With the end of the current levels of taxes soon to expire, aka Bush tax cuts, taxes will raise significantly. For example, the increase from 15% to20% on capital gains is an increase of 33%! Capital gains are not just for the rich, but your kids’ mutual fund account too. Add estate taxes – which means giving over half of your estate ( the things you’ve worked hard to get) to the government instead of your heirs. The bottom income tax level, if it moves from 15% to 20%, is an increase of 33% on the lowest wage earners, not just the rich.

Speaking of rich, one of the big levels often mentioned is $200,000 for individuals and $250,000 for married couples. Here’s where I have a big problem and maybe you should too.

A married couple is two individuals acting in a collective and sharing environment; therefore, the threshold should not be $250,000 for married people, but $400,000. In reality what you have, from a money standpoint, is the politicians speaking of family values in front of the cameras, but taxing the daylights out of couples at the same time.

Sen. Chuck Schumer believes is right to increase taxes on the millionaires and billionaires in times of increasing deficits. I see Obama as having the same viewpoint. My question is, are the rich responsible for out of control government spending in the trillion dollar budgets, earmarks, waste, and giving entitlements to people who do not deserve it, such as illegal immigrants?

With the discussion of taxes, in my book, Barking With The Big Dogs, I will explain why capital gains tax is a tax on a gain you don’t really get. If the new tax increases go into effect, the rate goes up to 55%! In addition, I’ll mention some hidden taxes on everyday goods people use. These hidden taxes affect everyone, not just the rich. In addition, the gasoline tax, with big increases, affects people driving a Maserati or a Kia, and can have a bigger impact on people in lower level income jobs. The prices at the pump can get high, but the money does not all go to the big bad oil companies such as Exxon and BP, but a big percentage goes to the government.

When the discussion of taxes come up in conversation, decide if you like forced redistribution where you do not have a “say so” in how your money is spent or saved, or would you rather give freely what you have in order to help others. If you believe in fairness, and not discrimination, then a flat rate or percentage applies to everyone equally. Discrimination does not just apply to the have-nots, but maybe disproportionally to married couples.

Newsbusted’s conservative version of Saturday Night Live’s Weekend Update.

Last week, the House passed a $30 Billion small business bill previously passed by the Senate. Obama is expected to sign as well. More help is on the way to small businesses. However, will the bill help, or was the passage and signing more of a political move?

To begin, as I sat in some seminars this past week, cheers went out when news flashed a bill had been passed. On the surface, I would agree, any business assistance is great right now. However, the news may only be temporary.

Coming from a couple of speakers, including one from a branch within the SBA, the comment was made that the bill has a set a specific amount of funding, or will last until the end of the year, whichever comes first. That’s right, December 31 which is only three months – just after the elections. As I see it, the talking points for politicians are:

1. We passed a business bill to help small business. (Too bad no one is mentioning the time frame.)
2. Banks aren’t lending. (They are the bad guys, or fat cats, creating the problem.)
3. With the taxes set to expire December 31 as well, only the rich will be affected.

Pretty lame talking points in my view. Here’s why.

Reducing fees for borrowers as well as upping the guarantees for banks does make borrowing more attractive for both the business and the bank. Unfortunately, as another speaker said at the conference, only about 1 in 5 businesses are safe enough to lend to right now. As a result, banks are not lending to business because of risk and borrowers do not want to take on additional risk either. Kind of a stalemate. In addition, banks have not only regulatory compliance and increased FDIC amounts to pay, for example, which limits activity, but also SBA guidelines to comply which are rarely mentioned in headlines or quick commentaries.

With a risky economic situation (no one except economist believe the recession ended), elections and uncertainty in taxes next year, everyone is really sitting on the sidelines.

Speaking of taxes, are the rich really the ones who will be hit next year? Doubtful. The rich, including politicians, have financial vehicles – legally – such as corporations, charitable trusts, partnerships, etc. to use for limiting taxes – including estate taxes, which many average Americans do not have.

In the end, hopefully business will be helped, yet last week and this week’s headlines may be more political than practical.

Comments coming from high places, such as the White House, refer to bankers as fat cats and Capital Hill taxed lucrative bonuses they originally approved, thus demonizing people making money. On a more local level, one public school in our town is constantly referred to as the rich school – even by people who do not live here.

Getting tired of hearing about our rich school district, I decided to look up demographic information to see the validity of the comments made by outsiders, even those across town.

Here’s what I found:

More renters live in the area as compared to the state average.

Adjusted gross income is $49,198 or slightly above the state average. (According to Obama, the rich are defined by making $250,000 or more.) Looking at the average, the income is 1/5th of the rich amount.

Taxable interest, dividends and capital gains are all well below the state average. The rich have money working for them. Not the case here.

The estimated value of a house in 2008 was $155,661 which is above the state average; but lower than many more affluent cities and towns around north Dallas, Austin, etc. Looking at a realtor website for Austin Westlake, which is a public school district – not private, the site stated for about $370,000, a family could get into the neighborhood. What does $150,000 buy in California?

The number of people living below the poverty level is well below the state average. The above poverty level statistic may be the most telling of all for our area. Many people complaining about the rich part of town may be defining the people living there by the poverty level or earning less than the average statewide amount, not a more practical and realistic idea of rich. KIA and Hyundai cars are more common than BMWs! As a matter of fact, no BMW, Volvo or Porsche dealerships are in town.

Okay, so I’ve dispelled the myth of our side of the town as rich.

Also, according to a broader more nationalized scope, rich doesn’t fit the mold here either.

Let’s look at schools for a moment. What are they teaching kids?

We know Obama and company have escalated the class warfare against the rich by demonizing them. That’s obvious. However, schools are quietly doing the same thing.

When I was helping my daughter with homework, we were working on long and short “e”‘s . She had to fill in the blank with the correct answer. The question was “having more than you need”. The answer: greedy.

What do we truly need? Food, water, clothing, shelter just like the cavemen. Okay, that’s extreme, but after explaining that having nice things or money does not make a person greedy, I had this thought.

Do you fit a lifestyle to match your income; or, do you work to produce an income that matches your lifestyle?

I like the later question; it takes ambition, drive, hard work and sometimes just some plain old luck.
Moreover, the mindset is what matters, not just dollars in the bank account. Rich and poor are a way of thinking. One is positive; one is negative.

We may not get what we want and things in life may not happen as planned, but I don’t hate the rich just because I don’t drive a Maserati – and neither will my kids.

With Obama’s enormous requests for spending and the Congress willing to oblige and write the checks, Volker feels we need a new tax to pay for the expenses.

Spending is at 25% of GDP and the new taxes will come from income taxes, a VAT (value added tax), energy tax, carbon tax or whatever. These taxes seem to be a “good idea”. Corporate taxes are already among the highest in the world. No wonder why companies move overseas.

Speaking of oversea, I have a relative who lives in Sweden and when they came to America, I was told he and his wife are required to put their kids in daycare at the age of three. The income taxes are 50%; therefore, both spouses have to work. I don’t know about you, but I enjoyed playing with the kids when they were three versus letting someone else raise them.

But back to needing a new tax; in my opinion, cutting out the waste and backdoor deals, such as buying votes in Louisiana to get the health care bill passed, cutting out spending for free education and health care for illegal aliens, etc. seems to be a better idea.

If strategies such as the VAT are “poison” in the U.S. because they are a bad idea, and all of the European and Mexican ways of running a country do not work, why try it here? Why not fix the problems there instead of having the U.S. taxpayers bailout out everyone.

Unfortunately, what the American people want is not the agenda of Washington – redistribution is.

Talk has surfaced again about nationalizing retirement accounts.

With the government’s out of control spending and promises for entitlements which it can’t pay, one way to borrow money is through retirement accounts.

Obama and company want government retirement accounts, formally known as IRA’s and 401k’s, to fund the pensions, etc. We already have Social Security, but that isn’t good enough and is broke too.

The way to fund their obligations is by nationalizing private citizen’s accounts and paying paltry returns on our money. One way the government borrows money is by issuing Treasuries. Would our retirement accounts, containing stocks, mutual funds, exchange traded funds, etc., be reduced to containing low yielding Treasuries?

Take a look at my previous article, “How to double your money – slowly“. Only this time substitute the word bank with government. Or better yet, you can read Chapter 44 “Failure By Design”; it’s online HERE.

While driving to work yesterday and enjoying the nice spring morning, I was channel surfing the radio and landed on NPR. The topic on the radio had commentaries about health care reform.

One of the key comments made had to do with limiting excess profits. The idea is for companies to make enough profits to pay claims, doctors, etc., but eliminate excess profits.

What a sinking feeling.

No, I’m not talking about reducing my health care cost, which would be nice (but not likely even after reform). In reality, we will pay in some shape, form or fashion for this reform – both monetarily and our in our freedoms – of choice and time for example. Instead, what I’m referring to are things like mutual funds, exchange traded funds, retirement accounts, insurance policies, etc.

That’s right, these excess profits go to shareholders, such as you and me, not just the demonized Wall Street suits we only hear about. Why invest our money if we won’t get a return on our money?

How do insurance companies pay for life insurance for example? The companies use money to make profits to pay the policies. Have you ever looked at a prospectus to see where the money goes and which companies are invested in?

Yes, Obama has made it clear he does not like profits (for everyone else in my opinion). However, he made $5.5 million last year. Obama has mentioned, there is a time for profit, but it is not now. That’s just plain wrong – there is always a time to profit. As well, he has labeled bankers as fat cats, yet has not reduced earmarks for pork projects.

Barney Frank made comments about eliminating profits going to shareholders as well.

The ironic thing about socialism and capitalism is that the Socialist are Capitalist themselves.

The elites, who put their pants on one leg at a time just like the average Joe, are really capitalizing by taking from everyone else. Therefore, capitalism works, socialism doesn’t. And why should one man or a small group of people determine what everyone else makes – or limit individual potential?

To finish, I saw a bumper sticker that read “I’ll keep my guns, money and freedom…You keep the change”. When all of the new changes that have been occurring over the last year and in the years to come, I hope we are not simply left with pocket change.

I was reading an article today from the Money Game talking about Barack Obama and his comments on the VAT tax (value added tax). What is interesting about the comment is Obama said “my first priority is to figure out how can we reduce wasteful spending…”

My thought right here was, “who needs to reduce wasteful spending?”

The American people or the Federal Government?

From the looks of the following graph, the Federal Government’s spending is out of control.

In addition, I received an e-mail from a relative the other day (which is the source of the graph) stating:

“…babbled again today about Obama inheriting a huge deficit from Bush.

Budgets do not come from the White House. They come from Congress, and the party that controlled Congress since January 2007 is the Democratic Party. They controlled the budget process for FY 2008 and FY 2009, as well as FY 2010 and FY 2011.

In that first year, they had to contend with George Bush, which caused them to compromise on spending, when Bush somewhat belatedly got tough on spending increases.

For FY 2009, though, Nancy Pelosi and Harry Reid bypassed George Bush entirely, passing continuing resolutions to keep government running until Barack Obama could take office. At that time, they passed a massive omnibus spending bill to complete the FY 2009 budgets.

And where was Barack Obama during this time? He was a member of that very Congress that passed all of these massive spending bills, and he signed the omnibus bill as President to complete FY 2009…

In a nutshell, what Obama is saying is, “I inherited a deficit that I voted for and then I voted to expand that deficit four-fold since January 20th.”

So much for the dog & pony show and lip service.

By the way, did CEObama pay 90% income taxes on his $5.5 million (or part of it) as did CEO’s who received bonuses – which were allowed by Congress in the bailout bill?