●The more federal budgets are cut and taxes increased, the weaker an economy becomes.
●Austerity is the government’s method for widening the gap between rich and poor, which leads to civil disorder.
●Cutting the deficit is the government’s method for taking dollars from the middle class and giving them to the rich.
●Until the 99% understand the need for federal deficits, the upper 1% will rule.
●To survive long term, a monetarily non-sovereign government must have a positive balance of payments.
●Those, who do not understand the differences between Monetary Sovereignty and monetary non-sovereignty, do not understand economics.
●The penalty for ignorance is slavery.
Vanguard, which provides investment funds with reasonably low management fees, sent me (I am invested in their funds) an Email, describing the effects of the “fiscal cliff” legislation.
For your interest, here is what Vanguard says:
The legislation includes the following provisions:
*For most taxpayers, income tax rates would remain unchanged at the 2001/2003 levels.
*Individuals earning more than $400,000 and couples earning more than $450,000 would be subject to a higher 39.6% top marginal rate.
*These same upper-income earners would face an increase in capital gains and dividend tax rates from 15% to 20%.
*Individuals earning more than $250,000 and couples earning more than $300,000 would see the return of a phase-out on personal exemptions and itemized deductions.
*The tax rate on large inheritances (estates valued at $5 million for individuals and $10 million for couples, indexed for inflation) would rise from 35% to 40%, the estate and gift tax regimes would remain unified, and spouses would continue to have access to unused estate tax exemption amounts.
*The alternative minimum tax (AMT) would be permanently adjusted for inflation, preventing more families from being subject to the AMT.
*401(k) and other defined contribution retirement plans could provide plan participants with a newly expanded opportunity to convert their pre-tax savings in plans into Roth savings.
*The IRA charitable rollover provision would be extended for 2012 and 2013 (with special ability to make use of the provision for 2012 distributions).
*Unemployment benefits would be extended for one year.
See anything missing?
The Vanguard guys, being wealthy managers, directed virtually all their attention to the piddly, little rich-guy tax increases (most of which the wealthy are too clever to pay anyway), and forgot all about the biggest, worst, most damaging tax increase of all: the FICA increase.
I saw an estimate that the FICA tax increase will rip $150 billion from the pockets of salaried people, dramatically increasing the gap between the rich and the rest. Whether or not the number is correct, the real number is sure to be large.
On an individual level, that extra 2% will take $1,000 away from a salaried person earning $50,000 per year. I guess that problem isn’t worth the attention of Vanguard’s wealthy managers.
Incidentally, I’ve seen several comments claiming the 2% FICA increase, wasn’t really an increase, because the previous level was meant to be a temporary decrease. That inane argument will be of great comfort to working people, who now will have additional dollars taken out of their paychecks.
(I suppose if all the income taxes had been raised to pre-Bush levels, they too would not be considered increases.)
Anyway, I hope you find this interesting, both from its content and its non-content.
Rodger Malcolm Mitchell
Nine Steps to Prosperity:
1. Eliminate FICA (Click here)
2. Medicare — parts A, B & D — for everyone
3. Send every American citizen an annual check for $5,000 or give every state $5,000 per capita (Click here)
4. Long-term nursing care for everyone
5. Free education (including post-grad) for everyone
6. Salary for attending school (Click here)
7. Eliminate corporate taxes
8. Increase the standard income tax deduction annually
9. Increase federal spending on the myriad initiatives that benefit America’s 99%
No nation can tax itself into prosperity, nor grow without money growth. Monetary Sovereignty: Cutting federal deficits to grow the economy is like applying leeches to cure anemia. Two key equations in economics:
Federal Deficits – Net Imports = Net Private Savings
Gross Domestic Product = Federal Spending + Private Investment and Consumption – Net Imports