Two Unsettling Articles You Should Read

There are a couple of articles you should check out - both unsettling.

One is from Market Watch about the IRS and some states that are watching Social Media sites - "Taxman Turns to Social-Network Sites" http://bit.ly/dDmQX You better be careful what you Twitter or post to Facebook, and not just because it might embarrass you someday!

The other is about the details of the Credit Card Legislation that was passed in May. A recent blog post of mine gave you a link to read about the new rules credit card companies will have to abide by, but this link listed a provision in the bill that I hadn't noticed anywhere else:

-- Includes unrelated provision that would allow people to carry loaded guns in national parks and wildlife refuges. http://bit.ly/EQZIz


Sure enough, H.R. 627: Credit Card Accountability Responsibility and Disclosure Act of 2009 was signed into law by the President with this provision in it:

(8) The Federal laws should make it clear that the second amendment rights of an individual at a unit of the National Park System or the National Wildlife Refuge System should not be infringed.

(b) Protecting the Right of Individuals To Bear arms in Units of the National Park System and the National Wildlife Refuge System- The Secretary of the Interior shall not promulgate or enforce any regulation that prohibits an individual from possessing a firearm including an assembled or functional firearm in any unit of the National Park System or the National Wildlife Refuge System if--

(1) the individual is not otherwise prohibited by law from possessing the firearm; and

(2) the possession of the firearm is in compliance with the law of the State in which the unit of the National Park System or the National Wildlife Refuge System is located.

Now, I don't want to debate here whether one should be allowed to carry a loaded gun in a National Park, but I sure as heck want to debate whether these totally unrelated provisions should be allowed to be attached to bills in the first place.

Tax Changes Being Talked About - You Need to Know This

There is a potential bill floating around that would make 401(k) contributions no longer deductible. Are you aware of that? I'll bet many people aren't. But the good news is that they were trying to sneak it through, but enough people heard about it and are now up in arms about it. We may have just dodged a bullet here.

But my point is that if people aren't aware of these types of bills they can be passed without your input to your senators and congresspeople. Staying aware, especially right now, is critical. And so is making your opinion known. I've never been one to step up to the plate on that, myself, so I'm talking to myself here as well! It's easy to send an e-mail or note. They are more "noticed" than a computer generated petition that many good organization provide for you. I'll post a place that you can go on the internet to get the names and e-mail addresses for your representatives at the end of this blog post.

So, onto the other issues coming at us. Doing away with the yearly cap on Social Security contributions, along with a possible 5% additional tax on earned income to fund Social Security. Now you would get $600 PER YEAR of additional Social Security at some point when you retire for that 5% - doesn't sound like a fair deal to me!

And there is also talk about making distributions from an S-Corp and LP subject to self-employment tax.

Now, I don't know about you, but I'd say the "middle class" is going to take the brunt of this. I know several small business owners that would get hammered with self-employment tax on distributions; they already pay taxes on paper earnings, not what they actually take in salary from their businesses. And they're already struggling just to keep the doors open in this economic quagmire.

And is $102,000 (the 2008 wage base on Social Security) really considered "high income" these days? Maybe in rural America, but in most metropolitan areas you can barely live on that as a single person, never mind a family. I just looked up on Wikipedia the number of millionaires (and this is based on individuals with a net worth of at least $1 million in all assets except their "primary residence") and there are over 10 million people in the world who fall into that category! About 3 million in the US - and over 38,000 multi-millionaires in the US (assets of over $30 million).

And that's not the end of what is on the table right now. Popularly called the "iTunes tax," there is already a sales tax on digital downloads required to be paid currently in 27 states and the District of Columbia. But there's been talk for a long time about a Streamlined Sales Tax; that seems to have stalled, but the “Internet Tax” has quietly come up again and Congress seems to have decided to bring it back to the table in order to resolve the issue so as to raise taxes quickly.

Here’s a link to a CNET article on the Internet Tax project:

http://news.cnet.com/8301-10784_3-9919420-7.html

If you want to have a voice in all of these issues, you need to act. Here are the links to how to write to your representatives (put it on your Toolbar so you see it and use it):

http://www.usa.gov/Contact/Elected.shtml

Our Tax System Explained: Bar Stool Economics

A great election day "pass along" for you!

Our Tax System Explained: Bar Stool Economics

David R. Kamerschen, Ph.D. Professor of Economics University of Georgia

Suppose that every day, ten men go out for beer and the bill for all ten comes to $100. If they paid their bill the way we pay our taxes, it would go something like this:

The first four men (the poorest) would pay nothing. The fifth would pay $1. The sixth would pay $3. The seventh would pay $7. The eighth would pay $12. The ninth would pay $18. The tenth man (the richest) would pay $59.

So, that’s what they decided to do. The ten men drank in the bar every day and seemed quite happy with the arrangement, until one day, the owner threw them a curve. ‘Since you are all such good customers,’ he said, ‘I’m going to reduce the cost of your daily beer by $20.’ Drinks for the ten now cost just $80.

The group still wanted to pay their bill the way we pay our taxes so the first four men were unaffected. They would still drink for free.

But what about the other six men - the paying customers? How could they divide the $20 windfall so that everyone would get his ‘fair share?’

They realized that $20 divided by six is $3.33. But if they subtracted that from everybody’s share, then the fifth man and the sixth man would each end up being paid to drink his beer.

So, the bar owner suggested that it would be fair to reduce each man’s bill by roughly the same amount, and he proceeded to work out the amounts each should pay.

And so: The fifth man, like the first four, now paid nothing (100% savings). The sixth now paid $2 instead of $3 (33%savings). The seventh now pay $5 instead of $7 (28%savings). The eighth now paid $9 instead of $12 (25% savings). The ninth now paid $14 instead of $18 (22% savings). The tenth now paid $49 instead of $59 (16% savings).

Each of the six was better off than before. And the first four continued to drink for free. But once outside the restaurant, the men began to compare their savings.

‘I only got a dollar out of the $20,’declared the sixth man. He pointed to the tenth man,’ but he got $10!’

‘Yeah, that’s right,’ exclaimed the fifth man. ‘I only saved a dollar, too. It’s unfair that he got ten times more than I got’ ‘That’s true!!’ shouted the seventh man. ‘Why should he get $10 back when I got only two? The wealthy get all the breaks!’

‘Wait a minute,’ yelled the first four men in unison. ‘We didn’t get anything at all. The system exploits the poor!’

The nine men surrounded the tenth and beat him up. The next night the tenth man didn’t show up for drinks so the nine sat down and had beers without him. But when it came time to pay the bill, they discovered something important. They didn’t have enough money between all of them for even half of the bill!

And that, ladies and gentlemen, journalists and college professors, is how our tax system works. The people who pay the highest taxes get the most benefit from a tax reduction. Tax them too much, attack them for being wealthy, and they just may not show up anymore. In fact, they might start drinking overseas where the atmosphere is somewhat friendlier.

I admit it, I'm an Information Junkie!

I love information, just ask my husband...there are magazines, newsletters and books all over our house, not to mention the internet articles I print so I can read them later. He knows better than to throw out anything; even junk mail might be of interest to me (I get ideas for ad copy, etc.)!

I participate in several online Forums, sometimes just to read, sometimes I post. I come across such a wide variety of interesting topics in all of this blitz of information that I decided to share what I find in a Blog. There will be links to articles and internet sites of interest, comments on a wide variety of things - no one area could contain my thirst for knowledge and information! News of the day, comments of interest on other sites, "how-to's" on saving money on most everything, tax savings and issues, information on starting a business - you'll never know what I might come up with to blog about!

So join me while I share "a little bit of this, a little bit of that."