When I was 23, I had about $3,000 in savings and most of it I earned while in Viet Nam. So when I see these protesters in the street, that are young, they’re not brimming over with wealth. Saving over a lifetime gives one riches. This is how wealth is accumulated. The Hoi Polloi definition of “Rich,” is a person with enough money that there is no need to work ever again!
The government (Congress) is talking about wage earners who earn a lot of money when they refer to taxing the rich. A family of three or four with two wage earners earning 55K pays no tax; so double that, the rich are 110K and above.
Now let’s figure that John Doe decided to save $600 a month for the rest of his life starting at age 20 after 40 years at 6% he would have $ 1,150,178 or under today’s Bernanke interest rate plan about $353,886 at a 1% rate.
So now, after 40 years of savings, you have over a million in the bank. No need to cash it out, it’s FDIC insured. But while you were collecting interest, the government was printing money for the last 4 years. Inflation is a tax on savings, so in this case, we are taxing the rich/savers. And at 8% inflation, over the last 4 years, that amounts to a 32% tax. It’s invisible, nobody presented you with a bill.
Then we have FDIC insurance. Great little promotional item thought up by FDR. All of the banks by that time that were going broke had already gone broke, so there was no capital outlay for this added bank guarantee. So in today’s world, if your bank gets real sick, there is no reason to go to the bank to withdraw your funds. A run on the bank, puts the bank out of business, this has been averted.
The real neat thing is if you keep your money in the bank for that rainy day ahead that is what the government is counting on. Once retirees start spending their savings, they will burn right through the paltry interest in no time. Those dollars saved way back 60 years ago were hard dollars, and those same dollars valued in today's purchasing power, have been taxed to death by inflation.
Then there is the suggestion that millionaires ought to pay more than 17 percent in taxes. Why more? 17 percent of 100k is 17 thousand dollars and 17 percent of one million is 170K. The percentage paid is the same, but the amounts vary by a factor of 10, plus throw in the 32% inflation tax. I guess what it comes down to is the fact that rich people are incredibly stupid and the voters are incredibly intelligent. There is absolutely no reason to pay an accountant 20k a year to help you pay less in taxes, or is there?
People point to the Bush Tax cut renewal and it cracks me up. If they pass it, it will be called the Obama tax cut. Think for one moment, has there ever been a permanent tax cut? Has Congress been cutting our taxes permanently year after year? Tax Cuts are sunset laws, the law expires at a certain date and Congress conveniently passes a new tax cut, and points out to their constituents that they lowered taxes, talk about exhausting work.
Let’s go back to Eisenhower times and tax the rich at 90 percent. This will satisfy the Hoi Polloi’s demands as to the status quo; and it will end up being nothing more than window dressing. Who would go to work and have the government take 90 percent of their earnings? Of course it might work out as intended for a lottery winner, winning 300 million; they’d end up with 30 million after taxes.
Let’s tax the rich, but understand one thing, if they are smart enough to get rich, they are smart enough to want to avoid paying the additional taxes. Believing that they will have to pay is pure stupidity. The funny thing is rich people behave just like you and I; we try to avoid paying more taxes than we have to. I wonder how dumb that is?