Future Tax Increase

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dshields's picture
dshields
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Future Tax Increase

The CBO says the spending cuts the repubs and dems fought over for 2 weeks came to 322 million dollars.  There is a 1 trillion plus budget deficit for 2010 and it is not clear what the deficit is going to be for 2011 but it seems to be of a similar nature.  We appear to be unable to control spending.  There is going to be a national emergency if the politicians can not control spending.

http://www.heritage.org/Research/Reports/2011/04/Tax-Day-2011-Deficit-Sp...

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Yes Aaarrgghhh Its sooo

Yes

Aaarrgghhh

Its sooo frustrating. You don't have to know much to see that the 'budget agreement' was complete BS. It's just so strange that it's accepted and not challenged.

C'mon people!

For the love of Mike!

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No Choice

Middle class is the only demographic to rob :(

Taxes will increase. Stupid poor have nothing to loot - please, don't shoot the messenger. BTW the deficit is not designed to be paid off, that would get us off the hook. Again, sorry to bring bad news. Check interest rates on credit cards - that will give you some insight, do the poor have any credit facility?

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paying off the debt

Seeing we are in lala land already, if the Fed can create money out of thin air, why can't the government repay it out of thin air? 

I'm not sure what this would look like but t hey seem to come with the unimaginable time and time again.

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posted this elsewhere....

Originally posted this last year on another site I think. Still true:

"Current politics is best represented by a two headed dragon. Politicians pay lip service to opposing ideologies but both the Republican and Democratic parties are part of the same big government dragon body. The body is moving in one direction; bigger and more powerful government. More control over the electorate. Having the two parties serves a greater purpose though....it divides the populace (sheeple?) into two camps that are always at each others' throat. I think this tactic is called divide and conquer. Until we wake up and get away from the 'Repubs this....' or 'Dems that....' blame game then we will be slowly boiled...just like the frog in the frying pan...all while the dragon stands by watching and laughing."

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r101958 wrote: Originally

r101958 wrote:

Originally posted this last year on another site I think. Still true:

"Current politics is best represented by a two headed dragon. Politicians pay lip service to opposing ideologies but both the Republican and Democratic parties are part of the same big government dragon body. The body is moving in one direction; bigger and more powerful government. More control over the electorate. Having the two parties serves a greater purpose though....it divides the populace (sheeple?) into two camps that are always at each others' throat. I think this tactic is called divide and conquer. Until we wake up and get away from the 'Repubs this....' or 'Dems that....' blame game then we will be slowly boiled...just like the frog in the frying pan...all while the dragon stands by watching and laughing."

Dude, you just might be right.  I did not use to think so but after the last budget deal where the repubs caved in to the max I am starting to reconsider my position.  I cut more grass off my yard than they cut off the budget.  There has to be cuts, and I mean big cuts, historic cuts, then and only then might we escape the fall we are heading for - if it is not too late already.  Pretty sad.

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A solution...

Hi r101958,

"Current politics is best represented by a two headed dragon.
Politicians pay lip service to opposing ideologies but both the
Republican and Democratic parties are part of the same big government dragon body.

The body is moving in one direction; bigger and more powerful government.
More control over the electorate. Having the two parties serves a greater purpose though....
it divides the populace (sheeple?) into two camps that are always at each others' throat.
I think this tactic is called divide and conquer. Until we wake up and get away from the
'Repubs this....' or 'Dems that....' blame game then we will be slowly boiled...
just like the frog in the frying pan...all while the dragon stands by watching and laughing."

Well, here's one way that the frog can leap to safety....
It's the WinWinRevolution.org....   A newly formed group:

"What WWR proposes is
Capitalism+Democracy+Charityism (Where Charityism
is the mature form of government spending, capped
and graded)

Capitalism rewards the rich for helping the
middle. Charityism helps the poor. Democracy keeps
it from falling into the wrong hands.

And can you imagine how our economy will boom once
our people are united behind a sustainable capped
and graded government that has solved the ethical
issues we have today with capitalism?"

More details in this CM thread:
http://www.peakprosperity.com/forum/win-win-revolution-must-watch/56576

I'm excited and hopeful that this could keep us from boiling to death. 

-Bob O

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Why does everyone leave out

Why does everyone leave out the fact that someone has to borrow from the banking system and pay interest to the banking system before anyone can "spend"?

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I've read a news that talks

I've read a news that talks about the debt ceiling.  There is a fierce debate underway in the United States over the country's "debt ceiling".
You may be scratching your head as to what exactly a "debt ceiling" is, and why politicians are so up in arms over it.  When we talk about debt ceiling is simply a cap on how much money the US federal government can owe. In the news, they have mentioned that President Obama dealt with the debt ceiling in a White House press conference Wednesday. He was especially critical of House republicans not willing to increase the debt ceiling if taxes are raised. The president suggested congress shout "address their sac red cows" and "get it done.". Predictable, responses to the conference have been divided along party lines. I read this here: Obama blasts Republicans on debt ceiling

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Welcome

JennahL wrote:

I've read a news that talks about the debt ceiling.  There is a fierce debate underway in the United States over the country's "debt ceiling".
You may be scratching your head as to what exactly a "debt ceiling" is, and why politicians are so up in arms over it.  When we talk about debt ceiling is simply a cap on how much money the US federal government can owe. In the news, they have mentioned that President Obama dealt with the debt ceiling in a White House press conference Wednesday. He was especially critical of House republicans not willing to increase the debt ceiling if taxes are raised. The president suggested congress shout "address their sac red cows" and "get it done.". Predictable, responses to the conference have been divided along party lines. I read this here: Obama blasts Republicans on debt ceiling

Jennah -

Welcome to CM.com.  As you know, there are lots of moving parts to the problems facing everyone today and the debt ceiling is but one of them.

Have you watched Crash Course yet?

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revenue verses spending

I do not think we have a revenue problem, I think we have a spending problem.  I have never heard of the Fed Gov having a spending decrease after a revenue increase.  For many years the Fed Gov has always spent more than they have taken in.  At some point we have to draw a line and say we are not going to keep spending more and raising taxes more forever.  At some point if you keep raising taxes there will be an implosion as fair percentage of the people will no have enough money to meet their current obligations.  I think we should draw the line now.  We need to see real spending decreases.  For instance. the Dept of Education does not educate anybody as far as I know.  Why do we need a Fed Dept of Ed at all ?  If it actually does have some few useful functions, save those and cut the rest.  Free all the people back to the private sector where instead of being overhead they can be productive.  Stop the crazy wars.  That would save a aircraft carrier of money.  We can do it.  We just have to elect politicians with back bone.  Fed Gov spending could be cut say 25% without causing a revolution if we focus on stuff we really do not need.

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dshields wrote: I do not

dshields wrote:

I do not think we have a revenue problem, I think we have a spending problem.  I have never heard of the Fed Gov having a spending decrease after a revenue increase.  For many years the Fed Gov has always spent more than they have taken in.  At some point we have to draw a line and say we are not going to keep spending more and raising taxes more forever.  At some point if you keep raising taxes there will be an implosion as fair percentage of the people will no have enough money to meet their current obligations.  I think we should draw the line now.  We need to see real spending decreases.  For instance. the Dept of Education does not educate anybody as far as I know.  Why do we need a Fed Dept of Ed at all ?  If it actually does have some few useful functions, save those and cut the rest.  Free all the people back to the private sector where instead of being overhead they can be productive.  Stop the crazy wars.  That would save a aircraft carrier of money.  We can do it.  We just have to elect politicians with back bone.  Fed Gov spending could be cut say 25% without causing a revolution if we focus on stuff we really do not need.

Seeing how there has been nothing but tax cuts since the 1960's, I can't see how you think there is not a revenue problem. The top rate was 91% in the early 1960's, it's now down to a little more than a third of that now.

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The purpose of taxes is....

Useyerloaf wrote:

Seeing how there has been nothing but tax cuts since the 1960's, I can't see how you think there is not a revenue problem. The top rate was 91% in the early 1960's, it's now down to a little more than a third of that now.

Are taxes supposed to punish success or generate revenue?  If the answer is generate revenue, then how are the rates much of an indicator of anything as long is revenue is increasing at least proportionate to the economy.  However, it can still be a spending problem if spending is increasing at a faster rate than tax revenue or the economy at large.

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goes211 wrote: Useyerloaf

goes211 wrote:

Useyerloaf wrote:

Seeing how there has been nothing but tax cuts since the 1960's, I can't see how you think there is not a revenue problem. The top rate was 91% in the early 1960's, it's now down to a little more than a third of that now.

Are taxes supposed to punish success or generate revenue?  If the answer is generate revenue, then how are the rates much of an indicator of anything as long is revenue is increasing at least proportionate to the economy.  However, it can still be a spending problem if spending is increasing at a faster rate than tax revenue or the economy at large.

It should be obvious to anyone that after 40 years of tax cuts that when towns are forced to lay off teachers, firemen, policemen, and turn off street lights there is indeed a revenue problem. The same goes for the country at large. Anyone who's now paying 35%  before deductions who used to pay 91% is certainly not being punished.

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Useyerloaf wrote: goes211

Useyerloaf wrote:

goes211 wrote:

Useyerloaf wrote:

Seeing how there has been nothing but tax cuts since the 1960's, I can't see how you think there is not a revenue problem. The top rate was 91% in the early 1960's, it's now down to a little more than a third of that now.

Are taxes supposed to punish success or generate revenue?  If the answer is generate revenue, then how are the rates much of an indicator of anything as long is revenue is increasing at least proportionate to the economy.  However, it can still be a spending problem if spending is increasing at a faster rate than tax revenue or the economy at large.

It should be obvious to anyone that after 40 years of tax cuts that when towns are forced to lay off teachers, firemen, policemen, and turn off street lights there is indeed a revenue problem. The same goes for the country at large. Anyone who's now paying 35%  before deductions who used to pay 91% is certainly not being punished.

You are confusing federal income taxes with state and municipal taxes here.  In my area, the state and local taxes, fees. assessments,etc, that fund the services yuo refer to have risen dramatically over the past 15 years...and it still hasn't been able to keep up with the spending habits of those governmental entities.

As far as federal income tax goes, I am sick of the IRRESPONSIBLE nature of the spending irrespective of any change in rates.

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Fairness

Useyerloaf wrote:

It should be obvious to anyone that after 40 years of tax cuts that when towns are forced to lay off teachers, firemen, policemen, and turn off street lights there is indeed a revenue problem. The same goes for the country at large. Anyone who's now paying 35%  before deductions who used to pay 91% is certainly not being punished.

But you did not answer the question.  Did tax receipts decline due to the rate declines or did revenues increase over this time?  If you believe in government spending, you should not care about rates.  You should care about maximizing revenues.

Also how has the size and cost of the teachers, firemen, and policemen changed over the past 40 years?   I will bet that their growth has been at a far higher rate than revenues or GDP.

I also find the attitude that you should be happy to pay 35% when you could be paying 91% a bit disturbing.  That is morally equivalent to saying a black man should be happy during the Jim Crow era because alternatively he could have been a slave.  To me at least, it is not about how things have improved, its about fairness.  Trying to fix fundamental fairness with the tax code is just two wrongs trying to make a right.

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Fair

goes211 wrote:

Useyerloaf wrote:

It should be obvious to anyone that after 40 years of tax cuts that when towns are forced to lay off teachers, firemen, policemen, and turn off street lights there is indeed a revenue problem. The same goes for the country at large. Anyone who's now paying 35%  before deductions who used to pay 91% is certainly not being punished.

But you did not answer the question.  Did tax receipts decline due to the rate declines or did revenues increase over this time?  If you believe in government spending, you should not care about rates.  You should care about maximizing revenues.

Also how has the size and cost of the teachers, firemen, and policemen changed over the past 40 years?   I will bet that their growth has been at a far higher rate than revenues or GDP.

I also find the attitude that you should be happy to pay 35% when you could be paying 91% a bit disturbing.  That is morally equivalent to saying a black man should be happy during the Jim Crow era because alternatively he could have been a slave.  To me at least, it is not about how things have improved, its about fairness.  Trying to fix fundamental fairness with the tax code is just two wrongs trying to make a right.

But what of population increases? Why is this not considered? Would we not expect that municipal services would rise proportionally to population? And if corporations are outsourcing jobs to China, and as a result destroying the tax base, they are in fact directly externalizing their costs at the expense of the rest of us. So both the rates would need to go up on average, and the services provided would have to go down.

What exactly is fair, and fair for whom.

I believe you would find if there was equality among tax payers, corporate and individual, and profit seekers were not allowed to externalize their costs without accountability, that the generalized tax rate would fall and services could map properly to population increases.

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Of course population changes matter

You are correct.  Population increases must also be considered.  I did not mean to imply that it was as simple as the ratio of cost vs. revenue.  Hopefully most of the population growth will be captured in GDP growth ( that is if GDP was true measure of the economy which it is not ).

My main points were if you need revenue, then worry about revenue.  Worrying about rates is just a distraction.  Also trying to fix the injustices of the world, after the fact with changes to the tax code, will probably just result in legal plunder.

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Delusional Thinking Politicians

It's just like a running a business or a family's household expenses. When you face deficit, you have to do one or both of the following:

1. Increase income by earning more
and/or
2. Decrease expenses by spending less

Anyone who approaches addressing the deficit problem by envisioning only spending cuts (and some are even more delusional as to envision further tax cuts as well)... is delusional.

Especially delusional are the politicians who voted for all the extra spending and all the extra tax cuts, and now want to only work only on reducing spending.

The future deficit problem will have to be addressed by both spending cuts and tax increases, or it won't be addressed at all.

Poet

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The Roman Empire conquered

The Roman Empire conquered the world on a 1% tax rate, up to 3% in times of war.  Ask yourself, why do our world governments need 30%, 40%, 50% of our earnings?  It's silly to say "Americans pay less tax than other civilized countries".  Getting robbed the least does not mean we are not robbed.

Like us, the Romans debased their currency, which led to oppressive taxes (by ancient standards, we should be so lucky) and economic hardships.

My opinion is that we have WAY too many welfare recipients.  By that, I mean public employees that do not produce anything.  The DOD alone is responsible for vast amounts of wasteful spending, through both bureaucracy and wars of aggression that immensely profit our war-based corporations through wealth confiscation, and the corporations that rebuild the stuff we bomb.  We pay to rent those bombs til they drop, then we BUY the bomb, then we pay for the school/hospital/what-not to get rebuilt.

"That's what government's for.  To get in a man's way"  -Malcolm Reynolds, Firefly series

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Useyerloaf wrote: dshields

Useyerloaf wrote:

dshields wrote:

I do not think we have a revenue problem, I think we have a spending problem.  I have never heard of the Fed Gov having a spending decrease after a revenue increase.  For many years the Fed Gov has always spent more than they have taken in.  At some point we have to draw a line and say we are not going to keep spending more and raising taxes more forever.  At some point if you keep raising taxes there will be an implosion as fair percentage of the people will no have enough money to meet their current obligations.  I think we should draw the line now.  We need to see real spending decreases.  For instance. the Dept of Education does not educate anybody as far as I know.  Why do we need a Fed Dept of Ed at all ?  If it actually does have some few useful functions, save those and cut the rest.  Free all the people back to the private sector where instead of being overhead they can be productive.  Stop the crazy wars.  That would save a aircraft carrier of money.  We can do it.  We just have to elect politicians with back bone.  Fed Gov spending could be cut say 25% without causing a revolution if we focus on stuff we really do not need.

Seeing how there has been nothing but tax cuts since the 1960's, I can't see how you think there is not a revenue problem. The top rate was 91% in the early 1960's, it's now down to a little more than a third of that now.

Surely the Fed Gov confiscating up to a third of our personal property every year is sufficient for every possible constitutional Fed Gov function.  A third is too much.  The gov should not consume a third of the resources of the country.  That is totally out of control.

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Poet wrote: It's just like a

Poet wrote:

It's just like a running a business or a family's household expenses. When you face deficit, you have to do one or both of the following:

1. Increase income by earning more
and/or
2. Decrease expenses by spending less

Anyone who approaches addressing the deficit problem by envisioning only spending cuts (and some are even more delusional as to envision further tax cuts as well)... is delusional.

Especially delusional are the politicians who voted for all the extra spending and all the extra tax cuts, and now want to only work only on reducing spending.

The future deficit problem will have to be addressed by both spending cuts and tax increases, or it won't be addressed at all.

Poet

I agree the politicians are delusional.  The very ones who get on TV crying about the deficit are the very ones that voted for the spending bills.  It seems crazy when you examine it in detail.  But, numbers are numbers and the politicians voted for the bills knowing that they could not be paid.  Look at Obamacare as a perfect example.  The is no way they are going to cut half a trillion from Medicare - it simply will not happen.  The deficits due to Obamacare out  in the future expand into a national financial catastrophe - and the dems voted it right in over th objections of the people they were elected to represent.  That is called tyranny.  It is an outrage.  The have gone against the people and done financially irresponsible things.  Now we are going to have to pay the price for their misbehavior.  It is infuriating.

The good part is many of the people have been watching over the last few years and there is a growing understanding in the general population that the politicians, dems and repubs, and made some amazingly large mistakes.  The 2010 midterm election results are an indication of this awaking.  The 2012 general election will continue this trend.  So if we can keep it together and not take a dive before Jan 20th 2013, we will be in a position to get government spending back in line with revenue.  We probably need a balanced budget amendment to the constitution that would phase in over some number of years - 5 to 10 years. 

I am actually not in favor of a balanced budget amendment but it has become clear that modern politicians are unable to control spending on their own.  If government spending was in line with revenue a lot of the negative issues we face today would simply evaporate.  We would be if not the strongest, then one of the strongest countries on earth.  There would be many benefits to having our finances under control.

No, we do not have a revenue problem, we have a spending problem.  I have never seen a case where a taxing authority reduced spending after a revenue increase.  It simply does not happen.  Half the population doesn't pay fed income taxes.  That is broken also.  If one does not pay anything and receives things then one has no skin in the game and will vote for more free stuff forever.  Once 51% percent of the voting population, and we are almost there now, always votes for politician(s) who say they will give them more free stuff then it is over.  America will be over and we will collapse for sure - no doubt.  The collapse will be terrible and the very people who voted in the politicians that caused the collapse will be the people who suffer the worst.  The rich will move their money out to safe places, and probably themselves also, and just leave the rest of us to the disaster we ourselves caused.  If I was rich I would do the same thing.  It is the one hole in democracy that can bring a nation down - out of control spending due to the election of the wrong politicians due to the ignorance of the people.

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The Roman Empire conquered the world

tictac1 wrote:

The Roman Empire conquered the world on a 1% tax rate, up to 3% in times of war. 

Ah... but they weren't using cruise missiles!

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You're in good company

dshields wrote:

Once 51% percent of the voting population, and we are almost there now, always votes for politician(s) who say they will give them more free stuff then it is over.

Dshields

Check this quote -- and note the date.  You are in good company.

Alexis de Tocqueville wrote:

The American Republic will endure until the day Congress discovers that it can bribe the public with the public's money.

Alexis de Tocqueville, 1835

Travlin 

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spending vs. revenue

Spending problem?  Revenue problem?  How about a "Theft problem".  The US is in for big trouble on a fiscal basis, because there is absolutely no political stomach (or genuine widespread support from the electorate, for that matter) for even modest reductions in federal gov't spending such as Ryan or Bowles/Simpson.  Yes, I said "modest"...the cuts they envisage don't even approach being enough in my view.  Too many people who either "want theirs" or buy into the "social justice" tripe to justify removing consumer sovereignty in favor of government controlled defined benefits.  Add in the wider demographic and resource issues, and that is why I pay attention to folks like Dr. Martenson...I don't see a way out.  I'm interested now only in navigating through the coming chaos as best as I can for me and mine - I have absolutely no remaining faith in any elected official, or most of the folks who voted them in, for that matter.

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badScooter

badScooter wrote:

Spending problem?  Revenue problem?  How about a "Theft problem".  The US is in for big trouble on a fiscal basis, because there is absolutely no political stomach (or genuine widespread support from the electorate, for that matter) for even modest reductions in federal gov't spending such as Ryan or Bowles/Simpson.  Yes, I said "modest"...the cuts they envisage don't even approach being enough in my view.  Too many people who either "want theirs" or buy into the "social justice" tripe to justify removing consumer sovereignty in favor of government controlled defined benefits.  Add in the wider demographic and resource issues, and that is why I pay attention to folks like Dr. Martenson...I don't see a way out.  I'm interested now only in navigating through the coming chaos as best as I can for me and mine - I have absolutely no remaining faith in any elected official, or most of the folks who voted them in, for that matter.

Dude !!!  You are good.  I agree to the bone.  Over the last 2 years I have basically lost all confidence on the political capability of America.  We are simply unable to manage ourselves in a responsible manner and now we are going to pay the price for our misbehavior.  It is going to be very tough on the poor and working poor.

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Travlin

Travlin wrote:

dshields wrote:

Once 51% percent of the voting population, and we are almost there now, always votes for politician(s) who say they will give them more free stuff then it is over.

Dshields

Check this quote -- and note the date.  You are in good company.

Alexis de Tocqueville wrote:

The American Republic will endure until the day Congress discovers that it can bribe the public with the public's money.

Alexis de Tocqueville, 1835

Travlin 

Yep - looks bad.  Old dude was right.

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Even after collapse, things could get worse

badScooter wrote:

I don't see a way out.  I'm interested now only in navigating through the coming chaos as best as I can for me and mine - I have absolutely no remaining faith in any elected official, or most of the folks who voted them in, for that matter.

I agree that we are in for huge pain and really no way out other than collapse.  However, it's still worth trying to educate people (even politicians) about what is happening, not to prevent what is coming, but so that we don't go down an even darker road after a collapse.  It will be easy for someone to step in and promise to fix everything and scapegoat some selected class.  That generally always ends very badly - think Hitler. 

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rhare wrote: badScooter

rhare wrote:

badScooter wrote:

I don't see a way out.  I'm interested now only in navigating through the coming chaos as best as I can for me and mine - I have absolutely no remaining faith in any elected official, or most of the folks who voted them in, for that matter.

I agree that we are in for huge pain and really no way out other than collapse.  However, it's still worth trying to educate people (even politicians) about what is happening, not to prevent what is coming, but so that we don't go down an even darker road after a collapse.  It will be easy for someone to step in and promise to fix everything and scapegoat some selected class.  That generally always ends very badly - think Hitler. 

Good point.

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rhare wrote: badScooter

rhare wrote:

badScooter wrote:

I don't see a way out.  I'm interested now only in navigating through the coming chaos as best as I can for me and mine - I have absolutely no remaining faith in any elected official, or most of the folks who voted them in, for that matter.

I agree that we are in for huge pain and really no way out other than collapse.  However, it's still worth trying to educate people (even politicians) about what is happening, not to prevent what is coming, but so that we don't go down an even darker road after a collapse.  It will be easy for someone to step in and promise to fix everything and scapegoat some selected class.  That generally always ends very badly - think Hitler. 

Good point.

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Future taxes on retirement accounts

I just read this article on Financial Sense from Daniel Amerman. In a nutshell, he argues that future taxes will have to be increased in order to get revenues to pay for our current (and future) debts. He says that the poor have no money and the rich have connections. He sees the middle and upper middle class receiving an unpleasant surprise. Why? They have been "foolish" enough to save money for their retirements using government sanctioned arrangements. These huge sums cannot be emptied without incurring tax penalties until the individual has reached retirement age; therefore, most people will just keep adding to their accounts expecting future tax liabilities to be similar to today's. In sum, it is a very large amount of money that is available for politicians to plunder. Can politicians resist when our fiscal condition gets more dour?

http://www.financialsense.com/contributors/daniel-amerman/2011/07/14/retirement-accounts-and-the-coming-tax-code-revolution

It is a well written and sobering view on the potential abuse of something the masses have taken for granted. I tried to pull my funds out of my 401(k) account several years ago. I was told that policy prevented me from doing so unless I quit, retired or turned 59 1/2. I'm not willing to quit, not eligible to retire, and have many more years to reach the magic age. My money is stuck! I stopped ontributing and took out the biggest loan I could at the time to focus on preparations.

Back then, I didn't know about CM. I read enough to know that our collective debts could never be repaid, that oil production was about to peak, that our aging demographic situation was about to accelerate, and no one in power could/would do anything about it. It was (and is) ludicrous to think that the smaller "Gen-X" generation will be able to buy all the McMansions, purchase all the stocks to keep the stock market going, pay increasing taxes to fund the "Baby Boomer's" retirements, educate the much larger "Millenial" generation, and do so with wages low enough to keep the purchase prices of all the materialistic goods at reasonable prices.

The only real change I see between then and now is that conditions are universally much worse now. This isn't going to end well.

Grover

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