In the nineties I was involved with a number of companies that brought Russian technology to the United States to develop businesses. At one point I asked one of the Russian gentlemen what he thought of our country. He said he was particularly taken by our privileged class. When I asked him to clarify the statement, he said, “You know, your teenagers.” He went on to explain how they drive the cars, buy the clothes and the electronic equipment, and they do it all at little to no cost to themselves. However, they are not the only group that has favor in this nation. There are other groups with favor based on age, health, income, net worth, and occupation.
Posts Tagged ‘inflation’
Family Budget Crisis in Sixteen Months!
Friday, August 28th, 2009In the year 2011 when the first baby boomer reaches 65 years of age there will be a significant tax increase without an act of Congress. This will happen when the tax cuts put in place under President Bush expire. What I have observed since the Bush tax cuts took effect was an increase in taxes at the state and local level as federal funds were cut back. When the tax increase takes place we will see taxes, at least in Ohio, at an unprecedented level.
What will this mean to the average family earning $50,000 per year? Using standard deductions a family earning $50,000 will pay an extra $200 per month in federal taxes. If this was the only tax to be concerned with it might be possible for a family to survive. But it’s not. (more…)
June 19, 2009 Newsletter
Friday, June 19th, 2009
CHARITABLE GIVING REFORM
Congress and the current administration are now considering doing away with deductions for charity. While this plan may initially be targeted toward those with high incomes (in excess of $250,000), it will affect all socio-economic classes when finalized. With the anticipated inflation, those now considered middle-class may find themselves losing their deductions as incomes rise to meet the inflation demand. The poor and lower middle-class lose the benefits from charities.
The deduction for charitable contributions is one of the oldest deduction provisions in our tax law, enacted in the War Reform Act of 1917. While many changes and adaptations have been made to this provision over the years, Americans are still ‘rewarded’ for supporting, what the 1981 Joint Committee on Taxation said, were “…organizations which provide services that otherwise might have to be provided by the Federal Government.”
This plan comes at a time when the need for charity in the United States is greater than it has been in the last several decades. Non-profits are currently facing the ‘perfect storm’ of issues: contributors’ wealth evaporation, cutbacks by cash-strapped states and municipalities, and skyrocketing need. A study by the Center of Philanthropy at Indiana University estimated that the tax change could reduce affluent households’ overall itemized charitable giving by nearly 5 percent — or about $3.87 billion — based on an analysis of the Internal Revenue Service’s most recent deduction data. (more…)
May 22, 2009 Newsletter
Friday, May 22nd, 2009Real Estate Trends
As the productivity in this nation continues to turn down and resources become more scarce, housing costs will become an ever increasing problem for many families. As we have mentioned in previous articles, the government has created a massive Ponzi scheme with the underfunded Social Security, Medicare and Medicaid programs which will result in significant inflation. With significant inflation and tighter controls on credit, finding affordable housing or rentals is expected to be more difficult in the future. This will increase the number of homeless on our streets. Interest rates will soar. The number of people who can make the high mortgage payments will decrease bringing values down, but not prices.
Large square footage homes in the suburbs will be a risk primarily because many will find themselves facing reduced incomes precipitated by a decline in productivity. The productivity decline is caused by the large tax burden (direct and indirect) placed on the goods and services produced by this nation. If too many people move out of a community, the tax revenue will not be able to provide essential, emergency services. This would cause more people to move away because they would no longer feel safe or protected. (more…)
May 8, 2009 Newsletter
Thursday, May 7th, 2009EVERYONE NEEDS A PLAN B
The short term trend in the market has been upward for equities and although we may see some rocky behavior, the direction appears to be toward recovery. Our concern, in light of recent behavior in Washington D.C., continues to be toward a highly inflationary season for the long-term. Warren Buffet recently talked about how inflation taxes those on fixed income by stealing purchasing power. We fear this sentiment for everyone as new taxes devalue our currency and erode our purchasing power. The result of these new taxes for US stocks will be repressive. In turn, global stocks will likely rise more aggressively than US stocks. (more…)
May 1, 2009 Newsletter
Tuesday, March 24th, 2009
HOPE FOR TOMORROW
The United States will soon face an economic storm of immense proportions created by a Congress, who for decades have made promises that they cannot fulfill. They have engaged in a process of buying votes in the present while postponing future financial needs. The baby boom population (78 million people) is approaching 65 and will be asking for Social Security benefits and Medicare benefits that are underfunded. In addition, the states have the responsibility to provide nursing care for the elderly who are impoverished. This system is called Medicaid. It too is largely underfunded. (more…)
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