Where the money is....

When Willie Sutton bank robber was asked why he robbed banks he said "Because that is where the money is". How things have changed.

The banker's Bank the Federal Reserve is now robbing savers with near zero interest rates. Why? Because that is where the money is. It is a hidden tax. No law was passed. Still you are having the your money stolen through near zero interest rates to restore bank's balance sheets. If you had $300,000 in an IRA (or 401k) earning 5% in 2007 ($18,000 a year with nearly no risk) you are lucky if you earn half that today. That is a $9,000 or more of hidden taxes.

I hope to expose these types of actions and others by the FED and government. Boomers need to be vigilant - because their savings is where the money is. I will also delve into other areas of finances of interest to Boomers.

Tuesday, September 27, 2011

Fixing jobs, housing, auto sales, social security, medicare

There recently was an article in the St. Petersburg , Fl. Times. The Business Section asked readers for ideas on: "How Would You Fix the Economy?" I think this 80 year old guy nailed it!

Dear Mr. President, Please find below my suggestion for fixing America's economy. Instead of giving billions of dollars to companies that will squander the money on lavish parties and unearned bonuses, use the following plan. You can call it the "Patriotic Retirement Plan": There are about 40 million people over 50 in the work force. Pay them $1 million apiece severance for early retirement with the following stipulations: 1) They MUST retire. Forty million job openings - Unemployment fixed. 2) They MUST buy a new AMERICAN Car. Forty million cars ordered - Auto Industry fixed. 3) They MUST either buy a house or pay off their mortgage - Housing Crisis fixed. It can't get any easier than that!! P.S. If more money is needed, have all members in Congress pay their taxes..   Mr. President, while you're at it, make Congress retire on Social Security and Medicare. I'll bet both programs would be fixed pronto!

Thursday, September 22, 2011

Tired of the lies about Medicare

If you're wealthy or you receive Medicare, President Obama's proposal to cut the federal deficit could very well either raise your taxes or cut your benefits. There's no winning if you're both rich and a Medicare beneficiary.

Barry tells you he is the protector of Social Security and Medicare.  The facts say differently.  The fact is Obamacare took $500billion away from medicare to fund this program.  Now his new Kill Jobs and Tax program could hit Medicare again.  Where is the protection of Medicare with sensible reforms?  Barry refuses to address the problem and keeps slicing funding for Medicare.

Saturday, September 17, 2011

Unspinning the fair tax

Make sure you understand what has been proposed (and may be again this election cycle) before you support it.   What you don't understand can hurt you.

The "Fair" Tax supposedly would replace Federal Income taxes, FICA, Medicare, inheritance taxes and other federal taxes. It would be a consumption tax.

In an article on the second GOP debate (2007), Gov. Mike Huckabee as well as Reps. Tom Tancredo and Duncan Hunter supported the FairTax. The bipartisan Advisory Panel on Tax Reform had "calculated that a sales tax would have to be set at 34 percent of retail sales prices to bring in the same revenue as the taxes it would replace, meaning that an automobile with a retail price of $10,000 would cost $13,400 including the new sales tax." Some pointed out that H.R. 25, the specific bill mentioned by Gov. Huckabee, calls for a 23 percent retail sales tax and not the 34 percent used by the Advisory Panel on Tax Reform. That 23 percent number, however, is misleading.....

A 23-percent (of the tax-inclusive sales price) sales tax is imposed on all retail sales for personal consumption of new goods and services.

How to Make 30 Look Like 23
  First consider the way in which sales tax is normally figured. A consumer good that carries a $100 price tag might be subject to a 5 percent sales tax. That means that the final bill for the item is $105. The 5 percent figure is the amount of tax that is charged on the original purchase price. But now suppose that instead of pricing the item at $100, the shop owner simply priced the item at $105, then sent $5 directly to the state. The $105 price would be a tax-inclusive sales price. But $5 is just 4.8 percent of $105. That 4.8 percent number, however, is relatively meaningless. You are still paying exactly the same 5 percent tax on the item.

The 23 percent number in H.R. 25 is the equivalent of the 4.8 percent in the previous example. To calculate the real rate of the sales tax, we have to determine the original purchase price of an item. We can begin with the same $100 item, keeping in mind that a price tag that reads $100 has sales tax already built in. If our tax rate is 23 percent of the tax-inclusive sales price, then of the $100 final price, $23 of those dollars will be for taxes, meaning that the original pre-tax price of the item is $77. To get $23 in taxes on a $77 item, one must impose a 30 percent tax. In other words, a 23 percent sales tax on the tax-inclusive sales price is equivalent to a 30 percent tax on the actual price of the item.

FairTax proponents object to the 30 percent number, claiming that critics use the larger number to frighten people. Americans for Fair Taxation claims that it uses the tax-inclusive number to make it easier to compare the FairTax to the income tax that it will replace (since most of us think of income tax rates on an inclusive basis). But we are not accustomed to thinking of sales taxes inclusively. The result is that many FairTax supporters (about 15 percent of those who wrote to us, for example) do not understand that the 23 percent figure is tax inclusive.

Analysis of the FairTax used a figure of 34 percent as the basic exclusive tax rate. As someone pointed out that our number was at least 10 percentage points "higher than [the FairTax] is" because we calculated it as an addition to retail prices. But our 34 percent number is not 10 percentage points higher than the legislation. A 34 percent exclusive number is equivalent to a 25 percent tax inclusive rate – only 2 percentage points higher than the FairTax bill. We think that, intentional or not, the use of the tax-inclusive 23 percent rate has misled a lot of FairTax proponents.

Flat tax or senior screw job?

Now for the higher income seniors a flat tax may be good, but for your average senior (say with an income of $30,000 per person) may be a another way to put the burden on those who already struggling to maintain a decent life style.  RepukeCon Cain is proposing a flat tax of 9% which I believe includes payroll taxes like FICA and Medicare.  For the bottom end this is a tax increase, for the more affluent this is a tax decrease (Payroll taxes for FICA and Medicare is 7.65% and 9% is greater than 7.65% and I would assume no EIC).

From the discussion of the flat tax I have heard it would eliminate exemptions and deductions.  This means you would pay taxes on the first dollar of income. 

Let's suppose you are single and drawing $18,000 in Social Security benefits.  In addition you receive about $12,000 of income from your retirement funds (company retirement or IRA).  Your total income is around $30,000.  Now if 1/2 your Social Security ($9,000) and other income ($12,000) is less than  $25,000 your Social Security benefits are not taxable.  In this case $9,000 + $12,000 is less than $25,000 so your Social security benefits are not taxable.  Your income subject to tax is $12,000.  Your personal exemption and the standard deduction total is around $8,500 so that leaves $3,500 taxable at a 10% rate.  Your federal income tax is around $350.

Under a flat tax of 9% your taxes on $30,000 ($18,000 Social Security + $12,000 other income) would be about $2700 or almost 8 X your current taxes.  Even if Social Security was excluded if you tax $12,000 from the first dollar the tax  your tax would be over $1,000 or almost 3 X your current tax.

I can't answer for you, but I have planned my future based on the current tax rules.  I say leave them alone!!!  Also, Cain is proposing a 9% sales tax.  This guy is a nut case IMO.

Isn't the lack of interest you are (interest not received) enough of a hidden tax?  How much do they think they can push on to seniors with limited income.  I did warn you early on though they would come after the money you had put aside for your retirement (because that is where the money is). 

Tuesday, September 13, 2011

Is Social Security a Ponzi scheme?

Perry seems to have started quite a discussion.  Whether it is a Ponzi or not the way the government has run it (treated it as a source of general revenue funding) is a fraud.  There is no Social Security reserve fund, it a bunch of Government IOUs.  Today the income from FICA payroll deductions is less than what is being paid out each month.  To make matters worst in typical DC think they have cut the FICA payroll tax which makes the problem worse.

If a private company treated pension funds the way the government has Social Security some body would go to jail.  There are requirements on private companies regulating the security of pension funds and funding levels. 

more information on the subject:


Monday, September 12, 2011

Punish the savers

Barry has a plan to do a mega refinance of mortgages and he plans to end run the congress.  It will take from savers to give to the borrowers.  Here are the details:


Hold on to your wallet

I told you in one of my very first posts - If you are retired (or soon will be) and have funds for that - that they would come after you - because that is where the money is. 

Here is a long and detailed article telling you how.  It is long, but worth the read: