The fiscal cliff is looming over us and as I predicted the Democrats and Republicans could not come together for a compromise. I am all right with taxing the rich, but there are not many of them and the tax burden will surely fall on the rest of us working and paying taxes.
According to figures that I recently seen, in 2008, the United States lists 400,000 people with incomes of more than a million dollars. Last year that number dropped to 268,000.
Treasury Secretary, Timothy Geithner, proposes levying some $1.6 trillion dollars in new taxes while only cutting some $400 million in unspecified expenses. Unspecified means, nothing will be cut!
We cannot tax and spend our way into prosperity, we need to find away to get people to work and not depend upon the federal government for support. Having said that, I will be the first to admit that there are a lot of people that are not able to care for themselves, for many reasons. Old age, like me, is one of them and the Christian thing to do is to see that those needs are taken care of. I would suggest an adult education program to get younger people back to work. Small business startups will create many jobs and lift people out of depending on Uncle Sam.
I agree with the President that we need to extend the George W. Bush tax cuts. I might differ with the president, as he wants it only for the middle class. I would also suggest that the low wage earners should also be included in lower tax rates. As for the people making those millions, the current tax rate is 35% and moving it back to the Clinton tax rate of 39% is not going to create enough revenue to get our $16.3 trillion federal debt lowered.
I dug out some old forms from the Government. They are Circular E, Employer’s Tax Guide. The information contained in that circular is a list of withholding schedules for federal income taxes and social security. I looked at the 2000 charts and compared them with the current withholding charts. I am listing three wage earners by weekly pay and the amount of federal withholding that is required from each wage class. The three are for a person with weekly incomes of $500, $750 and $1,000. The person is married and claiming two exemptions.
Weekly wage: $500
Current weekly withholding: $38.00
2000 weekly withholding: $50.00
You get to keep this much more a year: $780.00
Weekly wage: $750
Current weekly withholding: $75.00
2000 weekly withholding: $116.00
You get to keep this much more a year: $2,132.00
Weekly wage: $1,000
Current weekly withholding: $126.00
2000 weekly withholding: $171.00
You get to keep this much more a year: $2,340.00
So if you are making that $1,000 a week, under the current tax charts you have an additional $2,340.00 a year to spend on needed items and that my friends is what puts people to work, supplying those purchases.
But, if you look at in another way, taking that $2,340.00 from a million wage earners, the government would collect over $2 trillion in new income. I might support this if all the money goes to reducing the national debt. But if the government takes the money, sales will decline and people will be laid off and government will have less revenue.