AMT Relief in the FY2005 Budget: A Bandaid for a Hemorrhage

For my entire career, one of the biggest issues I have been addressing has been how to help people avoid becoming victims of the dishonest and financially unsound Social Security system. It has always been inevitable that the system would be changed to deny people all of the benefits they have been promised. This has already been done through taxation of benefits for many recipients (contrary to the original promise) and raising the age of eligibility for full benefits so that more people will die off before even recovering what they have paid in.

As I have always said, any free market company that offered a retirement plan similar to SS would be charged with fraud and run out of business. It’s different when our rulers in DC pass laws forcing people to participate in what is no more than a government run Ponzi scheme.

My long running prediction that SS benefits will be denied to people who are considered to be wealthy (earning more than $25,000 per year), and thus not needing any assistance, still stands and is even becoming more open, as in this call by Alan Greenspan to reduce benefits. He doesn’t mention anything about reducing the huge amounts of taxes required to be paid into the SS system. Everyone is expected to pay in more and more in current taxes for fewer and fewer potential benefits.

I’m not a big fan of plans such as this, to allow people to set aside a tiny portion of their SS tax for privately controlled investments, but still send the full 12.4% to our rulers in DC. What most people fail to realize is that, while the current SS tax rate of 12.4% doesn’t seem like a lot when compared to the 15%, 25% and 28% income tax brackets most people fall in, that is very misleading. The 12.4% SS tax is assessed on the gross pay, while the income tax is charged against taxable income, after deductions and exemptions. This makes the effective tax rate, and the actual dollars charged, much higher for SS tax for most people than they are for income taxes.

As I’ve described over the years, there are several ways in which one’s business and financial affairs can be structured to minimize the amount required to be paid into the SS system. While it is usually more of a hassle than not doing those things, people who are holding their breath waiting for Bush or any of our rulers in DC to magically fix the entire mess are literally flushing thousands of dollars down the crapper each year they wait to take those steps on their own.

The immorality of taxes

Love Your Taxes, Says England’s Catholic Church – I personally preferred the message that “if 10% is good enough for God, why do our earthly rulers need to take over 50% of everything we earn?”

Virginia Tax Reel. Richmond gets greedy, and John Kerry is watching.

IRS taking the gloves off – A little IRS PR to keep everyone in line for Tax Season.

Marriage Changes May Shake Churches’ Tax Exemptions – It’s not politically correct to oppose the left’s agenda and the tax code could be used to punish anyone who doesn’t fall into lockstep with them.

Unlike much of the Wall Street Journal’s website, the Sunday section is supposed to be free and accessible by anyone, not just paid subscribers. Please let me know if this doesn’t work out for non-subscribers.

How to Pick Right Kind of Tax Preparer

Dreaded Tax Law Could Ding You – More victims of the insane AMT. We’re still waiting for the number of victims to reach that point of critical mass so our rulers will pull their heads out of their rectums and do something to fix this problem.

Selling Your Home Office

Do the Retirement Math – My personal preference is normally to grab the Social Security benefits ASAP.

Be Ready When Changes Come

Behind The Chocolate Curtain – A recent profile in the local paper on my dad and his early years growing up at the Hershey orphanage. I actually learned about this article today after receiving a copy from him in the mail. The newspaper version also included a nice photo. {with a more reliable copy than is available from the newspaper, which changes the URL every day}

Goodies cost – Another good big picture economics lesson from Walter Williams.

The Bush Paradox. Wasn’t the era of big government supposed to be over?

The 6.2 Percent Solution: A Plan for Reforming Social Security

Tax fight simmers – RINOs doing what they can to help the DemonRats fight tax cuts.

A new world of higher taxes in Virginia?

‘Perfect storm’ hits taxpayers in Virginia

A Taxpayer’s Rights: Gail Clarifies the Constitution – Good response from Gail Buckner to an idiot who fell for the tax protestor scam that taxes are voluntary.