What we are exposed to every day by the various media can sometimes be very frustrating because of representations without a whole lot of thought. There are many misconceptions and there seems to be more each year.
Consider inflation. It is the most confiscatory tax of all as it simply takes money from everyone. We are all forced to deal with skyrocketing inflation, higher taxes, and rising energy costs. We all get hurt/have less money in our pockets.
The politicians and the media are mostly blaming the rich, expecting them to pay their fair share. No one bothers to ask how you can make the poor rich by making the rich poor.
Here is an interesting game to play. Ask someone where they work. Then ask if they are planning for retirement. And finally, ask where their employer invests its retirement plan assets. This works if they are in civil service, in GovGuam, have a TSP, an IRA or a 401K; they will say the money is invested in stocks.
Now ask if they think corporations should pay higher taxes. If they say “yes,” then ask, “Do you want them to take your retirement plan profits and give them to the government? Wouldn’t that be robbing yourself?” This helps people understand that corporations don’t pay taxes, all they do is collect taxes from the product or services they sell.
We would all be better off if they did not have to pay taxes at all because they don’t sit on the money, they do something with it like create more jobs to help increase your retirement assets. The only conceivable winner from inflation seems to be the government which collects the taxes.
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Here is another. Ask people how much money one must make to be in the top 10 percent income earners in America. They usually would be very surprised, and while it changes every year, it is around $130,000.
Another great question is, “What percentage of all the taxes America collects per year are paid by that upper 10 percent of the taxpayers?” Answer: about 71 percent. You hear people say all the time, “The rich should pay their fair share.” It seems 71 percent of all taxes paid is already a big chunk of fairness.
Notice that most people never define what fairness is to them, they just repeat the narrative. Because the money must come from someone, to cut to reality, just say, “if you make more money than me, how much of your working income am I entitled to?” It is pretty easy to guess what their answer would be.
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It is disheartening to see the average person knows very little about what their cost of living needs might be by the time they retire; or worse, how long they might live and need that income; how will they pay their taxes and how much will taxes be by then; what legacy do they want to leave their children; how will they afford education for their children or grandchildren; and how will they pay for major capital purchases like long term care??
Running out of income because you lived too long is not a pretty picture. This might equate to a moment of seriousness. How much is one trillion dollars? Well, there are 86,400 seconds in a day. That means there are 31,536,000 seconds in a year. So guess what year it was 1,000,000,000,000 (1trillion) seconds ago? Ask your friends. Want to know? Read on.
Now convert the seconds to dollars and suppose you had so much money you could spend $31,536,000 every day. How long would it take you to spend $1T dollars? Answer. 30,000 years. So, 1 trillion seconds ago was 30,000BC!
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It took America 232 years to accumulate $9T in debt; then we got $14T more in the next 14 years; then we racked up another $7.2T in the last 2 years. America has over $31 trillion of debt. How will it be paid off? Our highest tax rate was 94 percent during the war, followed by 14 more years at 90 percent.
Taxes are low now in comparison. Logically, which way will tax rates go? Do you really want to pay taxes when you have no worker income during retirement? We have a great tax rate risk right now and the reality should be that we are doing something about it.
There are a lot more of these considerations, but this piece is already long!
Carl Peterson is the president of Money Resources Inc. Send feedback to carlpete@moneyresourcesinc.com
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