As we approach the fiscal cliff, it is clear that Mr. Boehner has caved to the president and the Democrats. Rather than force the government to balance the budget, Mr. Boehner has decided to abandon the principles of the Republican Party that were forged over 20 years ago. Instead of holding the line on taxes as he promised, he has decided to use semantics in a foolish attempt to trick voters into believing that he is not raising taxes. Anyone with half a brain will see through his reclassification of tax deductions, now calling them loopholes. Get real! The Congress passed the tax deductions that he proposes to eliminate as valid offsets against income. A loophole, on the other hand, is a means of avoiding a rule without breaking it. By eliminating valid tax deductions, Mr. Boehner is raising taxes and breaking his promise to the electorate.
The government is a vampire with a never-ending thirst for our blood! Rather than face the difficult task of cutting the size and cost of government, Mr. Boehner sold the American people out. The tax deductions that he proposes to eliminate are the lifeblood of the middle class. Whether it is the deductibility of mortgage interest that enables many Americans to purchase a home, or personal exemptions for taxpayers and their families, these deductions protect the middle class from excessive taxation. The Republican plan to confiscate the assets of the middle class to satisfy the appetite of an unfettered federal government will cause significant harm to the economy and could push us into another recession.
On his website, Mr. Boehner states: "Republicans vowed to 'make Congress do more with less by significantly reducing its budget.'" This is a boldface lie! There are no true budget cuts. Even under his own plan, he is slowing the rate of growth rather than making the surgical cuts that are necessary to balance the budget. Under his proposal, there will be $800 billion in tax increases. While some of the money may come from "the rich", most of it will come from the working and middle classes. His budget taxes the American people just as the British Stamp Tax pushed our forefathers to the point of revolution. Mr. Boehner's capitulation could very well be the ruin of the Republican Party.
One of the worst tax increases is the death tax. Americans work most of their lives to support themselves and their families. We don't want to be a burden upon society, so we save our money to ensure we are secure in our "golden" years. Most Americans are not aware of the value of their assets and many do not even know they are millionaires! By paying off their house mortgage, they are increasing their wealth. Currently the average home is worth approximately $250,000. As workers approach retirement, their company or union pensions may be worth $500,000 or even more if they worked in the auto industry. Add in savings, personal assets, and other investments and their net worth could easily top $1 million. Currently, there are 10.5 million families with a net worth in excess of $1 million in the United States. By the year 2020, 25 percent of families in New Jersey will be millionaires.
On January 1, the death tax goes up to 55 percent of the amount that exceeds $1 million. If the estate is worth $1,200,000, the executor will send a check for $110,000 to the IRS. If the estate is worth $2,000,000 then the IRS will get $550,000. The reward for a lifetime of hard work, saving for retirement, and supporting your family is that the government confiscates the larger share of your assets and your children and other heirs get only what is left over after the government feasts on the fruits of your labor! This onerous tax can only be described as confiscatory. It is designed to transfer a lifetime of labor and frugal living from the family's pockets into the pockets of the cash thirsty government. The government will take this money even if farms, houses, family heirlooms and investments have to be sold to pay it. Is it any wonder that the number of family farms is decreasing at an alarming rate? The farmers and ranchers have always been the lifeblood of America. The crops they grow and harvest turn the country into the breadbasket of the world. Without their crops, millions of people would face starvation. As the family farms are sold off to developers to pay the onerous inheritance taxes, our ability to grow the food we need to feed our nation will diminish.
As we approach the beginning of a New Year and the likelihood of higher taxes, it would be a good idea to guesstimate your wealth. Many of us are not aware of the value of our company pension. This is a good place to start when preparing your net worth calculation. If you can retire at 60 with a pension of $1,000 per month, the pension has a value of $237,000 if it was paid in a lump sum today. A pension of $2,000 a month is worth $474,000 in today's dollars. I assumed that you or your spouse would live 30 years an interest rate of 3 percent. If you would like to calculate the value of your pension, here is website that will help you: (http://financialmentor.com/calculator/present-value-of-annuity-calculator ).
Smart retirees take the lump sum value of their pension upon retirement and invest it in a guaranteed annuity. This avoids the effect of bankruptcy on a company pension. When Delco went bankrupt recently, the Delco retirees lost most of their pension and health benefits.
(http://www.nypost.com/p/news/opinion/opedcolumnists/pensions_wiped_out_b... ). It is a good idea to make sure you are in control of your pension rather than the bankruptcy court!
Once you've calculated the cash value of your pension, add in the value of your house, your savings and investments and other family assets. If your net worth is over $1 million, congratulations. You just won the right to have the government confiscate your wealth! For those of you who only have a half million dollars in assets, if you live another 10 years and invest the money at 8% you will have over $1 million and be subject to the confiscatory death tax. There is one thing you can count on: the average middle-class family will be severely impacted by death duties when the estate is passed on to their children and heirs.
Death duties and taxes are the cruelest form of double taxation. Every penny of your net worth is taxed as you earn it. Capital gains, interest, and dividends are taxed as they are earned. The president, Mr. Boehner and his political cronies have implemented a myriad of taxes from income taxes, excise taxes, sin taxes on cigarettes and alcohol, death duties and estate taxes, sales taxes, import duties just to name a few. To President Obama and Mr. Boehner I say that we are taxed enough. Get your heads together to cut the size of government until the budget is balanced. Raising taxes now will push our economy into a death spiral that could turn the United States Of America into a banana republic.
© 2012 Gordon Smith - All Rights Reserved.