Friday, July 20, 2007
100% Taxes
There have been a few Wall Street Journal articles about the minimum tax issue The ABCs of Dealing With the AMT . If you make income above a certain level you lose the ability to claim deductions. Thus for a range of income above that level you pay 100% tax. Since that level is above 200k most Americans are not worried. I read an article yesterday about the cost of future government obligations. These range from the generous city fire fighter and police retirement benefits to the possible trillions of dollars for prescription drug benefits. Who Do We Owe and How Much? What worries me when I look at these numbers is that some estimates actually range beyond 100% of what the government can tax. Based on the obligations the government is spending twice as much as they take in. Estimates put total government tax at about 55% (total tax is everything from the tax added to gasoline to those penny taxes for this and that on your phone bill and everything in between). If you double 55% then we are actually racking up tax liabilities at more than 100% of what everyone makes. This total varies widely based on how you compute government spending, obligations and GNP. Is everyone in a 100% tax bracket?
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What is the big deal?
Our elected representatives represent the electorate. Borrow against the future and let the next generation deal with the problems. Preboomers are collecting their SS with no second thoughts. Boomers are planning to retire for 20 years and make no contribution to society and draw their SS checks. Gen Xers are cynical because they realize it just will not be there. Gen Yers are living for the moment.
Its just like all the fuss about buying from China. If consumers stop buying from China, the problem goes away. But our greedy throwaway society demands consumption of what we want when we want it at the cheapest possible price.
We can always declare National bankruptcy, make our money worthless and pay our debts. The scary day is when the debt owed exceeds national assets. It would be like owning a car worth less than the loan owed... and lots of people do that today... so what is the big deal?
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