Posts Tagged Taxes


Living within your means sounds reasonable enough.  Families do it, state and local governments are constitutionally required to, and corporations do too.  Long-term needs—a new house, capital infrastructure projects, or plant and equipment—can easily be financed through debt, which would be repaid over the useful life of what was financed.  So, why not the Federal Government?

Quite frequently, however, national governments are often confronted with large financial needs—natural disasters, lasting recessions, widespread pandemics, wars, etc—which must be addressed, even though they were not budgeted for.  And, as we saw during the recent financial crisis (4Q07-1Q09), the Government needed to pump money into infrastructure as well as state coffers. If the Administration did not act, the results would have been even more catastrophic.

Our Federal Government has an advantage in that it controls both fiscal (budgetary) and monetary (the money supply) policy.  Fiscal policy enables the Government to adjust tax brackets (with Congress’ approval), manage the Federal Budget and arrange for emergency funding.  Monetary policy is the set of tools by which the Federal Reserve (our central bank) manages interest rates, thus causing the economy to accelerate or slow-down,

For the most part, the Obama Administration has done a reasonably good job in managing the Economy since he entered Office, on January 20, 2009.   During mid-October of 2008, President George W, Bush said that America was staring down into a financial abyss.  And six weeks after Obama’s Inauguration, the economy started to recover: the stock and bond market began to solidify; the Gross Domestic Product consistently reported positive quarters; and Unemployment began a long-term decline

According to the IMF, the U. S. is the only major economy that has continued to rise since The Great Recession, although not as quickly as we would like. During this period, the Administration has reduced the Federal Deficit, as well as the Federal Debt.  It’s important to note that much of these accomplishments were made without sufficient assistance from the Republican—or Opposition—Party.

Generally, a National Governments should consider raising taxes and building a surplus when the Economy is strong, and lower taxes and even engage in deficit spending when the Economy is weak. Unfortunately, sometimes political ideology interferes with proven economic methods and common sense.


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I had not intended to write any blog posts about the GOP Primary Candidates, at least not until the field had been narrowed down to, perhaps, two or three.  With Donald J. Trump, however, I have made an exception; because, he seems to demonstrate a darker, more insidious tendency than was first assumed.

Trump is a self-proclaimed fabulous, super-wealthy, accomplished real estate mogul, give or take a few bankruptcies along the way.  Those failures, however, seem to be the only part of his personal life that he doesn’t blabber on and on about.  In fact, Trump is the only 69 year old, that I’m aware of, who still flaunts his B.A. from the University of Pennsylvania’s Wharton School (of Business), which he earned way back in 1968.

German periodical Der Spiegel’s linked article “America’s Agitator: Donald Trump Is the World’s Most Dangerous Man,” provides an excellent explanation of the considerable mistrust that many Europeans have for Trump.  The British Parliament even debated whether to bar him from entry into the U.K; however, their Freedom of Speech provisions did not allow for that barrier.

Europe has its share of fringe political players—on both the right and the left—but, even so, they view Trump even more suspiciously.  Spiegel, in fact, points out that: “Race-baiting has been part of every authoritarian movement to date”.  That article, which goes on to suggest his fascist tendencies, is linked as follows:

Michael D’Antonio was granted several audiences with The Great One in preparation to write a biography about Trump.  The interviews were held in Trump’s penthouse, according to the author, in Trump Tower: “behind the kinds of double doors that would normally be used in castles”.  And, although Trump claimed to be an avid reader, D’Antonio said that he did not see one book—other than those written by or for Trump.

He said Trump talked for what seemed like an eternity about nothing except himself:  his greatness; his extreme wealth; his business accomplishments; etc.  D’Antonio says that: ”It’s a miracle Trump didn’t invent the selfie.”

When it comes to the the 2016 U.S. General Election, however, I firmly believe that the three key issues that will draw primary consideration will be:  the Economy; Health Care and National Security.  Let’s bypass the Economy for a moment, since one might assume that Trump actually knows something abut budgets and taxes, and (let’s) focus on Health Care and National Security.

During the prior GOP debates, Trump either did not, or could not address any substantive issues.  His responses were merely to guarantee superlative responses to each and every problem, once he’s President—and that is, regardless of whether he seemed to even understand the various questions that he was asked during the Debates.  Just trust him?

For Health Care, he’ll repeal and replace Obamacare with “something else”.  But with what, and what will it cost?  And, he didn’t seem prepared, or even curious, about how our various nuclear weapons systems can be delivered.  Remember that Trump had previously vowed to “bomb the shit out of Iran”.  Could any American, or our allies for that matter, really trust a President Donald J. Trump to take the right course of action?

Trump’s economic solutions are just as bombastic, ill-conceived and made without any consideration for political or diplomatic reality.  He intends to: renegotiate all of the trade agreements; lower taxes; save Medicare, Medicaid and Social Security; reduce the National Debt; and he has many other other “bright” ideas.  Keep in mind that comprehensive programs will only be rolled-out, once Trump’s elected President.

The Tax Policy Center, a bipartisan Washington think tank, had previously posted that: “(Trump’s) plan would reduce federal revenues by $9.5 trillion over its first decade before accounting for added interest costs or considering macroeconomic feedback effects.  The plan would improve incentives to work, save, and invest.  However, unless it is accompanied by very large spending cuts, it could increase the national debt by nearly 80 percent of gross domestic product by 2036, offsetting some or all of the incentive effects of the tax cuts.”  (In 2014, the U.S. GDP was $17.42 trillion.)

Donald Trump reorganized his Father’s real estate empire, some years ago, into Trump Organization, LLC, a closely-held corporation, based in New York City.  As Chairman and President, he doesn’t have a Board of Directors or Shareholders to answer to.  So, in that capacity, Donald J. Trump has complete control over every segment of his business empire.  In other words, he’s used to always getting his own way!

Trump hasn’t focused on the realities of sitting in the Oval Office:  Congress can greatly reduce the size of vitally needed proposals, such as President Obama’s Stimulus Plan in early 2009; the House voted unsuccessfully 63 times to repeal the President’s signature legislation, Obamacare; and the Senate has failed to confirm numerous qualified jurists to reduce the shortage of higher court vacancies?  And what about partnering with other nations on such matters as:  Climate Change, ISIS and National Security?  Will that work?

Does Trump intend to personally negotiate deals with: Chinese President Xi Jinping on the contemptuous island-building along vital shipping routes in the South China Sea; and with Russian President Vladimir Putin, explaining why he should leave Ukraine and to stay out of the Balkans?  And, will he convince Iran’s Supreme Leader, Ayatollah Ali Khamenei, to disband his country’s nuclear program and stop financing terrorism?

In fact, Donald Trump’s ability to work with our closest Allies is seriously in doubt.  The Spiegel article suggested that a President Trump: “…would make the America of George W. Bush seem like a land of logic and reason in retrospect.”  And, that’s really saying something!

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If you have been filing a Joint Federal Income Tax Return, with your Spouse, over the years, you might have heard the terms; Marriage Tax and Marriage Penalty.  As someone who has worked in the Personal Finance Arena, and has always done our Taxes myself, I have never tried to determine the difference–and whether we were doing the right thing.  Perhaps, I was just happy to be through with Taxes.

Yes, I could have gone to a CPA; but, his or her Bill probably would have been higher than any benefits that we might have received. Actually, I could have run our returns–both Individual and Joint–on TurboTax and answered that question myself.

I’ve looked at several versions of the analysis–both with a couple having combined Annual Incomes of $200,000 and $60,000, and with the same number of dependents and deductions.  In both cases, if one Spouse earns all or the bulk of the money, the result would generally be a Tax Bonus–with lower Taxes Payable.  If both Spouses earn similar amounts, it would generally result in a Tax Penalty–with higher Taxes Payable.

I have linked one version, from Tax Policy Center,  Obviously, as always, I recommend that you consult with your own Tax Advisor on specific questions.


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Each year, more and more of retail sales are made over the Internet. It took a few years for many of the popular Retail Stores, with a nearby physical presence, to jump on the bandwagon–as Amazon.COM was eating their lunch. But, they did.

Just think, since an on-line company does’t have to stock the merchandise at multiple locations, it is much more cost-effective to just ship the products from one, or a few, locations. Retail stores began to offer customers the ability to return on-line purchases, made on their web sites, at their local physical locations. Amazon responded by offering special discounts on purchases made from mobile devices (only), assumedly when people were comparison-shopping in the competitors’ physical stores.

The one major advantage that on-line shopping has had was that State Sales Taxes originally were not collected. Then, several states passed legislation whereby stores, having a physical presence in that state, must collect the appropriate Sales Tax. Macy’s, Barnes & Noble, Victoria’s Secret, etc. cried foul. Well, now the collection of ALL State Sales Taxes are being considered on Capital Hill. The Senate might vote this week on what is called the Marketplace Fairness Act.

Many of the items purchased in on-line companies, that do not have physical locations, are actually checked-out, tried-on for fit, reviewed (books or music), etc. in the local retail stores, with the actual purchase being made through on-line (only) stores. Shouldn’t the local stores be compensated for their efforts and their commitment–like by a purchase?

Let’s look at books, since that was one of the product lines where stores like Amazon first grabbed the public’s attention. When our children were young, we often took them to a local book store, which allowed people–and lots of children–to sit on the floor (by the shelves) or on chairs that were provided and read. That store helped our children immensely to gain a love for books–and reading. The employees were book-lovers, who could suggest likely choices to read, and the store displayed new or appropriate editions. There was never any pressure to buy. But…that was where we did buy books.

Besides the ability to “test-drive”, if you will, a new book, a pair of slacks, a car, the retail stores employ your friends and neighbors. They put tax money back into the local community, their employees patronize local stores and restaurants and, indirectly, help maintain property values. Shipping the benefits of your on-line purchases off to some remote mega-factory location will do nothing for your quality of life.

As a young boy, there was no such thing as the Internet or Big-Box Stores. There was the small grocery store down-the-street, the nearby stationery store, family-owned restaurants, etc. I went to school with some of their children, played ball with their grandsons, etc. They were local, businesses were passed from generation-to-generation, etc. Besides, if there was ever a problem with a product or service, you were talking to the source. Not someone offering a nonsensical “our policy” response.

Members of Congress are already choosing sides on this issue. And, as always, the Naysayers are claiming that they are protecting small businesses and jobs. Haven’t we heard this before? Perhaps the exemption for truly small business can be increased; however, and those that took advantage of the Golden Goose for so long must now realize that that bird has flown the coop. Otherwise, if the State Sales Taxes do not become universal, the Taxpayers bares the burden–YOU!

So, whatever side you take on the Issue, be sure of the potential impact on your community. And, do let your Senators and Representative know your views.

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Last year, Congress could not agree as to how to Balance the Budget. It wasn’t too important when, in the early 2000s, in a time of relative Prosperity due to the Clinton Tax Increases, Congress agreed to several Tax Decreases (mostly for the Wealthy).  Also, the Last Administration led the Country into Two Unnecessary Wars. Remember the Non-Existent WMDs? But, Balancing the Budget was a Low Priority then.

Last year, President Barack Obama was even willing to provide $9 Dollars of Budget Cuts for each $1 of Tax Increases. Due to the Tax Pledge to Grover Norquist–perhaps a Manipulation of Congress?– the Republicans were not ready to bargain. But now, the President and Democrats in Congress are no longer willing to Sell-Out!

The “Gang of Six” (three each Democratic and Republican Senators) was called in to work out a solution–or, if not, Congress would agree to Equal Across-the-Board Program Cuts. Such cuts would include Entitlement Programs and the Long-Protected Defense Budget, among others. Well, as we are now approaching our eighth month, the saying “Be careful, you might get what you asked for” seems to be nagging at the Republican Consciousness.

Former Vice President Richard Cheney (also a former Secretary of Defense) was recently seen prowling the Halls of Congress, re-enforcing the concern from major cuts in the Defense Budget. This week, Republican Senators John McCain, Kelly Ayotte and Lindsay Graham travelled to four states with major military bases and defense contracts, to discuss the negative impact of cuts in the Defense Budget.

Let’s add to that Mitt Romney’s comments, in Jerusalem, that the U.S. should be more supportive of Israel defending itself against Iran. Perhaps the fact that the majority moderate Israeli doesn’t want to attack Iran doesn’t matter to Mitt.

And, an Op-Ed in today’s Miami Herald, by Sen. Marco Rubio (R-FL), emphasized that the U.S. should take a more active role in Syria. Are these people coming out of the woodwork? How many wars are we supposed to fight?

Economists have a term; “Guns and Butter”, which means that you generally can’t have both. Whatever funds you spend on Defense would not be available for Public Programs, as well. With regard to “Guns”, the Pentagon states that it already has more M1 Abrams Tanks than it needs and, accordingly, intends to freeze refurbishing the Pre-Cold War Tank in the amount of $3 Billion. General Dynamics, a major Congressional Campaign Contributor is lobbying hard so that Congress will protect the jobs in their respective districts.

John McCain used to work hard to eliminate the so-called “earmarks”, unnecessary programs in the various Congressional Districts. Now, it appears that he has gotten in line with his Party. But, why have they sunk so low to side with the Military Industrial Complex, which former Republican President Dwight D. Eisenhower (and also a Five-Star General) warned us about. The unnecessary money that goes into “Guns” merely takes available funds away from necessary programs, such as: Food Stamps; Medicare/Medicaid; PELL Grants (for College); Veterans’ Affairs; the GI Bill; etc?

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From when President Barack Obama entered office, in January of 2009, the “Right” has been relentless in pestering him about being a Moslem and Born in Kenya (which would disqualify him). They have been consistently ridiculous in their demands for Birth Certificates and Other Documentation. AND CONSISTENTLY WRONG! This was happening all the while the President was trying to Overcome the Financial Melt-Down that had started in 2007, under the Prior Administration.

In the past, both Political Parties have come together in times of War to show solidarity, at least, for the Country, if not for the President. Well, how different was that situation, in 2007 through early 2009, to a full-scale Financial War? Candidate Romney also questioned the Administration’s Strategy in Libya and Syria, as well. Now, what were Mitt Romney’s Foreign Affairs Credentials again?

Perhaps now, Mr. Romney is having HIS “Birther Moment”–maybe FOUR of them! Just recently, the President’s Campaign, Media and others–even Conservative Sources– have begun to pester HIM on four questions that have gone largely unanswered:

1.  Why doesn’t Mr. Romney want to really discuss His Record and activities at Bain Capital, which he supposedly left in early 1999? For the next three years, however, documents submitted to the SEC, and signed by Mr. Romney, listed him as the President, Chairman, CEO and Sole Shareholder–a period during which he supposedly received $100,000 per year in Salary. But, he says that he no longer had any management duties there. WHERE DO YOU GET ONE OF THOSE JOBS?
2.  Why doesn’t Mr. Romney wish to discuss his term as Governor of Massachusetts? Wouldn’t that be a better indicator of the potential role he might play as President–as compared to CEO of Bain Capital, a small Private Equity Firm? Remember that Corporations have Profitability as their key goal–not Job Creation. During his Tenure in Massachusetts, his State was Number 48 (among the 50 States) in Job Creation and, by the way, he signed RomneyCare–the Template for the Affordable (Health) Care Act (ACA)–into Law. He touted his Health Care Plan as a Candidate in 2008.
3.  Why won’t Mr. Romney release more than one year of his Tax Returns? Every President, since George Romney (Mitt’s Father) set the precedent, when he ran for President in 1968, has done so.  The Senior Mr. Romney released twelve years of Tax Returns, stating that any one year could be a fluke.  Isn’t it better to release them, Mitt, rather than promote the question of Why Not?  Even Conservative Journalists, George Will and William Kristol, have called for him to release the preceding 12 years of Tax Returns.
4.  Mr. Romney, why do you have so much of your Considerable Wealth (rumored to be approximately 40% of it) invested in offshore “Tax Havens”, said to be in the Cayman Islands, Bermuda, Switzerland and…?  If America is the Exceptional Country that you proclaim, shouldn’t that large portion of your Wealth (said to total approximately $250 Million) be invested in This Country? You claim that you pay taxes on it; however, shouldn’t you be willing to prove that–if you wish to be Presideint?

By hiding behind wanting to discuss the issues, Mitt Romney is just prolonging the Questions as to Who or What he is. Oh, by the way, Mitt, you constantly point-out that President Obama is doing things wrong. But, that’s certainly not discussing the issues. MITT, WHAT ARE YOUR IDEAS FOR DOING THINGS MORE SUCCESSFULLY?

I believe that Americans would like to hear: How you would Re-Structure the Federal Government Bureaucracy; Your Recommended Budget Changes (especially to Education, Social Security, Medicare/Medicaid and Defense, among others); the Impact of Taxes and Tax Rates, etc. Also, what Government Services will be Outsourced to Private Companies–and what sort of Controls would the Government maintain?  Additionally, many would like to hear, once again, how you might replace or modify so-called ObamaCare.  Would that be with the Paul Ryan Plan?