the Liberals were most influential at inflating the housing bubble by incentives to lend to those who couldn’t afford those loans and eventually penalizing lenders that did not.  That escalated inflated prices that eventually had to burst.

10.     The President’s plan would continue the 10 percent tax bracket, which allows everyone to pay a 10 percent tax rate on their first $8,900 in income (or $17,800 for married couples).

Notice there is no mention of a Republican plan here, because under the Republican plan, middle-income families of four pay no taxes on the first $39,000 of its income.

So the President is bragging about doing nothing?  I have to admit, doing nothing has been one of his least problematic qualities.

11.     The Republicans plan eliminates the American Opportunity Tax Credit, meaning 11 million families and students paying for college would see an average tax increase of $1,000 each.

Actually there is no tax increase involved.  It means that the $1,000 credit for having a child in college expires December 31st 2012.  Both parties have competing plans for an amended version.  Reality always sounds a little different than WH talking points.

So shall we talk about unemployment?  How about why businesses move jobs overseas?  How about Agenda 21, (disguised as “Sustainable Development)?  Can we discuss how many more doctors will be created under Obama care?  How about illegal aliens; Homeland Security that considers “we the people” a greater threat than rife illegal boarder crossings?  Let’s discuss why the US prosecutes innocent supporters of the GOP (i.e. Gibson guitar), while allowing anything black, or Muslim, or alien, or Occupy movements go unprosecuted, (per stated administration policy).  How ‘bout that Medicare?  Social Security?  Where do those fit in your list to debate?

Barack Obama was right about “Hope & Change.”  Never has America hoped for change more than now.

God bless America.

The FairTax Series: America's Road To Prosperity Part 2

In this installment of the FairTax series I want to cover the cost of compliance and enforcement with today’s tax codes. Before I go into the complexities of compliance and enforcement I want to spend a few minutes dispelling the favorite myth of the anti-FairTax crowd. One of the things that put me off the FairTax at first was the pooh-poohing of the plan by those who don’t want to see it implemented. I bought into the lies and distortions because I did not have enough knowledge of the FairTax to dispel these negative stories. This part of the issue is covered a little further into the book but I want to get this cleared up before I go any farther. I want you to understand the plan clearly, without the distortions thrown at me early in my exposure to the FairTax.

There have been some in Congress, along with the “tax the rich more” crowd, who have suggested a Value Added Tax or VAT. This would be a national sales tax added on to the cost of everything we buy today. This tax, proposed to begin at about 2%, would eventually be up in the 16% or higher range as it is now in some European countries. THE FAIRTAX IS NOT THE SAME PLAN. Those who do not want to see the FairTax implemented deliberately confuse the two plans to scare people like me, and you, away from the FairTax. This worked for quite some time as I was not knowledgeable enough to discern the difference. Be assured that when you hear VAT used in the same sentence as the FairTax it is a red herring designed to put you off the most intelligent proposal I have heard in my 61 years, The FairTax.
Now to the costs associated with our current system. In the debate about income and employment taxes we seldom hear of the costs involved. I am a simple man with a high school education so it doesn’t take very long for the tax structure to get the best of me. I haven’t been able to find any concrete numbers but the federal income tax code has somewhere between 67,000 pages, as stated in the 2nd FairTax book published in 2008, and 86,000 that I heard a politician mention a little while back. I can’t remember which politician or exactly when he gave that number but I do remember 86,000 pages being mentioned. I really don’t care which number is right, both are absurd. My wife has a college degree in accounting in which she achieved a 4.0 grade point average. She is a very smart lady and extremely good with accounting but even she can’t keep up with yearly changes and the odd nuances of the ever changing tax codes. As a result we have our taxes done by a local Certified Public Accountant who is very good and keeps up with all of the changes from year to year.Let me describe the differences very simply here before I go on to the main subject of this article. The FairTax is instead of, not in addition to, income taxes, employment (Social Security/Medicare) taxes, inheritance (death) taxes, gift taxes, etc. The Value Added Tax (VAT) is in addition to, not instead of, these other taxes. This is a huge difference when it comes to deciding whether to support the FairTax or not. Once I understood the difference in the two plans I could plainly see that the FairTax is a plan that is in my best financial interest.

This year, 2011, the IRS has a $12.633 billion budget. That is $12,633,000,000 of our money going to an agency to insure that everyone, well almost everyone, complies with the tax codes. Even with that amount of money being spent they won’t get all of the money “due” to the government in taxes. The IRS is not the most efficient tax collection system. They can find me if I don’t pay but they have a hard time finding out if members of Congress, congressional staff members, and even the head man at the Treasury Department, Timothy Geithner paid their taxes as they should. As I mentioned in the first segment, they won’t collect these taxes from the local drug dealer, prostitute, illegal alien, or anyone else who gets paid under the table for work.
Now let’s talk about the cost to We the People directly. The last figures I could find on the cost to prepare income taxes were from 2005. That year the U. S. General Accountability Office reported that taxpayers paid between $240 billion and $600 billion to prepare and file their tax forms. That is for 2005, 6 years ago. My costs have almost doubled since then to the $315 my wife and I paid to have our taxes prepared in 2010.

So, let’s take a quick look at what we have for the cost of compliance. The IRS alone will spend $12.633 billion in 2011, at least, to insure that some of us pay our taxes. Those of us who pay our taxes spend as much as $600 billion, at least as of 2005, to have those forms prepared. The GAO also stated that taxpayers can expect to pay as much as 20% of the cost of their taxes to have the forms prepared by professional tax preparers. That is another 20% in addition to the amount of the taxes owed (ours isn’t that high). The figures in this paragraph come from the IRS site itself, not the FairTax book. I guess these numbers are great if you are a CPA or tax lawyer but not so great for those of us who have to spend that money.

For those who say “so what, I don’t pay much in taxes and the rich can afford to pay more” I have a new perspective for you. Every dollar that is spent to prepare tax forms or taken by government is a dollar that those “rich people” can’t use to provide jobs for working class people like myself, or you. Also look at the downstream effects. Corporations and the “rich” who own businesses factor their tax liability into the prices they charge for their products and the wages they pay their employees. One way or the other we all pay for the taxes that are heaped upon those we consider “rich”, and those “evil corporations”. People who own businesses own them to make money for themselves to support their families primarily. They are going to make money regardless of how much they are taxed, or they are going to go out of business and let their employees fend for themselves in the employment lines. When they pass those expenses on to the customer it comes to the point that customers pay the taxes in the end through the cost of the product. The bottom line is that corporations don’t pay taxes, the customer pays the taxes. The corporation just becomes the tax collector for the federal government because that money goes straight to bureaucrats and politicians.

The economists who have studied the tax structure and developed the Fair Tax plan have determined that there is a 22% tax liability built into everything you purchase, above and beyond state and local sales taxes. This is where things get a bit complicated and are difficult to comprehend. For example, let me use the wagon we bought for one of our grandchildren last fall. We paid $99, not including sales taxes, for a small wagon with wood sides. These wood sides were barely stronger than balsa wood, not the hardiest or strongest of woods. That may or may not sound like a lot of money but let me delve into how the price of that wagon was arrived at.

The wagon is made of metal, with rubber tires and wood siding. Each of these materials has a manufacturing process. The ore for the metal has to be mined, processed into steel, stamped into shape, painted, packaged, and shipped to its final destination, the store where we purchased the product. The wood for the sides and the rubber for the tires go through this same process. At each step of the process taxes are assessed for the materials and labor needed to complete the process and those costs are included in the final price of the product. By the time we purchased that wagon, $22 of the cost were the built-in taxes added to the cost of producing that product. This includes evaluating the tax costs of those who provide the machinery that makes the wagon. So I pay roughly 32% of my income to the government and then pay another 22% in federal taxes, not counting state and local sales taxes, to purchase the wagon for my granddaughter. So we have a wagon I could have bought for $77 now costing $99.

Take out your latest pay stub and look at it. Look at the Gross Pay box, and then look at the Net Pay box. Now go back and look at the various deductions, federal income tax, social security/Medicare tax, miscellaneous federal taxes, and see how much they take from your paycheck each time you get paid. Quite an amount going to Congress to waste on themselves isn’t it? (The FairTax stops the 32% I pay on my income but doesn’t raise the 22% I pay for the wagon.)

If you will stop and think about it for a moment the current system is a can of worms that is so ungainly and complicated even those who write the tax codes can’t comply. Don’t believe me? Do some research on Rep. Charles Rangel (D- NY), the former chairman of the Ways and Means Committee in the House of Representatives. They write the tax laws and he just got pinched, or hand slapped to be more accurate, for evading millions in taxes. He claims he didn’t understand the laws and made a simple error, to the tune of several million dollars. He had the nerve to stand on the floor of the House of Representatives and complain about how complicated the tax codes are. Rangel writes those tax codes. You try to make that excuse fly and see if you find yourself with a finger wagged in your face or you join Wesley Snipes in prison for tax evasion.

The FairTax puts a stop to all of this nonsense. No need for the IRS, no need for complicated forms and CPA’s or tax lawyers, and a full paycheck coming to you every payday. How much would it help if the drug dealers were paying a consumption tax on their fancy cars, boats, airplanes, etc? What about the millions of tourists who visit the United States every year? Under the FairTax plan they would be helping pay the taxes that support Social Security, Medicare, Medicaid, and social welfare systems. Right now almost 50% of American citizens do not pay any income tax at all, not to mention the illegal aliens who use an overly large portion of our “free” services. What if John Kerry had to pay taxes on the $7 million boat I mentioned in the introduction to the series!!!!!!!!

How would you like to get a gross pay check instead of a net pay check? How far would that money go to help you provide for your family? You are paying a 22% tax on everything you buy, food, clothes, a bicycle for your child, a car to get to work in, shoes for your feet, light bulbs, toilet paper, food, everything. Imagine not having to pay the income tax on top of these embedded taxes. And a bonus is that it wouldn’t hurt the “poor” people in our society. Even those paying no income and social security taxes are paying the embedded taxes.
So let me review what we have learned in this installment. We the People are paying millions to have our taxes prepared by professionals because the tax codes are too complicated for us to do it on our own. The IRS will spend billions on auditing and compliance, for those of us who they audit. Those who engage in illegal activity do not pay income and social security taxes while those of us who are honest hard working folks pay through the nose. The “poor” aren’t going to be hurt by this. And best of all, We the People can be rid of the IRS, and take the favoritism and vote buying out of the hands of the politicians. Those who use taxes to increase their power, wealth, and prestige through taxation lose a great deal of that power and give it back to We the People where it belongs in the first place.

In the next installment I will delve into the business and financial aspects of the FairTax, how it would help in bringing business and manufacturing back to our shores from other countries, and why the money being hidden in offshore accounts would be brought back to provide jobs and increased opportunity for American citizens.
I submit this in the name of the Most Holy Trinity, in faith, with the responsibility given to me by Almighty God to honor His work and not let it die from neglect.

Bob Russell
Claremore, Oklahoma
November 25, 2011

The FairTax Series: America's Road To Prosperity, Part 1

This is the first of a 5 part series I am writing based on the book “The FAIRTAX: The Truth”. In the series I take a 300+ page book and condense it down to a virtual “cliff notes” version designed for the novice political reader. I designed the series for those who are not very knowledgeable about politics or the tax structure and how it affects all Americans. I encourage eveyone reading the series to buy the book and get the full effect of the policies in place today and see how the FAIRTAX will change the dynamics of government financing.

A couple of years ago I began hearing about a new concept in taxation. This new concept is called The FairTax. I didn’t pay much attention because I thought “how is any tax fair?”, when some pay and  some don’t. At first I dismissed it as another scam to throw me off the track of an out of control government looking for another way to hoodwink me into paying more of my hard earned money into their grand spending plans.

I have long since grown tired of paying so much of my money into ever growing but useless government programs that pay people to sit on their butts and spend my money. Welfare expenses keep going up as more and more people find ways to game the system by having babies, faking injuries, working for cash under the table, etc. The ultra-rich hide their money in “foundations” or overseas to avoid the taxes I have been paying for 45 years. All of them, rich and poor are getting over on the other working stiffs who are too stupid, too honest, or unwilling, to do these things. These money pits keep growing as the amount of available income to tax drops.

One of my pet peeves with income tax is those who don’t pay any. While I was paying 32% in my working years the local drug dealer was paying nothing. The local prostitutes who hang out on street corners in the bigger cities or work out of high priced hotels were paying nothing. The welfare cheats who sit around finding ways to game the system for their own benefit have no intention of doing anything to benefit society, or themselves for that matter. The illegal aliens who were working for cash were paying nothing. I had noticed the illegal aliens especially. They were everywhere and driving much nicer vehicles than I was, or am now driving (I don’t hang out where the hookers hang out). I was paying a 25% income tax, a 7.5% social security/Medicare tax, plus state taxes, and being told the government couldn’t afford for me to retire while those not paying taxes lived the good life. I struggled, they flourished. That is when The FairTax began to make sense to me.

I heard Neal Boortz one day talking about this new plan on his radio show. I listened with interest and thought it sounded good but never really did any more to learn about The FairTax. In the last election cycle, the 2010 mid-terms, I kept bumping into Carol Chouinard and she kept handing me literature about The Fair Tax. I took the information and looked it over without really spending a lot of time educating myself on this new concept. Interesting but, ehhhh!!!!

One day I was going through a stack of papers that had accumulated over a few months, actually several months, and found the literature Carol had given me. As I read through the brochures and leaflets I began to realize that this was not the run of the mill scam to get more of my money. This was an idea that made sense to me once I really looked at it.

Carol is the local guru on The FairTax. She lives in Rogers County, 2nd Congressional District, State of Oklahoma. She travels throughout Eastern Oklahoma, or anywhere else for that matter, presenting The FairTax to any group or person who will give her a chance to enlighten them. I ran into her again the other night and we got to talking about political issues and The FairTax came up. Well, I was complaining about the current debt ceiling debacle and how to deal with it. Carol began to explain some more about how The FairTax was the answer to much of the problem.

As I listened to her a light bulb came on in my head, and the squirrel began to spin the cylinder. The things I had read came back to me and began to make sense. I began to remember about the way our tax system keeps hard working honest people in bondage while those who don’t mind cheating skate by without paying anything, only taking from those of us who do things the right way. Carol gave me a book about The FairTax. It is the second book called FairTax: The Truth. The first book, The FairTax, came out in 2005. This book was published in 2008 so is 3 years old as I start this article. Much of the information I will include in future articles about The FairTax will come from updates from the FairTax web site as I want to give you the most up-to-date information and statistics available.

One solution I see to our fiscal problems in this plan is the title, The FairTax. From everything I have read and the research I am doing, this plan solves many of the financial problems we face as a nation, the issue of money paid in taxes. I find that this plan is aptly named. I often hear Democrat and sometimes Republican politicians, especially those in Washington, cry about how “the rich” get over by not paying enough taxes. Yeah, like the politicians pay “their fair share”. Remember the hullaballoo a few months ago about Senator John Kerry, the one who parked his multi-million dollar yacht, $7 million yacht to be exact, on the far side of the bay because the state taxes on that yacht were cheaper there than on his side of the inlet? $500,000 per year cheaper to be exact. So much for Washington’s multi-millionaire insiders being concerned about paying their fair share of taxes. Hmm, I wonder where I am going to park my $7 million yacht. Oh, never mind, I don’t have one.

I also hear many “poor” people make the same statements, “the rich need to pay more taxes”. The problem with the “poor” complainers is that most of the ones I know don’t pay any taxes at all either. Most of the “the rich need to pay more taxes” crowd, at least the ones I know personally, are on the dole. They are drawing welfare, food stamps, social security disability, state aid, etc. Many of them either don’t work at all or work part time. They pay nothing and spend much of their time complaining that they don’t “get enough help from the government”. They have cell phones for themselves and their children, several have big flat screen HD televisions, complete with the latest game consoles, cable TV service, cigarettes, and are usually well stocked with beer in the fridge. Actually, I need the “rich” people to continue to be “rich”. They are the ones who will hire me, hopefully, so I can make a little money. Poor people never seem to hire me for anything.

In the spirit of “transparency”, my wife and I both have cell phones, we have cable TV service, and one 37 inch flat screen HD television set. Before you say “AHAH!!!” let me offer a caveat to this. We don’t get any help from the government and are not exactly in the “rich folks” category. I am retired but not old enough to draw social security, my wife works a full time job, and we have a small Mom & Pop business that gives me a little work and usually provides us very little in the way of profit. As a matter of fact, if the business doesn’t make a profit in 2011 we are going to have to shut it down. I work part time for a friend when he needs help on a project but the rest of the time I spend working on and around the house. We have a 1976 Chevy pickup that my father-in-law gave to us when he became unable to drive. We have a 1995 Ford Escort that my mother-in-law gave to us when she became unable to drive. We also have a 2004 Dodge PT Cruiser with over 100,000 miles on it (it was a demonstrator model). We don’t owe any money on our cars, and live in a 101 year old house with a $60,000 mortgage. Not exactly Beverly Hills here, closer to Green Acres, but we don’t get any government assistance either.

To get back to the point of this article, our nation cannot keep going the way it is financially. We cannot continue to borrow and spend, drive businesses out of the country, and raise taxes on the “rich”, those making $250,000 per year or so, the small to medium businessman/family who provide the bulk of the jobs in this nation. We have to do something to bring the jobs back to the United States. We need to make it feasible for those who hide their money to use that money to provide jobs so those who desire to work but can’t find a decent job can get back to work. Giving people unlimited unemployment pay is not the answer to prosperity, it is a handout not a hand up. Many of those drawing that unemployment would work if they could find a job. Some of them are lazy bums that are looking for a handout but most, and I do mean MOST, are honest hard working people who just want to provide for their families.

The FairTax is a method to accomplish this task of financial recovery and prosperity. In the next installment of this series I intend to delve into how our current tax structure is designed to inhibit rather than enhance prosperity. I will cover the costs of enforcing and complying with the current tax code and how it affects every person in America, tax payer and non-taxpayer. The FairTax books are a treasure trove of information about how our financial system works, or doesn’t work, and what We the People can do if we will stand up and demand that the politicians change the way they do things. Other installments will cover more aspects of The FairTax plan and how we go about getting it implemented by politicians that are more concerned about themselves than We the People. Elections are only 11 months away, so let’s get to work changing our future. God Bless America!

I submit this in the name of the Most Holy Trinity, in faith, with the responsibility given to me by Almighty God to honor His work and not let it die from neglect.

Bob Russell
Claremore, Oklahoma
November 25, 2011

Reminder: Tax Day is Tomorrow, A Trip Down “Memory Lane”

     April 15th is our national tax day deadline. This is the day many hard working Americans will run around frantically trying to get the income tax statements mailed into the IRS by the stroke of midnight, lest the nasty collection agents and thuggish IRS bullies start threatening anyone who has missed this all important deadline. If you will notice in the aforementioned group of taxpaying Americans, they were referred to as hard working, which certainly leaves the four and a half day weekend- loving politicians out.  Most of the time they leave on Thursday afternoon and waltz into work sometime on Tuesday.  When it comes to the tax man imposing strict penalties and interest charges on Americans who miss the April 15th deadline, this also appears to only apply to the hard working taxpayer and not the members of Congress.

   Is that Senator Claire MCCaskell imitating the “scout’s honor” sign, and promising America that she will actually remember to pay all of her taxes this year in the picture at the left ?

    I say the hell with them,why don’t we all just ” forget ” to meet the IRS deadline of April 15th, and not send in those payment checks ?  We can just follow the lead of the politicians and their forgetfulness. Sen. Claire McCaskell (D-Mo)    just ” forgot ” to pay her taxes on an airplane for over 4 years and paid no penalty or did any jail time either. We were told that she wrote the check for her back taxes right away, and will sell the airplane involved in her forgetfulness to pay her fair share of taxes. I would like to see the actual check and IRS thank you note for Claire’s stated payment for  the almost half a million dollars in taxes that she just forget to pay for over four years. I recently asked Claire on twitter just how much jail time she did for the felony of evading pay-ing income tax for four years and never received a reply. Claire did have enough time to announce her next TV appearance on twitter, yet was too busy to answer the question of what jail time the big bad IRS gave her for her felony forgetfullness. She also refused to answer just how much in ” penalties ” she had to pay for it. Maybe the hard working taxpayers should just send in a note with their income tax return statement to the IRS that says I have a case of Claire McCaskell forgetfulness, and therefor I must have forgotten to include my payment check this year. Check with me in four years, maybe I will remember to pay it then,  just like Claire did, Please do not threaten me with those silly penalties and jail time either , as we now know you do not enforce them any longer.

    Another forgetful Democrat’s name you can write on your IRS statesment of non-payment this year is Congressman Charlie Rangel. Either the IRS publishes the proof that he paid all his back taxes and interest penalties for his forgetfulness, or we send in the Charlie forgot to pay his taxes for several years and so did I this note in leiu of a payment check.  Ya see, in 1987 Charlie purchased a luxury rental unit in Punta Cana Yacht Club in the Dominican Republic. This is in a yacht club people, not the urban ghetto slums of America, and it rents for a whopping $1100.00 dollars a night in peak season. First Charlie emphatically said there is no unreported income, period. Then he tried to blame it on his wife’s incompetence. next he was found to have under-reported the income from this luxury rental property in 2004, and 2005 reporting less than 5 grand in income  for the whole year. We pay income taxes on a yearly basis Mr. Rangel, and your property goes for 5 grand a week during peak season not 4 grand a year! In the end he remembered that he failed to pay income taxes on 75 grand over 7 years. Did he go to jail for felony income tax evasion ?  Not only did he not go to jail, he still sits in our Congress demanding that other people pay more in taxes, and also paid no penalties or interest for the 7 years on income tax evasion. That is a hell of a lot of forgetfulness there, Charlie.

     Tax day is tomorrow. While we must remember that tax laws and deadlines, penalties, interest and jail time will only be applied to the working man in America and not the career politicians that are supposed to work for the people, please remember Claire and Charlie as you write out the IRS payment check. Or, you could simply write out the ” I forgot just like Charlie and Claire did ” note, in leiu of a payment check.

Recent Legislation Allows Congress to Track You

The new paradigm in Congress: Pass legislation first, then figure out what’s in it.  We have certainly learned much about the worthless health care reform bill and now a real head scratcher.  Section 9006 of Obamacare amends section 6041 of the IRS code so that when you buy or sell more than $600 of anything, within a fiscal year, you have an obligation under the new law to issue 1099s.

The purpose of the 1099 form has traditionally been to report income for contract labor.  In fact, contract work is often referred to as working under a 1099.  Now, the government may have chosen to use it to track something else: precious metals, barter and any other activities the government wants to track.

Combining section 6041 of the IRS code with the amednment (section 9006 of Obamacare) yields the following according to  FreeRepublic.com post

All persons engaged in a trade or business and making payment in the course of such trade or business to another person, of rent, salaries, wages, amounts in consideration for property, premiums, annuities, compensations, remunerations, emoluments, or other gross proceeds, fixed or determinable gains, profits, and income (other than payments to which section 6042(a)(1),6044(a)(1), 6047(e), 6049(a), or 6050N(a) applies, and other than payments with respect to which a statement is required under the authority of section 6042(a)(2), 6044(a)(2), or 6045), or $600 or more in any taxable year, or, in the case of such payments made by the United States, the officers or employees of the United States having information as to such payments and required to make returns in regard thereto by the regulations hereinafter provided for,shall render a true and accurate return to the Secretary, under such regulations and in such form and manner and to such extent as may be prescribed by the Secretary, setting forth the amount of such gross proceeds, gains, profits, and income, and the name and address of the recipient of such payment.

Why would the government need to do this?  Gold isn’t used in any significant quantities for the performance of business transactions.  Do the Bourgeoiscrats in Washington worry that the dollar will decline to a point that more Americans will start using alternative methods of commerce like a barter system or gold?  Or is there some other reason for tracking precious metals – specifically gold.

In the South during the civil war and reconstruction, currency became worthless.  Southerners didn’t turn to gold as form of currency, they reverted to the barter system.  The new law says that a 1099 should be created if it transaction exceed $600.00 in a single year.  So although some feel that this is an attempt of the government to track commercial transactions paid by other means than dollars – that, at first, seems unlikely.  An article at Rofasix’s blog explains the case that the government is planning to track barter-based transactions

The government wants to make it illegal to have a transaction such as a barter or trade that goes unreported to the state. So now, whatever the exchange, if you don’t file a Form 1099 you just broke the law. The reason for the need the thousands of new IRS agents as well as the massive 12-gauge pump shotgun buy for the IRS starts to become clearer now, doesn’t it?

While a nefarious purpose seemed plausible, preventing untaxed barter commerce did not seem to me to be the target.  The amended law clearly defines that the transactions must result in $600.00 of payment for services or goods within a fiscal year, right?  The law seems to quantify itself using U.S. dollars and would therefor not apply to in-kind trade.  But as a  David Ganz  post at Numismaster.com pointed out:

It doesn’t matter in what form payment is made, whether cash, check, credit card, or Yap stone money, the $600 threshold applies.

That’s disconcerting at a minimum and Orwellian at it’s worst.  David Ganz makes the case that it is the worth of the goods, regardless of form of payment.  The law is not clear here, so David may have something.  This would force Americans to report all forms of trade and if it were a barter trade, wouldn’t both sides have to report it?

Another possibility is that the $600.00 amount could be used to track the purchase, sale and trade of gold.  This has been speculated to be the original intent of the law.  For what purpose?  In, “Inflation and How it May Affect You”, I used the government’s own historical actions to explain the issue with gold:

While gold is a hard asset, I have one basic concern with owning gold as a hedge to inflation. If gold becomes a better currency than paper money, the government could do what it has done in the past – take it from you. In 1933 President Roosevelt forced citizens to sell all of their gold at a price that had not adjusted for inflation (roughly $21.00/ounce), once the government had all of the gold, they re-adjusted it for inflation and deemed it worth $35.00/ounce. Gold did not function well as a hedge in that case, and I believe a liberal government would do the same thing again to increase the money supply if all else had failed (which it would have if we were relying on gold as currency).

It becomes obvious why the government may want to know who has gold so that they can make sure they get it all at the pre-inflation price and can resell it after re-adjusting it’s value.

This could also be a way that liberals are seeking to control activities that they cannot constitutionally control.  How about closing the “gun show loophole” without specifically writing a law?  That hunting rifle someone buys at a gun show.. previously, no federal forms were required, but now – if it’s worth $600.00, I have to tell the government that I bought a gun and who I bought it from.  If I trade one gun for the other, we both have to tell the feds about it or we are guilty of tax evasion.  Imagine all the other freedoms the government could impinge upon using this section of the health care law.

Speaker Pelosi told us we wouldn’t know what was in the health care reform law until it was passed.  The hits just keep on coming.