Tag Archives: IRS

IRS Insider Exposes Federal Reserve Coup and IRS Fraud

YouTube Description:

Joe Banister is the first and thus far only IRS Criminal Investigation Division Special Agent ever to conduct, while serving as a special agent, an investigation into allegations that the IRS illegally administers and enforces the federal income tax. He respectfully reported the results of his investigation to his IRS superiors, up to and including the IRS Commissioner. Rather than address the legitimate concerns raised by one of their own distinguished investigators, his IRS superiors suspiciously refused to address the chilling evidence of IRS wrongdoing raised in his report and instead encouraged him to resign from his position. Observing that IRS management intended to cover up the deceit and illegal conduct alleged in his report, Banister chose to resign from his position so that he could report his findings to the American public. In effect, Banister had to resign from his position in order to abide by his oath to support and defend the U.S. Constitution.

IRS Punishes Excellence: The Tax Burden on Olympic Athletes

This week, the best of American athletes, who’ve spent years putting hard work and effort into training for their respective sports, are in London for the Olympics.

It’s a wonderfully capitalistic competition- the best, the most talented, the hardest working from around the world competing to see who is the best. Excellence is rewarded with medals, international recognition and the personal satisfaction of knowing that your dedication has propelled you to victory.

Yet, how does America, the supposed bastion of the free market, reward the excellence of their athletes upon their return home?

By taxing them of course.

United States tax law states that U.S. athletes, who face a top tax rate of 35%, must add their Olympic medals and prizes to their taxable income.

Americans for Tax Reform notes that a gold medal is worth $675, a silver medal is worth $385 and a bronze medal’s worth is under $5.

Their is also a cash prize that accompanies each medal won- $25,000 for gold, $15,000 for silver and $10,000 for bronze.

The following chart, from Americans for Tax Reform, shows the tax burden, graduated by medal type, that athletes pay on each individual medal they receive:

  Medal Tax Prize Tax Total Tax Burden
 

Gold

 

$236 $8,750 $8,986
 

Silver

 

$135 $5,250 $5,385
Bronze $2 $3,500  

$3,502

This astounding tax on excellence is made even worse by the fact that U.S. athletes are virtually the only competitors who are taxed for their winnings, because the U.S. is one of the only countries that taxes worldwide income- income earned overseas by taxpayers.

However, Tea Party favored Florida Senator Marco Rubio is making an attempt to end the tax. Calling the American tax code a “complicated and burdensome mess that too often punishes success”, Rubio introduced a bill that would end the tax on Olympic medals.

In Deep with Michelle Ray – May 17

When: Thursday, May 17th, 10pm Eastern/7pm Pacific

Where: In Deep with Michelle Ray on Blog Talk Radio

What: Join Social Media Director of ConservativeDailyNews.com, Michelle Ray (@GaltsGirl) as she discusses the issues that impact America.

Tonight: Breitbart stirs up the birthers, criminal monetary policy, the IRS loves illegal immigrants, and Ron Paul bails… kind of.

 

Show Recording: (Available after show)

The FairTax Series: America's Road To Prosperity Part 5

In this final installment of the FAIRTAX series I want to review the content of the series and give a few personal thoughts on our country, our system, and how I see the FAIRTAX being an integral part of the solution to our debt issue, though not the only aspect, and of how we get the United States back on steady financial ground.

As I write this series, our nation owes more than $14 trillion to other nations, mostly Communist China. Our debt ceiling has just been raised to about $17 trillion, money that will surely be spent as fast as government presses can print it. Our overall unfunded liabilities, including Social Security, Medicare, Medicaid, and all of the other unfunded promises run in the neighborhood of $130 trillion depending on which numbers you believe. From watching our esteemed federal government the last 40 years, I tend to lean towards believing the higher numbers, with no foreseeable end in sight to the irresponsible activities of those elected to “govern” us.

It is apparent to me that cutting taxes, changing the tax structure, or confiscating every dollar of We the People will not do all that is necessary to solve our financial woes. We face basically two major problems. One is government spending, a matter I will delve into later. The other problem is taxation. The FAIRTAX is designed to be revenue neutral, which means it won’t destroy government funding as some alarmists would have you believe. On the other hand, the FAIRTAX will not raise the cost of everything you buy by the 30% that the alarmists would also have you believe.

I would much prefer to receive the entire paycheck and decide for myself how it is used. The studies that have been done to show why companies locate overseas have been overwhelming to me. The cost of labor is being driven ever higher by the tax structure, which is a never ending catch-22 situation. The more taxes paid by those doing the hiring the less there is for them to pay We the People for work. The more I have to pay in taxes the more money I need to combat inflation. Every penny collected in taxes makes it more difficult to survive and prosper. Every job shipped overseas due to the tax structure, prohibitive regulation, and government “oversight” makes our nation that much less prosperous and safe.

Those who say “tax the rich more” don’t realize, or don’t care, that the money paid in taxes does not benefit the overall financial situation of the nation. Higher taxes on the “rich” doesn’t make the poor any wealthier, as a matter of fact, it has the opposite effect. A poor person never provided me with any income. If the reverse was true Communism would not fail everywhere it is tried.

I see that out of 500 company CEO’s surveyed, 80% said that under the FAIRTAX they would build their next production facility in the United States, and the other 20% would move their entire operation here. That causes me to believe that those jobs that have gone overseas would be right back here and we would find ourselves in the position of having more jobs than applicants, a good position for the working class people as that would cause wages to rise. This in turn adds to the taxable income available. More jobs mean a broader tax base, more income for the government coffers, and more prosperity for more people.

Under our current system, those who produce legally pay the taxes. Under the FAIRTAX everyone would contribute. Those here illegally and working under the table for cash would contribute. Drug dealers, prostitutes, and tourists would also contribute to the tax structure where they don’t do so now. I can’t find any reason to not like the FAIRTAX system.

The Pre-bate is designed to take into account the cost of taxes on the basic necessities of life. I like the idea of food, medicine, utility costs, and other necessities being tax free, up to the poverty line. Every penny I don’t have to pay to the government in some form of tax is another penny I can spend on my family to make our quality of life better. This part of the FAIRTAX will benefit those at the lower end of the financial spectrum greatly as more money would be available to improve the quality of life for those with less to start with. If I choose to save money instead of spend it I can benefit where under the current system I can only save after the greedy politicians have taken their cut from my hard earned wages.

Today, we find about 45% or so pay no income or employment taxes at all and many of these complain that the 55% who do pay income and employment taxes aren’t paying their “fair share”. I find this rather ironic. Someone who pays nothing complains about someone else is not paying enough, not paying their “fair share”. I wonder how much the “fair share” of those not paying anything would be if the playing field was level. I believe that everyone should pay at least some taxes. We all have a stake in the safety and prosperity of the United States, not just the “rich”. This issue has been used by politicians for my entire life to divide and conquer for their own benefit, not for the benefit of We the People.

Remember, government does not produce wealth; they only take the production of others, filter it through their pockets, and then give it to those they deem deserving, mostly those who are too lazy to work for their keep and know how to game the system for their own benefit. Politicians use tax rates to buy votes. The latest figure I have seen, as of 2009, say that 28 cents of every welfare dollar actually goes to help recipients. The other 72 cents goes to “administrative costs”. I fail to understand how the current system “helps” anyone at all. I would think that a job paying money directly to a wage earner would be a much more efficient way of providing sustenance for people.

As any other decent American, I believe that taking care of those who cannot take care of themselves is the responsibility of all able bodied people. Paying women to have baby after baby to be able to stay on welfare rolls, those faking injuries to draw SSI, and those who are drug addicts and use that as a “disability” to draw SSI are all problems that are not “fair” to those of us working for a living. The FAIRTAX, or any other tax system, will not solve these problems.

I have seen various arguments made against the FAIRTAX. I don’t have the time or space to answer every argument made against this plan but I can say that I have not seen a better plan come out with the specificity of the FAIRTAX. Most of the arguments made at the various places I have posted this series are debunked in the book this series is based on, FAIRTAX: The Truth. The authors devote an entire chapter to covering the misunderstandings, the lies, and the disinformation that has been passed out to defeat this plan.

My intent in this series is to give an overview of the book, and a basic understanding of the plan, not rewrite it here. I can say that 86,000 pages of tax rules and regulations are a bit excessive and should be eliminated. The FAIRTAX does exactly that, and more.

The legislation is H.R. 25 and can be found at the Thomas Congressional Library website. You can look it up by bill number or by name as you wish. I also encourage you to buy the book and get a more in-depth understanding than I can give you. After reading the initial article a friend decided to buy the book and get more details. He e-mailed me that the book, FAIRTAX: The Truth, can be bought on Amazon.com for $3.95. This is the Cliff notes version and is designed to give you as broad and as fair a description as possible with the hopes that all who read my articles will look further and get a more complete understanding of the FAIRTAX and how it is designed to improve the lot of all Americans.

I understand that the FAIRTAX is not the only answer to our nation’s financial ills. Spending by politicians bent on preserving their power and prestige is a huge issue that must be addressed if we are to ultimately solve our nation’s financial problems. A large part of the spending problems stem from the fact that politicians of both parties can demagogue the tax issue, using class warfare to pit one American against another for the benefit of themselves, the political ruling class. The FAIRTAX goes a long way towards ending this practice.

I can assure you that if the FAIRTAX was of great benefit to the ruling class we would already have it in place, not just being bandied about, or more precisely, ignored by the ruling class. The more politicians oppose the plan the more I like it. Many economists and others have spent months coming up with this plan and I believe it is a much better system than we currently use. Nothing will ever be perfect but this comes as close as anything I have heard or read about. It gives We the People more say in how our wages are used.
Tax and spend politicians need to be sent home and people with common sense, and the safety and prosperity of all as their first priority elected to do the job they swear to do when they take office. The self-interest of politicians and the corruption they participate in every day needs to be stopped if we are to survive.

I have read the FAIRTAX book very carefully twice and parts of it more than that. Many people take a quick look at the plan and begin to berate it without truly understanding what it means and how it works. At one time I also looked at the FAIRTAX and thought “so what”!! I began to hear more about this plan, and as I took the time and effort to look into it a little more thoroughly I began to change my opinion about the FAIRTAX. I am convinced that this plan will make great strides in helping our nation come out of the financial doldrums and put us back on the road to prosperity in a hurry. All we have to do is convince the ruling class to put it to work. We do that by letting them know of our support for this plan and our insistence that they act soon.

You are welcome, and encouraged, to share any of these articles with anyone you would like to share with. Information is power and I write these to inform, educate, and motivate people. I hope everyone you know sees these articles.

Again, the legislation is H.R. 25 and can be found at the Thomas Congressional Library web site . The bill is very short and very simple to read. It is up to We the People to make the changes necessary to promote prosperity, not wait on self-serving politicians to do what is best for us. The bill can also be found at this link.

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
December 27, 2011

The FairTax Series: America's Road To Prosperity Part 4

In this installment of the FAIRTAX series I want to cover the “pre-bate” provision of the plan. The “pre-bate” is a provision designed to help with the basic necessities of life, to essentially “un-tax” food, medicine, utility costs, clothing, etc. up to the poverty level. It is not designed to help the “rich” buy new cars for their 16 year old as a birthday present, a new plasma TV, or that new boat or other play toy they might want. It is also not designed to allow that “poor” family to buy a plasma TV, or to buy their kids a video game. This means that the basic necessities of life will be tax-free for everyone. The basic necessities of life being tax-free, however, does leave money to help buy these other things if desired, as the decision on how the extra money is spent is up to the members of the particular household. Once again we see the playing field leveled, more money in the hands of We the People, and everyone being treated equally, “equality under the law”, I think the Constitution calls it.

Poverty level spending is defined as the amount of money necessary for a given sized household to buy the essential needs of life as determined each year by the Department of Health and Human Services (DHHS). The amount of the “pre-bate” will differ depending on the number of people in the household, not on how much income is present. I constantly hear about “fairness” from the politicians, but fairness is not really a factor in today’s tax structure. People “paying their fair share of taxes” is a class warfare tactic designed by the political class to divide and conquer We the People, not a tactic designed for actual fairness. Are those paying no income taxes paying their “fair share”? Not in my book, and I am not one of the “rich”.

One benefit of the FAIRTAX pre-bate is that it must be applied for every year. I can’t imagine Bill Gates, Warren Buffett, or other ultra-rich people applying for the Pre-bate so they aren’t likely to benefit. I can only imagine the flack these ultra rich would catch if they applied for something meant to help the least of us in America. The Pre-bate will also only go to those legally residing in the United States. It is designed to reward citizens, and those here legally with the proper work permits and authorization to be a part of our society. Those who work for money under the table pay no taxes now but will pay taxes when they spend their illegally earned wages under the FAIRTAX. They will not be able to participate in the Pre-bate as it is a provision designed to bring wage earners out of the shadows if they want to participate. I find this part rather insignificant compared to the fact that these people will actually be contributing to our tax structure through their purchases as the FAIRTAX will do. They already pay no income taxes and no Social Security or Medicare taxes as those of us legally employed are subjected to. Having the pre-bate will require those working under the table to come out into the light if they desire to benefit from the pre-bate provision.

As a household of 2, my wife and I will not benefit as much from the pre-bate as those who have larger families. It will benefit my children and grandchildren as the money taken off of the cost of the basic necessities of life will provide more money for food, utilities, and the other necessities. When they take the amount of taxes off the price of food, for instance, they can buy more food instead of paying federal taxes with that money. I am looking at the best option for the people of America and I find this to be a very fair and sensible way to implement that

This is the final installment of the “nuts and bolts” of the FAIRTAX. My final installment will cover an overview of what you have seen so far and my conclusions as to the benefits of the FAIRTAX.

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 3

In this installment of the FAIRTAX series I want to cover the impact  of jobs, particularly manufacturing jobs, coming back to the United States. When Bill Archer (R-Tex.), was the chairman of the House Ways and Means Committee, the tax writing body of Congress, he often quoted a survey of 500 international companies located in Europe and Asia.

When asked about the impact of the elimination of taxes on capital and labor, and instead have the taxes based on consumption, 400 of those CEO’s, that is 80%, said they would build their next manufacturing plant in the United States. The other 20% said they would move their entire operation here. The reason these companies have located overseas is partly because of the cost of taxes on capital and labor, combined with the complication and costs of complying with the tax reporting required, and the overbearing regulations applied. I covered the cost of compliance in my previous installment of this series (Part 2: The Cost of Compliance).

I don’t know how many employees these companies have but many of them are huge. The FAIRTAX would bring all of those jobs back to our shores, to our states, to our cities, to benefit We the People of the United States of America instead of benefitting the people of other countries. What would happen if we built televisions, cell phones, computers, and other electronics here? What would happen if we began to make our own steel again? How much better would calling tech support be if you could understand the person on the other end of the phone? All of these things are likely with the FAIRTAX.

The complication of the tax codes, combined with the tax rates, make it much more cost effective to manufacture overseas and ship the product back here. With NAFTA and GATT in place the import costs are minimal. It is cheaper to ship products from Europe and Asia, even with the cost of fuel, than it is to manufacture products here. Part of the problem is onerous regulations and authoritarian bureaucrats but the main problem is the tax structure. Paying bribes to officials in foreign countries, and paying to ship products here, is cheaper than paying lobbyists, taxes, and bribes here. That is a sad commentary on our tax system.

I have seen credible estimates that as much as $3 trillion is sitting, just sitting in foreign banks, offshore due to the tax structure we now operate under (maybe operate is the wrong word here). If that money could be brought back without the onerous taxes levied now it could be used to refurbish or build new manufacturing plants and hire people instead of giving it to corrupt politicians who will use it to buy votes for more corruption to occur. This money would mean jobs to American citizens hurting for employment. In the last few years, Texas has provided about half of the jobs created in the United States. The reason companies move to Texas from other states is that they have no state income taxes. Imagine how much that would mean to the nation if our federal government instituted the same policies nationwide. Other countries are looking at this plan as a way of taking business away from Europe and Asia. Are our politicians going to wait until it is too late to make a difference? What would the FAIRTAX do for the 3.5 million people who have lost jobs in the last few years? I believe we would see that number reverse and go beyond our wildest dreams!

A large part of the opposition to the FAIRTAX is the power it would remove from politicians. Under our current system, Washington D.C. determines winners and losers in business, and of We the People, by controlling who gets what in the way of tax breaks, tax rates, and incentives to create jobs or not. With a consumption tax each individual person and company would be able to determine how much tax they paid. Politicians currently keep the welfare rolls expanding by playing with the tax rates, who pays, who doesn’t pay, and uses these aspects to demagogue public opinion for the benefit of their political fortunes instead of looking to the benefit of We the People.

Corruption and waste are huge factors in the financial condition of our nation. Much of this can be eliminated with the FAIRTAX. Not all of that corruption and waste can be eliminated with the FAIRTAX because there isn’t any one single answer to all of our financial problems. I believe that if we can get the politicians out of our pockets we can make huge strides in the prosperity of the United States. Regardless of how many issues there are it seems to me that the tax situation is the biggest single issue preventing prosperity in America.

I support the FAIRTAX because I believe that taking the power away from government and placing it in the hands of We the People is the most important thing we can do to insure the growth of American exceptionalism and prosperity. I have confidence in the people to make responsible decisions with the money they earn, much more than I have in politicians to make those decisions. The FAIRTAX is the best plan I have seen to level the playing field, give every American a piece of the pie of responsibility and the best opportunity for each of us becoming successful in life.

If we are ever going to return to the prosperity of yesteryear, we are going to have to change the way our taxes are structured. Granted, there are other problems but this is where we need to start. We can use the FAIRTAX to get control of the tax structure and remove it from the power brokers in Washington D. C. and can once again find ourselves with more jobs than can be filled instead of the unemployment rate of 9.1% we now have.

The FAIRTAX is, to me, the most effective and easiest way to get government off our backs and out of our pockets. It is the best way to regain the manufacturing infrastructure that won WWI and WWII. It was the production of war materials that provided the means for our soldiers to defeat Nazi Germany and Japan. Today we must depend on our enemies to provide us with the electronics and other means, including steel products, to defeat them should a war become reality. That doesn’t make a lot of sense to me when we can once again be the manufacturing leader in the world. Will you help?

If everyone who reads this will write their Congressional delegation with requests that it be implemented we can get it done. I encourage you to collect all of the installments of this series and either send them to your representatives and senators or use them as reference for your letter. I have 2 more installments to go, The Pre-bate, and My Conclusions, that will be out soon.

The legislation is H.R. 25 and can be found at the Thomas Congressional Library web site. The bill is very short and very simple to read. It is up to We the People to make the changes necessary to promote prosperity, not wait on self-serving politicians to do what is best for us. The bill can also be found at this link.

The next installment will cover the FAIRTAX Pre-bate, what it is, what it does, and what it means.

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
December 9, 2011

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

Illegals Bilked Taxpayers for $4.2B Last Year by Exploiting Tax Code

Illegally entering America while breaking Federal Immigration laws and dropping illegal anchor babies appears to be a lucrative business in America today. In an article from The New American, we see just how much this act of criminality is costing hard working, tax paying Americans today:

The Treasury reported in July that the Internal Revenue Service coughed up $4.2 billion in child tax credits for illegal aliens in 2010.

At a time when politicians are talking about the need for government to reign in spending and reduce yearly deficits by taxing Americans more and cutting sevices in government-funded programs for our citizens, it is nothing short of ludicrous that we are funding the current illegal criminal baby-makers and their off-spring through the manipulation of our tax code that is 100% approved by the U.S. Government! How can this be possible?

The question is how illegals get away with gaming the system. Answer: Because all wages, even those earned illegally, are taxed, but since illegals cannot get valid Social Security numbers, the government needs a way to track their income and collect what is due. It does so using individual taxpayer identification numbers (ITINs), which, again, are for those taxpayers who cannot obtain a Social Security card.

So, politicians themselves have written a loophole into our tax code that siphons off tax dollars to illegal criminals. If that doesn’t piss off Americans who are today being told to give up more of their paychecks during the current Obama-recession (through his phony American Jobs Act, which is just tax increases to pay off Union vote begging cronies and big government corruto-crats), I don’t know what will. If you just can’t believe that last statement? Here is the loophole:

These ITINs create the problem, and it’s a big one, according to the Treasury: The booty claimed by illegals using the ACTC has skyrocketed from $924 million in 2005 to $4.2 billion in 2010.

According to a Treasury report, “ITINs are issued regardless of immigration status, because both resident and nonresident aliens may have a U.S. filing or reporting requirement under the Internal Revenue Code.”

“ITINs( individual taxpayer ID numbers) are for Federal tax reporting only and are not intended to serve any other purpose. Even income obtained illegally is subject to income taxes. Therefore, the IRS issues ITINs to help individuals comply with the U.S. tax laws and to provide a means to process and account for tax returns and payments for those not eligible for SSNs. An ITIN does not authorize an individual to work in the United States or provide eligibility for Social Security benefits or the Earned Income Tax Credit (EITC); however, the IRS currently processes claims for the Additional Child Tax Credit (ACTC), a refundable tax credit, filed by taxpayers with ITINs.”

But it gets even nastier when we see that NON-TAXPAYING ILLEGALS are getting U.S. tax refunds and credits. What really makes this taxpayer abuse even more disgusting is that they have been aware of this fraud for over a decade, yet refuse to take any kind of action against it to protect the U.S taxpayers!

The Treasury reported that illegals are fraudulently using the Additional Child Tax Credit, which was created to give more money to taxpayers who cannot claim a full tax credit for children.

The credit can be claimed even if a filer does not pay income tax:

The ACTC is the refundable portion of the Child Tax Credit (CTC). The CTC can reduce an individual’s taxes owed by as much as $1,000 for each qualifying child. The ACTC is provided in addition to the CTC to individuals whose taxes owed were less than the amount of CTC they were entitled to claim. The ACTC is always the refundable portion of the CTC, which means an individual claiming the ACTC receives a refund even if no income tax was withheld or paid. As with all refundable credits, the risk of fraud for these types of claims is significant

The treasury report goes on to summarize how this appears to be a pattern of systemized fraud enabled by our very own government as a way for illegals to scam the taxpayer:

“The payment of Federal funds through this tax benefit appears to provide an additional incentive for aliens to enter, reside, and work in the United States without authorization, which contradicts Federal law and policy to remove such incentives. ITIN filers are much more likely to claim the ACTC than other individual taxpayers. We found that in Processing Year 2010, 72 percent of all ITIN filers claimed the ACTC, while only 14 percent of non-ITIN filers claimed the ACTC

Numerous politicians, including Barack Obama have been seen in the national media lately calling for reforming our tax codes, and to raise taxes on Americans to pay for their recent explosion of nasty, ludicrous big government debt-spending. How about cutting off illegal criminals from the taxpayers purse as seen right here, in this blatant example of big government taxpayer fraud against American citizens?

Taking the Red Pill: Believing Eyes & Liberal Lies

My four-year-old daughter loves these gummy vitamins we get at Costco.  They come in a huge jar with multiple colors.  She loves the red ones.  She begs me to pick a red one every morning.  But being a practical mother, I’m not about to go rooting around in a jar of vitamins just so my baby can have a red one.  She gets what comes out on the first tip.  Realizing she wasn’t going to get her wish of a red vitamin every time, my daughter devised a very mature plan: she would just pretend every gummy she got was red.  I think she’s pretended for so long that now she genuinely does see a red vitamin in her hand every day.  It doesn’t matter what color it really is.  If its orange, yellow, green – it’s still red.  She says, “This looks orange, but I don’t think its orange. Its really red”.

Today as we went through the typical red vitamin routine, it struck me that perhaps my daughter’s coping mechanism isn’t all that unique.  As I watch our President campaigning this week, I see him applying the very same techniques to his view of the economy and Americans in general.  Barack Obama has figured out a way to see the red vitamin every time he tips the jar.

This week we’ve heard sound bite after sound bite of the President lamenting the “slow” economy.  He has been making the typical Washington promises of better governing and more helpful programs, and asserting that he understands the plight of the typical American family right now.  Of course, those of us who actually are typical Americans understand that everything this administration has done over the last two and a half years has been antithetical to capitalism and prosperity.  A giant “healthcare” bill that few people wanted and even fewer actually read, disastrous financial reform that’s added new burdens to the business community, extending unemployment to nearly 2 years, a drilling moratorium, a war in Libya, prosecuting Arizona for prosecuting illegal immigration, a government takeover of GM/Chrysler, an 800 billion dollar stimulus package – all of these Obama-led “solutions” have guided us right into 9.6% unemployment (which we know is an artificially low figure thanks to government math), as high as 24% in the Black community.  Any working, thinking American can see that spending more money than we bring in is a recipe for disaster, and we are reaping the first harvests of that disaster currently.  However, Obama has amazingly been able to turn all that gray, garbage-colored mess into a nice, shiny red pill.  Its not QE1, QE2, or even QE3 that’s responsible for rapid inflation, it was the earthquake in Japan.  Its not the drilling moratorium that makes it impossible for us to produce our own oil that is causing sky-high gas prices, it was the oil spill in the Gulf last year.  Its not the 4 trillion in deficit spending his administration will have added by the end of its first term, it’s the House GOP spoilsports backed by infamous terrorists such as the Tea Party and their hobbit minions. Also, George Bush, George Bush, George Bush.  Obama has found a way to deny the reality of this poison pill and make his eyes see a healthy, red vitamin.

This isn’t a quality unique to our President.  Indeed, most liberals are steeped in LDS – not the church.  Liberal Denial Syndrome.  I should know, I once suffered from the same thing.  Its most disturbing symptom is the ability to ignore or deny glaring facts and information and replace them with good intentions and wishful thinking.  Despite continually rising unemployment numbers and foreclosures last year, Liberals still trumpeted the Summer of Recovery as proof Obama-ism was working.  Leaked emails from global warming researchers at East Anglia’s Climate Research Unit (which gives recommendations to the UN regarding climate policy) have exposed global warming as a massive hoax based on doctored research and billions of dollars in financing.  The jig is up and yet the liberals are still supporting the UN’s call for a global Climate Change tax and business-killing Cap and Trade here at home.  The polar bear population has increased beyond endangered species parameters, but tell that to any liberal and they will passionately assert that oil and cow flatulence have all but destroyed their natural habitat and they are drowning one by one in the melting Arctic.  One needs only look as far as the IRS’s own website data to see that lower taxes bring increased revenue, but every liberal will tell you with absolutely no embarrassment that the only way to prosperity for more people is to increase taxes.

Provable facts mean nothing to the liberal suffering from LDS.  They mean nothing to Barrack Obama.  These are people who have spent a lifetime practicing up as down and down as up.  They want their good intentions and naïve utopian dreams to be enough to for them to be considered good people.  They want it so badly they are willing to make their eyes see what they wish so badly for in their hearts.  They choose to see the healthy red vitamin, while those of us rooted in reality know it’s really a cyanide pill.

Tax Expert’s Advice: Don’t Count on Social Security

BRENTWOOD, Tenn., July 1, 2011 — According to a poll taken earlier this year, 77 percent of voters think Social Security is in danger. Fewer Americans, however, approve of increasing the retirement age. Voters were split on permitting people to invest their Social Security taxes into personal retirement accounts.

Tax expert Dr. Friday, aka “The Tax Doctor,” falls into the camp of doubters. “I don’t look to the government to be there for me; I don’t think anyone our age (30s-40s) should,” says Dr. Friday.

The good news, she says, is that “it’s never too late to start saving. The key is to find retirement plans with immediate tax benefits.” She recommends a disciplined savings plan, and her site, DrFriday.com, has an online guide to determine how much one should put away each month.

Dr. Friday outlines steps for retirement savings:

  • Get out of debt so you can live on less than you make and actually save.
  • Start saving once you have no high-interest credit cards/loans to pay off.
  • Open a money market account and keep three to six months of living expenses in it for emergencies.
  • Max out one or in some cases two of the following – IRA, Roth IRA, Simplified Employee Pension Plan (SEP), 401(k) or 403(b).

Dr. Friday’s advice is sound, considering proposals to cut Social Security benefits. The American Association of Retired Persons (AARP), the lobby for older Americans, has been considered one of the leading opponents of cuts. However, the group recently indicated it was open to modest reductions in benefits for future recipients.

Darrell Payne, a public affairs specialist with the Social Security Administration, recently was interviewed by Dr. Friday and co-host Hank Parrott on the “Retirement Report” on Nashville’s Channel 5+. When asked about the solvency of Social Security, he said, “We’ll have enough money to last until 2037.”

“Social Security was designed after the Great Depression when people didn’t have any money,” says Dr. Friday. “It wasn’t designed to be your sole support for retirement.”

For more information on Social Security, visit http://www.ssa.gov. For more information on Dr. Friday’s financial services – including tax returns, retirement planning and business accounting – visit http://www.drfriday.com.


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.

Budgetary Boondoggle: Round 6

         In an article posted here at CDN on Feb. 14th titled, “Upcoming Budget: Nowhere to Run*,  I explained how I could see that our current Congress would not be able to even come close to passing a responsible budget for 2011 fiscal year. Looking at today’s news headlines, this budget boondoggle is following along exactly as I stated it would. Today the House passed the sixth Continuing Resolution budget in a row to temporarily fund our government. Here we are approaching the half way point in fiscal year 2011, and we are still basically running our government on a blank check drawn on the taxpayers account!  No accountability will ever come out of the last four and a half years of trillion dollar deficits within our government, all because the people are letting this farce of a budget battle continue to play out like a cheap failed soap opera of the 60’s. No budget basically means no way to keep spending in check and hold these tyrants in D.C. accountable for their actions.

       We recently saw the complete overthrow of the government of Egypt because the people were damned tired of tyrannical rulers sitting on gold toilets while 3/4 of the country went hungry, to sum it up in a nutshell. Meanwhile here in America the exact same thing is being done on a much grander scale, yet the people are pretty much silent. Congress is paid to do a job, and that job is to basically run the Federal Government, to produce leglislation to protect the people and businesses fairly, and last but not least, is to ensure that the taxpayer’s money is spent fairly and wisely. Ask yourself one simple question, “Is Congress doing their job as it is laid out by our Constitution today?”  Then why isn’t there a national calling to shut down the government and hold Congress accountable? The self-serving tyrants in D C will just keep on spending us into bankruptcy until the people stop giving them the money to do so. It is that simple.  

 No taxation without proper representation, period.

      In 1974, Congress passed what was then called The Congressional Budget Act.*  This also spawned what we now know as The Congressional Budget Office. The CBO was created as an unbiased accounting office to supply Congress with economic data to help them draw up budget resolutions, and compile economic data projections for other proposed legislation to be based upon. The original Congressional Budget Act of 1974 has been amended several times, including in 1985, 1990, and 1997. The basic budget process can be seen here from wordiq.com* which summarizes the process nicely: (emphasis mine)

The President’s Budget

The budget process begins in February with the submission of the President’s budget. According to the act, the budget is due on the first Monday in February. At this stage, the budget is not binding but merely constitutes an extensive proposal of the administration’s intended spending for the following fiscal year. In addition to the actual proposal, the President submits volumes of supporting the information intended to persuade Congress of the necessity and value of the budget provisions. In addition to the President, each independent agency also submits its own budget proposal which will be incorporated into the final version of the budget.

Budget Resolution

The next step is the drafting of a budget resolution. The resolution is drafted concurrently by the House and the Senate budget committees. Following the traditional calendar, by early April both committees finalize their drafts and submit it to the respective floors for consideration and adoption. ( today is march 16th 2011, right around the corner)

Once both houses pass the resolution, a conference report is drafted by members of the Senate and the House. The purpose of the conference report is to reconcile any differences that may exist between the House and the Senate versions. Usually, the conference report is adopted finalizing the budget resolution.

In contrast to most legislation passed by Congress, the budget resolution is a concurrent resolution and thus does not become law and does not require the signature of the President. As a result, no money has actually been appropriated at that point. The budget resolution then serves as a blue print for the actual appropriation process.

   Fast forward to today, where the House GOP leadership  has proposed their budget resolution with the very necessary cuts in government spending that will be needed to avoid raising our debt ceiling to over $15 trillion dollars.  The house Democrats  say no, we will not approve anyserious spending cuts, and threaten to let the government shut down if they are not allowed to keep on spending us into financial Armageddon. Meanwhile, the game goes on, with the basically illegal Continuing Resolutions being passed again and again to avoid any semblance of accountability in how our tax dollars are being spent. When do the people say enough is enough here? April 15th is tax day, when millions of Americans go to write out that big fat tax payment check to the IRS, they should stop for one second and ask themselves one simple question: ” Is this taxation without proper representation? ” 

                           Our dysfunctional Congress just passed the sixth continuing budget resolution in a row, with no firm budget resolution in sight! I normally recommend that people call their representatives and demand some sanity at this point in my articles. The people spoke up loud and clear against big government, Egyption-style self servancy and tyrannical spending in the 2010 elections, and have been speaking up ever since. In reading the above information, does it look like our representatives are listening ?  Think about that come April 15th, when you write that IRS payment check out soon. The way this is going, it will be double that amount next year and probably more.

*http://conservativedailynews.com/2011/02/upcoming-budget-nowhere-to-run/

** http://www.wordiq.com/definition/United_States_budget_process

I.R.S. Ombudsman to Congress: Tax Code is Too Complex

Tax system too complicatedMore than half of Americans know the pain and cost associated with preparing taxes every year.  Nina Olson, an ombudsman for the Internal Revenue Service, agrees.

The New York Times printed an article that summarized some of Ms. Olson’s comments to Congress in her annual report

Nina E. Olson, the national tax advocate who acts as an ombudsman for the I.R.S., issued a sweeping criticism of federal tax policy in her annual report to Congress. Ms. Olson found that the volume of the tax code had nearly tripled in size during the last decade — to 3.8 million words in February 2010 from 1.4 million in 2001. She estimated that Americans spent 6.1 billion hours preparing their returns each year — the equivalent of 3 million employees working full time.

That’s 6.1 Billion man/hours working to produce .. nothing.

Flat tax sympathizers like  FreedomWorks have been touting the need to simply our tax code for quit some time.  Here’s FreedomWorks’ Dick Armey to explain the idea.

Fair Tax ProposalAn alternative to the flat tax is the fair tax supported by fairtax.org. Either of these two plans would greatly reduce the complexity in our tax code, which is badly needed.  As the New York Times article demonstrates, the I.R.S.’s own internal watchdog agrees.

“The time for tax reform and tax simplification is now,” Ms. Olson said.

What may be a bigger surprise in the article is that the greedy wealthy corporate banker tycoon rich people that progressives have been complaining about, aren’t actually the biggest benefactor of our tax code – it’s the average working stiff.  The ombudsman’s report continues by saying:

“The dirty little secret is that the largest special interests are us — the vast majority of U.S. taxpayers,” the report said. “Virtually all of us benefit from certain exclusions from income, deductions from income or tax credits.”

The report makes an invalid presumption here.  Yes, almost all of us would pay more in taxes if there were no exclusions or deductions.  Lower-income earners would not have the earned income credit, child tax credit or many other tax provisions that help create our highly-progressive tax system.  Middle-income earners would not have the mortgage interest deduction, tax free retirement investments, exclusions of income used to pay for employer-based health care, etc.  High income families would lose tax shelters, deductions for charity.  Everyone would lose the dependent deduction and standard deductions.  Sure, we would all pay more if there were no deductions or exclusions.  That is not the same thing as saying we would all pay more under a flat or fair tax.

Under a flat tax system, there are no deductions.  It doesn’t matter how many kids you have, if you own a home or not or whether or not your employer pays for your health insurance.  You pay a certain percentage of the money you earn – period.  The difference is that the rates could be greatly reduced for everyone because more people would be paying taxes.

A CNN article lays out one problem with our tax system.

If tax year 2009, for which we are paying today, is anything like tax year 2008, then a record number of the nearly 142 million Americans who will file a tax return will get back every dollar that was withheld from their paychecks during the year.

That’s almost half of all working-age Americans that can vote, but pay ZERO taxes.  Even if actual tax rate was 5%, thet would be more than 150 Million taxpayers now actually paying taxes.  So even without deductions and exclusions, more money would flow into the coffers of the treasury with most taxpayers paying the same taxes.  The difference is that no one spent much of their time to hide, deduct, exclude, record, document and report their income while trying to understand all 3.8 Million words of the tax code.

The report also considers the increasingly complex job the I.R.S. is going to have to perform thanks to Health Care Reform turning them into enforcers of the insurance mandate.  The changes in how the I.R.S. will certainly be more expensive than the C.B.O. estimated.  Then again, the C.B.O. has underestimated the costs of just about everything that it estimated in the last two years – especially where health care reform was concerned.

Our tax system is overly-complex, incredibly expensive and has now become unmanageable.  This year, the I.R.S. had to move the tax deadline back three days just to deal with the fact that nothing was changing in the existing income tax code.  That’s right, because the income tax schedule will continue just like it was from 2010, they needed more time.

The I.R.S. is a bloated and unnecessarily over-manned government institution.  Not since 1986 has the tax code had a major revision.  Nina Olson has it right:  Congress, shrink the tax code.. now.

Many Private-Sector Employees May Be Independent Contractors Soon

The last eighteen months have been the most traumatic to America’s businesses community ever.  The Obama administration started out by bashing those who run companies and those who invest in them: CEOs and Bankers.  Oddly enough, now those two demographics are a little punch drunk and unable to do what the American economy needs: make money, invest, grow, hire.

From Politco.com

In the eyes of corporate America, President Barack Obama relied on a healthy dose of industry-bashing to sway votes in Congress for health reform and the new Wall Street regulations signed into law Wednesday.  Now those efforts threaten to undermine the one agenda item essential to Democrats’ hopes in the midterms and Obama’s chances for reelection: turning around an economy still just a half step out of recession.  Some corporate leaders said Obama’s comments prove that he’s hostile to business. Others cited corporate fears of a credit crunch as banks comply with financial reform or the possibility of significant tax hikes if the Bush administration tax cuts are allowed to expire.  But it all adds up to a lack of confidence in Obama among some in corporate America — and that’s fueling a reluctance among executives from Wall Street to Main Street to deploy their large cash reserves to make new investments and hire new workers.

And the Daily Caller chimes in on the tone-deafness of Obama’s circle of anti-business cronies:

“By reaching into virtually every sector of economic life, government is injecting uncertainty into the marketplace and making it harder to raise capital and create new businesses,” said Seidenberg, who had been one of Obama’s strongest allies in the business world up to that point.

General Electric CEO Jeffrey Immelt said around the same time that “government and entrepreneurs are not in synch,” and said the Obama White House and business leaders were not getting along.

By early July, the charge that Obama is anti-business had become a mainstream idea, with everyone from Newsweek to speakers at the Aspen Ideas Festival voicing doubts about whether the president understands markets and their interaction with government policy.

If the Obama administration’s attitude wasn’t enough to get businesses to re-think their hiring and investment strategies (yes, of course hiring is a form of investment – but progressives might read this and it must be explained), he went on a wreck-loose, anti-business revolution via massive government reforms.

First, health care reform.  This legislation puts massive new responsibilities on companies – companies that really just want to make money, expand, hire, invest, make more money.  Now they have to mind how much insurance and what kind of insurance their employees have or pay a penalty.

If health care reform didn’t put business owners over the edge, how about this idiotic push by Congress.  According to an article at CNSNews.com, Obama and his lackeys are forcing companies to report how much they pay each employee broken down by race, gender, national origin – heck BMI may not be far away.  This is intended to force fairer pay practices, but as usual with government overreach, will do the opposite.

The same CNSNews piece continues:

But critics charge that the Paycheck Fairness Act will be harmful to small businesses and the economy. The National Association of Manufacturers issued a statement about the bill in April.

“The Paycheck Fairness Act, which purports to prevent instances of illegal gender-based discrimination, could outlaw many legitimate practices employers use to set employee pay rates, even where there is no evidence of intentional discrimination and employers act with reasonable belief that their pay policies are lawful,” the statement said.

“Manufacturers strongly oppose unlawful discrimination in any form, but the Paycheck Fairness Act would impose unparalleled government control over how employees are paid, among even the nation’s smallest businesses,” it added.

“It would drastically alter the Equal Pay Act to allow unprecedented penalties of unlimited punitive and compensatory damages in cases of alleged discrimination,” the statement said.

James Sherk, Bradley Fellow in Labor Policy in the Center for Data Analysis at conservative The Heritage Foundation, said that the law would be a boon to trial lawyers seeking damages from employers for their clients and would allow the courts to “micro-manage” American businesses.

Unionization has been an issue for quite some time.  Their demands for outlandish benefits and ridiculous compensation has put a stranglehold on American industry.  Independent contractors may represent a way to weaken the those organizations.  Why would businesses collectively bargain with a union when a hungry contractor will certainly take a contract over a promise?

A good businessman or woman knows that success is all about adapting to change.  The government assumes that the only changes a business will make are those that their newest shiny tax or rule intended.  Fortunately for the economy entrepreneurs are in business to make money, not make the government happy.  So what will businesses do?

Adapt – and as usual, not in the way the government intended – I believe they will be increasingly going to go to contract labor models.

Contract labor changes the relationship between the consumer of services and the producer.  In standard employment situations, the relationship is employer-employee.  For contract labor, the business becomes the client and the worker is now the business.  According to the IRS, it uses three characteristics to determine if the relationship between two entities is employer-employee or client-contractor:

Behavioral: Does the company control or have the right to control what the worker does and how the worker does his or her job?

Financial: Are the business aspects of the worker’s job controlled by the payer? (these include things like how worker is paid, whether expenses are reimbursed, who provides tools/supplies, etc.)

Type of Relationship: Are there written contracts or employee type benefits (i.e. pension plan, insurance, vacation pay, etc.)? Will the relationship continue and is the work performed a key aspect of the business?

Businesses must weigh all these factors when determining whether a worker is an employee or independent contractor. Some factors may indicate that the worker is an employee, while other factors indicate that the worker is an independent contractor. There is no “magic” or set number of factors that “makes” the worker an employee or an independent contractor, and no one factor stands alone in making this determination. Also, factors which are relevant in one situation may not be relevant in another.

Why would business choose this model?  First, overall costs for contract labor are estimated to be 20-30% less than an equivalent employee.  Consider what a business provides to or pays for employees:

  • Social Security taxes (6.2% up to the annual maximum)
  • Medicare taxes (1.45% of wages)
  • Federal unemployment taxes (FUTA)
  • State unemployment taxes (SUTA)
  • Social Security (Employee pays 6.2%)
  • Social Security (Employer pays 6.2%)
  • Medicare (Employee pays 1.45%)
  • Medicare (Employer pays 1.45%)
  • health care insurance (soon to be required)
  • worker’s compensation
  • tools, computers, facilities

For independent contractors businesses supply:

  1. Only what is stipulated in a negotiated contract

In some cases, like Fed Ex, the trucks are actually leased or purchased from fed ex by the operators.  Imagine that model where you work.  Lease your computer, tools, fax machine, etc.  Nothing prevents it other than those IRS characteristics mentioned earlier.

Granted, for critical business functions, a company may not choose the volatility the independent contractors represent.  If there is even the hint that the relationship is indefinite, the IRS may very deem the contractor as mis-classified and demand back taxes.

From a purely theoretical position this sounds plausible but expected, right?  Guess again:

Entrepreneur.com reported

Chicago-based payroll company SurePayroll, which releases a monthly “scorecard” based on data from more than 25,000 U.S. small businesses, calculates small business contracting grew 19 percent last year while staff hiring grew only 3.4 percent. “There was a much greater percentage growth in contractors than there was in the overall small businesses,” says SurePayroll President Michael Alter.

Examples of Companies that went independent contractor:

ZipRealty

Fed Ex

In closing, note that the IRS has noticed and has become fond of this new model as well

From Bloomberg.com:

“It’s easier and quicker to audit smaller businesses”

For decades the IRS has played a game of find-the-freelancer at businesses where independent contractors remain on the payroll for months or even years. Companies, especially small ones, increasingly rely on such workers because they offer greater flexibility—and because they’re cheaper. Employers can save as much as 30% on wages by avoiding payroll taxes, unemployment insurance, worker’s compensation coverage, and benefits they provide regular employees.

Now both the IRS and state agencies across the country are redoubling efforts to uncover long-term “temps.” In February the IRS launched a three-year program that will examine 6,000 companies to find permanent workers misclassified as freelancers in violation of the Tax Code. President Obama’s proposed 2011 budget includes funding for 100 additional federal staffers to pursue such cases, and it would repeal a 32-year-old rule allowing companies in industries ranging from construction to health care to legally classify long-term employees as independent contractors. What’s more, a 2008 initiative linking the computer systems of various agencies makes it easier for the IRS and states to share data on how companies classify employees.

The only question is how will businesses adapt to this government action?

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