As we are getting nearer to election day, our minds turn to our government and our representatives. We look back to see just what our government has done for the American people, the people who elected them. This is suppose to be a country that is "By the People and For the People."
What we have instead is continued bickering--not only between the two main parties, but within the parties themselves. The Republicans have allowed the Tea Party to join them, a radical group worse than the religious right of yesteryear and the Democrats play games within the party.
President Obama has not shown strong leadership with the Republicans, though with the debt debacle, he didn't have much of a choice with the Republicans all to willing to allow the country to default rather than give up tax loop holes for the rich....The fact they call it a tax increase is quite telling. No, what the Republicans want to do is again go after the working poor to derail Social Security and Medicare....calling them entitlements. A call we have all heard before.
Entitlements? Just what do the rich call those tax loop holes they want to protect so much? Sure, the rich pay more taxes, why shouldn't they? They do make much more money than the 90 percent of us other taxpayers, but they have ways of avoiding paying taxes.
The top 400 wealthy taxpayers paid a 30 percent tax rate in 1995 and just under 17 percent in 2007. Most due to real estate, dividends and capital gains, according to Bloomberg Business Week. Warren Buffett, for example stated he pays less in taxes than his cleaning lady....because Buffett's income comes mostly from dividends.
Another example is when an executive borrowing money from an investment bank, with stocks as his collateral. He can freeze his value of his stocks by buying and selling later at a fixed price. Now he can either pay the banker or keep it. If he keeps it, he needs to hand over his stocks, deferring his tax bill until years later. However, his money can work for him by making more money through buying and selling so that he pays taxes only on the original amount.
Avoidance of estate tax. Someone who has millions in investment funds can set up a trust fund for their children and set it up in a GRAT or Granter Retained Annuity Trust and list their children as beneficiaries. The amount invested including interest must be returned to the parents in a certain amount of time. The money earned that is more than the interest rate (3 percent) can remain in the trust that will pass to the children, tax free of estate taxes and capital gains tax.
So of course it's the rich who have entitlements and tax benefits because they have the money to manipulate what they pay in taxes, something the working poor or middle class don't have the luxury of doing. They also have the money to pay experts who know the ins and outs of legal money manipulation.
There are people who like to spout rhetoric about how 45 percent of Americans don't pay income taxes. What they fail to take into account is that many people in that 45 percent make less than $10,000 a year and are therefore not subject to income tax and low and behold, those who make between $50,000- up to a million a year is included in this group who don't pay taxes, about 4 million people fall into this category. However, they do pay Medicare and FICA taxes. Middle income folks can take a little advantage in paying less in taxes due to Estimated income and child tax credit.
Now lets take a look at those who want to reduce or eliminate Social Security, calling it an entitlement. Just how is that going to reduce the national debt? Social Security is not part of the federal budget. It has its own source of income in the form of payroll tax. Why do some demand it be reduced? Because as of 2010, less is being paid into SS than is paid out. Why? Because government agencies borrowed from SS...and must now pay it back.....except they already spent it, so it's only fitting that some want to get rid of the debt...oops I mean their liability. Funny, in any other situation, not paying back what you owe will get you charges on embezzlement or possible foreclosure. Do away with SS and governmental agencies who borrowed from SS don't need to pay it back. A loss for the people, but a win for those who borrowed.
Obviously, tax reform is necessary. A tax system that eliminates most tax credits and personal exemptions,for all income earners could not only reduce the deficit, but lower income tax as the newly formed tax commission has recommended.
This means eliminating tax loopholes for the rich.
Now another argument the rich have for keeping the loopholes is that the wealthy create jobs. Really. The fact is that employment is dependent on consumer demand, not how much money people get to keep. If you own a business, the amount of people you will hire is based on how busy you are, how much you sell or what some call......demand, not how much money you take in. Keeping the Bush tax cuts for the wealthy does not create jobs because the rich will either reinvest the money or pay down their debt, neither of which creates jobs. According to a Financial Times report, much of the net income from the Bush tax cuts for the upper income elite, has gone to overseas investment.
American corporations, who make more money now than they did during the recession, are still not hiring.
Although the U.S. has the highest corporate tax rates in the world, the government takes in less revenue from corporate taxes in terms of economic output, most due to outsourcing overseas because the don't pay taxes until they come back to the U.S., which may take years....or never and yet the corporations who outsource get to take the deductions of the cost of doing business right away. Again, not conducive to U.S. employment. In fact, as of 2005, these corporations employed nearly nine million people.....overseas.....at a lower wage than they would need to pay American employees, according to The Bureau of Economic Analysis.
So instead of listening to political hype or biased media on both sides, the American people need to do some work on their own. Research, find out if what the people who run for offices are telling the truth or actually working for the American people. We the people have responsibility to ensure our government officials do as the constitutions demands, govern by the people or for the people, not for special interest, not for ever increasing profits at the expense of most of the American people. Take action when needed in the form of protests, writing your senator or congressman/woman and write editorials. Inaction is dangerous.
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