According to William Baldwin, investment strategies editor at Forbes, be prepared. Congress is going to give you a bumpy ride. He thinks it is inevitable that with the federal deficit above one trillion, taxpayers who have money in the bank are going to have to “chip in” (like its voluntary!) some of it to the U.S. Treasury.
Straightforward tax increases could cause a few of those government elite to lose their jobs, so they will do what the government elite have always done – secret tax hikes, phaseouts, surcharges and code interactions that haul in revenue while leaving the income tax rate unchanged, in the hopes that the average joe won’t notice they’re being screwed. The soon-to-arrive 3.8% surtax on investment income is a prototype.
Martin Feldstein, a Harvard economists, sees the government raking in $278 billion a year from limiting the value of itemized deductions to 2% of your income. For those making $50,000 a year, you’d be looking at a lousy $1,000 deduction which wouldn’t even cover the cost of your monthly food bill, much less your mortgage interest, medical, dental, state taxes, personal property and real estate taxes.
And if you think that retirement money you’ve tucked away in the bank is safe – think again. Already on the table is a proposal to lower the ceiling on retirement contributions to the lesser of $20,000 or 20% of earned income. An even more radical suggestion from the tax-equity crowd is to replace that deduction with a small credit that the goverment would deposit into your retirement account if you don’t owe income taxes.
How do you cope? Well, if you’re wealthy you’ve got lots of options. Your first step is to hire an expensive fancy attorney with ties to the government or at least goverment lobbists to find all those secret loopholes.
When you’re not wealthy – you’re screwed. When the thieves in Washington can’t sqeeze their wealthy friends, they turn their attention to those who can’t afford to fight back, and that be us!
As Damon Geller wrote, government officials are parasites; they don’t produce anything. They feed off those who do. When government officials can’t pay for all those empty promises they made, they’ll figure out ways to steal the public’s money to fund the projects.
The only chance we have is to put all those thieves out to pasture before they inflict the damage.
You get what you voted for.
