The Fiscal Cliff Simplified-Part 1

Post #144

I didn’t want to talk about this.  Some friends of mine, however, have encouraged ( or was it persuaded) me to express some thoughts.

Let me make a couple of up front statements; first, I am a Certified Public Accountant with 33 years in governmental tax administration experience, and secondly I ask you follow this to its conclusion to Part 2.

Let me begin by saying that the President stated that he believes his re-election was a mandate from the people, that his plan/program/approach is the proper course.  I tend to believe that the populus, never understood the rescue plan.  I believe political scientists will look back and determine the populus believed they would lose more with the Republicans than the Democrats.

The Tax

Let’s first begin by looking at the Presidents Tax Plan. He desires to increase the tax on the “rich”, the government defining rich to be anyone making $250,000 or more in income per year.  Would you be surprised if I said that the Presidents Plan actually favors the rich; if a rich person pays no tax now, and the President increases the tax rate by 2%, 5% or even 100%, that same rich man will still pay no tax.  For all the rhetoric to make the rich pay more, it would seem the President doesn’t want to aggravate the rich, all in one fell-swoop.  Let me say that those that know taxation, understand the this plan will never generate sufficient revenue.  Therefore there must be second phase yet to be mentioned, somewhere down the road.

The Republicans don’t want to affect the tax rates, on the (deemed) rich.  The most recent presentation, indicates an increase in tax revenue at half of the presidents plan.  This plan generates its money through elimination of certain tax deductions.  Without being too opinionated here, let me just say if the Presidents plan doesn’t generate enough revenue, then the half as much generated by the Republicans is twice as bad.

Entitlements

It was determined during the great depression that people couldn’t care for themselves in their old age. So, in 1933, the progressives and the President, put forth a federal insurance program, it failed to pass.  The argument was that the federal government should not be in the insurance business.  The members of congress were changed and in 1934 the Social Security Insurance Program was passed.

Entitlement, how did we get that term?  My grandmother, bless her soul, never worked a day, nor paid into the Social Security Program, but at age 65, she gladly claimed “her” monthly check that she stated she was entitled to.  She deserved it, because the government said she did.

Here’s how I see “entitlement”.  I need to buy groceries and I don’t have any money, so I should be “entitled take money from your “savings account” to pay for what I want. Why, because you have more (of everything) than I have and you should be forced to share.

Over the years, calculations were made determining that insufficient money was flowing into the governments’ “social checking account” compared to the flowing out.  So, over a period of years, social security salary caps were raised, and rates increased.   More money came in from those that had, and was given to those that didn’t have.  (Sort makes me think the government is Erroll Flynn as Robin Hood!!!)

See Part II for the conclusion

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About tgriggs17

Retired, CPA, enjoy freshwater fishing, being with my grandchildren, friends and family
This entry was posted in Learning, Life, Politics, The Economy, Uncategorized and tagged , , , , . Bookmark the permalink.

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