Balancing the Budget

To begin with, I feel like my blog is overly consumed by politics and economics. As the owner of two small businesses, I cannot help but to be overly conscious of these forces in America which challenge me every day in the decisions I make. Theses forces impact my family's financial future, and the future each member of my staff. Each day I gaze across a parking lot full of cars that belong to my teammates. It reminds me that our company's paid out wages make those car payments, puts gas in those cars, and feeds those families.

I am constantly burdened by the notion that 100% of the tax revenue collected by our government in taxes goes toward paying the $2.5T in Medicare, Social Security, Medicaid, and interest on our debt. These are all expenses that neither me nor my team get any benefit from. Our tax contributions are going toward funding the unpaid benefits of our forefathers. All other expenses of the federal government including military, employees, homeland security, FBI, CIA, etc equate to $1.3T. New revenue from the Fiscal Cliff deal (Expired Bush era tax cuts) will contribute $600B (Democrat number) to $650B (Republican number) to reducing the $1.3T deficit. Clearly more is needed as we are only half way home.


Politicians are shaping the truth about sequestration in the media. Sequestration does not balance the budget. Sequestration does not reduce spending. Sequestration reduces spending increases by $85B.

Just do a litte math, and remember: today, 1/2 of Americans do not pay any tax at all.

$3.8T - 2013 Federal Budget
-$2.5T - 2013 Estimated Tax Income
-$1.3T - Deficit
$.6T - Tax increases from Fiscal Cliff in Jan
$.85T - Sequestration
.15T Surplus

Again - this is little math. By that, there are many implications that are not considered here. Principally, when you increase taxes, you extort spending from the economy and reduce consumer spending - which has an adverse impact to future tax revenue and job growth. This holds true of Sequestration also.

Take a careful look at the President's proposal for further cuts.


President Obama's Deficit Plan from White House

Reduce payments to Drug Companies and Hospitals - $170B - What is that?

Encourage efficient care, and ask the wealthy to pay more - $85B - What is that?

Increase postal fees and transportation fees - $40B. 40% of an airline ticket is already tax, along with 20% of hotel charges.

My biggest concern is the limitation of tax deductions to 28%. It represents another tax in addition to the $650B in Fiscal Cliff tax increases. This is on top of limiting Medicare, Medicaid, and Social Security benefits to America's wealthiest.

So here we are at a standstill. The Democrats refuse to cut benefits, and the Republicans refuse to increase taxes. But I ask you this. Should we be focusing on raising revenue and cutting benefits on the wealthiest 1% of Americans, or raising revenue and cutting benefits on the 50% of Americans who pay no taxes and get 100% of the benefits of being a U.S. citizen.

Comments

  1. WEALTHIEST AMERICANS DRIVING SPENDING Consumer spending is up, but only among the wealthiest households. According to Mark Zandi, chief economist at Moody’s Analytics, people in the top half of the income distribution are carrying the load of consumer spending. “They're spending enough to keep the economy moving," Zandi said. Meanwhile, recent tax hikes and soaring gas prices are forcing lower income households to hold back. But this isn’t necessarily bad news for the economy, as the top 20 percent of earners account for about 38 percent of all spending, according to data from the Department of Labor. - Read more at The Wall Street Journal

    ReplyDelete
  2. Victor,

    Here's my input.

    First of all, everyone pays taxes, sales tax, property tax, employment tax, excise tax, gas tax and a multitude of other taxes. Not everyone pays income tax, either because they have no income or their income minus deductions puts them below the tax rate. Most of the no pay income tax group are either retires from the private or public sector. So it is not correct that half the population does not pay and yet gets benefits.

    Also, Social Security and Medicare are not entitlements. Those payments are benefits based upon an insurance policy where we all pay employee tax (SS and Medicare). If we live long enough we will be able to collect on our "investment", just like an annuity program we can collect more if we live longer. SS and Medicare should never have been part of the federal budget. They program was never set up to include all those extra benefits like disability which pays out before 65. There are many of us that collect SS and continue to work for which we pay Employment tax and income tax on our SS benefits and other income. Your employees will benefit from SS and Medicare when they reach 65 (or later if they increase the age of retirement)

    Things that should be done to fix the deficit and debt.
    Means test SS and Medicare
    Increase the age of retirement
    Significantly cut defense spending, we don't need to save the world. Jesus already did that.
    Hedge fund taxes should be ordinary income based
    Cut out loop holes and special deductions for the petro industry.
    Cut out duplicate federal agencies
    Increase tax rates on the ultra wealthy,


    Reduce tax on the middle class. They spend all the money they don't have to send to Washington. The ultra rich sock away their wealth and don't spend the extra amount on goodies. We need more purchase of domestic goodies to stimulate the economy and GDP.


    Stop subdicizing (sp) the Taker states where they get back more federal funds than they give to Washington. Turns out those are the Red States that voted for Romney. All the Blue states that voted for Obama are Giver states where they give more to Washington than they get back. The Taker states want less government, but they don't mind taking federal monies.


    ReplyDelete

Post a Comment

Thanks a lot for leaving a comment. My phone number is 805-709-6696 if you have any questions.