This is something that many people don’t understand. In one way, it should work this way — the higher the tax rate, the more revenue you take in — but it doesn’t. The Laffer Curve is the visual reason why; but the explanation is also quite simple: the more you tax, the more people hide their money; the more you tax, the more they move themselves and/or their money; the more you tax, the less incentive people have to earn money; the more you tax, the less there is to spend; the less there is to spend, the slower the economy goes; the slower the economy goes, the less revenue comes in.

One of the series of books I read through and greatly enjoyed was the Nero Wolfe mystery series, written by Rex Stout (and a few years ago, also made into a series of A&E TV shows). The books were set contemporary to when they were written, with the first one being published in the 30s, I think, and going all the way through the 70s. A recurring motif in several of the earlier ones (probably those written in the 40s and 50s), was the oppressive income tax, and how it squelched the brilliant detective’s desire to take on a case. When the novels were set in late November or early December, it was frequently noted that Wolfe would turn down cases because he was at or near a certain income, and if he earned any more, he would be taxed at a rate of 90% for it, so he figured that 10% of whatever fee simply wasn’t worth it. And that’s true — would you want to do the same amount of work and actually get to keep only 10% of your gross? It’s ridiculous! It’s time to trim the federal budget, so that we can keep more of our money. We are

Taxed

Enough

Already!

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Remember that famous quote from John F. Kennedy in his inaugural address? That famous line, “Ask not what your country can do for you, but ask what you can do for your country,” has been repeated by many different people over the past 48 years in a variety of contexts and for a variety of purposes. But it seems that we have forgotten it, and are only asking what our country or our government can do for us.

During this past election cycle, I got in a conversation with someone who was planning on voting for Obama and basically an entire Democrat and/or liberal ticket. She asked me why I was going to vote Republican, because “what have the Republicans ever given you?” I’ve thought about that question a lot in the past several months, and found it to give insight into the reason why government is so big, why they take so much from us in taxes, and why they are elected into office again and again, despite their massive failures. [Massive failures? Yes! Pres. Johnson declared “War on Poverty” in the 60s, and it’s only gotten worse. Yet we continue to throw good money after bad, in the apparent insane hopes that maybe this time history won’t repeat itself. And that’s just one example.]

This woman didn’t realize it, but she was selling her vote to the highest bidder — to whomever was able to convince her that s/he was going to give her the most. In one way, that’s not too different from what everyone does — everyone votes for the person that s/he thinks is the best. The difference comes in the way someone determines who will be the best candidate for the job. It’s an easy thing to vote for someone who promises you to “give” you what you want (even if, like so many campaign promises, the promise is forgotten the day after the election). It’s much harder — requires more discipline, more maturity, more circumspection, more thought — to vote for someone who does not promise you the moon.

But it is important to remember, that “the government” cannot give unless it first takes. They take our money in the form of taxes, then they take a percentage of our money off the top for bureaucracy, then they give us back a smaller portion of our money in the form of “benefits” and services. Some taxation is necessary, and some benefits and services are needful; but it’s time to say enough already!!!

We have to step up and let our voice be heard. A reader named Craig sent the link to this news story about various Representatives and Senators going apoplectic about proposed budget cuts, because the cuts were going to affect their districts. One of the items was a Presidential helicopter that Obama says is not necessary. Although $800,000,000 is a drop in the bucket, compared to the monstrosity of the “stimulus” package, it is still eight hundred million dollars of your money and my money that will be spent unnecessarily unless it is ultimately cut. And it will be spent because people voted, not for what they could do for their country, but what their country could do for them. Unfortunately, that comes at a very steep price, because as I said before, the government cannot give anything that it does not first take away.

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When a budget debate is underway, and some politicians try to cut taxes so that you and I can keep more of our money, the refrain from some in the media as well as certain politicians (who tend to be liberal — they liberally take our money in the form of taxes and liberally spend our money in the form of pork programs) is, “How are we going to pay for these tax cuts??” That’s the wrong question.

Nobody “pays” for tax cuts — it’s actually an absurdity.

If you spend everything you earn, and then lose some of your income, nobody would ask you, “How are you going to pay for your pay cut?” because it is recognized as not making any sense. Rather, someone might ask how you are going to pay your expenses due to your pay cut. It might seem like a minor quibble, but it really isn’t. Words are powerful! In skipping the step, and saying “pay for tax cuts,” it gives a powerful force to those who want to keep taking more of your money.

When you and I are faced with a reduction in income, what do we do? We economize. We reduce our expenses to match our income. Luxuries and non-necessary items are the first to go. You and I have to do this sometimes — why should our government (which is supposedly “we the people”) be so different? Why should the government continue to pay for luxuries and non-necessary items when revenue goes down, while you and I have to tighten our belts in order to make it?

In asking, “How are we going to pay for tax cuts?” it makes it sound as if the expenses are fixed and unalterable! How ridiculous! In any budget, there are only two sides to the equation: income and expenses. If my income goes down and I can’t get it back up, I have to cut my expenses. If the government’s income actually goes down due to cuts in tax rates (which is arguable), why do they act as if they cannot reduce their expenses? That’s just arrogance, pure and simple. It also smacks of immaturity — like the guy who is living on the edge (or even over the edge), but won’t give up his meals out or his unlimited cell phone usage or cable TV even if he can’t meet his bills. Or someone who buys a brand-new car that he can’t afford just because he likes it. Reminds me of a toddler — “But I want it!”

It’s time for some grown-ups to stand up and put the arrogant teenagers and toddlers that are currently in charge of our government back in their places, so that those who are mature (not necessarily old; just mature — able to say “no” and mean it) can run the government and get us back on the right path.

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A trillion dollars.  That is a hard number to wrap your mind around.  I wanted to try and make what is happening in our government easy to understand.  The only problem is that most of us have a hard time understanding how big a billion is.  A billion is 1000 million.  One hundred billion is 10,000 million.  A trillion?  100,000 million dollars!  I know… still impossible to understand.  So I have a different idea that might make this easier to understand.  Step 1:

 

Estimated income for Federal Government is 2,381 billion dollars, or 2.381 trillion dollars.  This number is what the president and his lackeys came up with.  The CBO a non-partisan group of very smart people think 2,289 is probably a little closer to the mark. 

 

The estimated expenses for the Federal Government are 3,552 billion dollars.  That pesky group of smart people at the CBO thinks that it will actually be 3,669 billion dollars.  I am going to use the estimates of the pesky, non-partisan, smart people for my example. 

 

Before I go into my example there are a few more things to note:

 

  1. 1,362 billion dollars are being spent on discretionary spending
  2. 172 billion dollars will be spent on paying net interest
  3.  At the end of 2009 the public will hold 7,987 billion dollars of debt
  4. At the end of 2010 we will hold 9,319 billion dollars of debt

 

I could get a lot more in depth but I really think this is enough information to make anyone a little… oh what is the word I am looking for? (see last sentence of this article)

 

Step #2  So here is my example with applying percentages to the above facts to a $100,000 salary.  This is about an every day Joe or Jane who has to manage a budget and here is what their situation would look like.

 

Gross income $100,000 a year

They don’t have to pay taxes!  Hooray for them.

They are planning on spending:

House payment 4,000 a month (48,000 a year)

Car expenses 1,000 a month (12,000 a year)

Food 1,500 a month (18,000 a year)

Utilities 1,000 a month (12,000 a year)

Miscellaneous expenses 250 a month (3,000 a year)

Interest that they owe on credit cards (8,000 a year)

 

OK… lets add this up *picture an old fashion cash register ringing up a total* $101,000.  Houston we have a problem.  At this point I think most of us would start looking at a few different options.  But that is you and YOU are NOT the Federal Government.  After all it is their job to stimulate the U.S. economy.  So here is what our everyday Joe or Jane does.

 

Ice Skating lessons $1,000 a month (12,000 a year)

Charities $3,000 a month (36,000 a year)

Going out to eat $1,000 a month ($12,000 a year)

 

Oh no!  Another $60,000 will now equal $61,000 in the hole for this year.  I still have not told you what is going on in the background.  You know that $8,000 a year they pay in interest?  Well the balance of that credit card is $400,000.  Now this Joe or Jane has a really good plan.  They have sat down and forecasted where they want to be by the end of the year 2019.  You are probably thinking to yourself that they are going to pay off their credit card and stop ice skating lessons and maybe move into a smaller house.  But I they think it will be a good idea to run their credit card up to a balance of $755,000!

 

There is one last little hope for this person.  Look how charitable they are with money they don’t have.  Let me tell you about the charity they give to.  It rewards people to have children out of wedlock.  It rewards people for not working.  It rewards people for not getting an education.  That is just the surface of what an ill conceived charity this Joe or Jane gives money to.  Does this surprise you given the information above?

 

FOLKS… this is EXACTLY what our Federal Government is doing with OUR MONEY.  Except it isn’t $100,000 we are talking about.  We give them an annual budget of $2,289,000,000,000 and this is what they do with it!!!!!