GOVERNMENT TRUE-ISMS

I don't make jokes. I just watch the government and report the facts. -Will Rogers

OBAMA ADVISER SAYS THE GOVERNMENT SHOULD FORCE US TO SAVE

Obama adviser backs automatic savings programs

Austan Goolsbee, a member of the Council of Economic Advisers and the chief economist for the President's Economic Recovery Advisory Board, says he believes automatic savings programs are more effective than tax credits when it comes to getting people to save for retirement. "A lot of people have a hard time actually going down and saying, 'Take money out of my paycheck and put it in the bank,' ... but if you default them into a savings program ... you automatically have money put into a 401(k)," he said. "The evidence suggests that for a lot of people that's way more effective than even giving them big tax credits to encourage them to do it because people are too busy." The Washington Post

INMATES RUNNING THE ASYLUM

It's bad enough that the person in charge of the IRS, Treasury Secretary Timothy Geithner, is an acknowledged tax cheat who claims not to understand how to use Turbo Tax. Now, Charlie Rangel, the Chairman of the House Ways & Means committee, which writes all of the tax laws, has been discovered to be hiding even more income and assets than were previously disclosed.

Here are just a few of the current news stories, courtesy of Drudge:

The Absent-Minded Chairman. Charlie Rangel wins the personal lottery.

OOPS! CHARLIE FORGOT THIS $1M HOUSE. REALTY BITES TAX-THEM-NOT-ME RANGEL

CHARLIE'S MORTGAGE BARES HOME UNTRUTH

Stop embarrassing us, Mr. Rangel. Resign

HOUSE GLOBAL WARMING BILL COSTLY

'Climate bill could cost 2 million jobs'

(The Hill) -- TheHill.com reports that a new study by the National Association of Manufacturers (NAM) and the American Council for Capital Formation (ACCF) finds the House global warming bill could "cost 2 million jobs by 2030." According to the story, "one key finding is that the climate bill will hurt the manufacturing sector particularly hard. As much as 66% of the total job loss from the climate bill could come from manufacturers, the report notes." The story notes that "though the impact of the bill will grow over time, the economy will start feeling the effects of the carbon cap almost immediately." The ACCF and NAM study can be found at <http://www.accf.org/publications/126/accf-nam-study>. The Hill story may be seen at <http://thehill.com/leading-the-news/climate-bill-could-cost-2-million-jobs-2009-08-12.html>

'House global warming bill's new bureaucracy: $8 BILLION'

(USA TODAY) -- USAToday.com reports "it will cost nearly $8 billion over the next decade to pay for the expanded federal bureaucracy needed to combat global warming under a bill passed by the House of Representatives, a report by the non-partisan Congressional Budget Office says." According to the story, "the complex bill, which runs more than 1,400 pages, assigns new tasks to at least 21 federal agencies, from the Energy Department to the Commodity Futures Trading Commission. It also creates new government programs, such as an effort to limit deforestation in developing nations." See the USA Today story at <http://www.usatoday.com/weather/climate/2009-08-10-climate_N.htm>

THE LAW OF BIG NUMBERS

I've talked about The Law of Big Numbers before, but I really think people should understand the magnitude of what the government is talking about when they say Million, Billion and Trillion.

Recently, while speaking at Senator Johanns' Roundtable on Healthcare Reform, I brought this issue up again.

This is what I said:

The papers have abounded with big numbers. The bailout - $700 billion dollars, the deficit - $1.2 trillion dollars. Million, Billion, Trillion...The only difference between the words is one letter and sometimes people get those things confused. I think there should be a law of big numbers so people really understand the difference between a million, and a billion, and a trillion. Everett Dirksen once said, “a million here, a million there, pretty soon we’re talking big numbers.”

Being a math guy, I like to explain it like this:

If you were going to count to a Million, and you counted one count per second, it would take you a little bit over eleven and one half days of counting non-stop.

Now let's go to a Billion, mostly when I ask people this, they usually guess 100 days. Well actually, to count to a billion, would take you 31 years and 8 ½ months. Remember, a billion is a thousand millions.

Then we can talk about a Trillion. How long would it take to count to a trillion? Do the math. Again you move the decimal point but it would take you 31,709 years plus 8 months to count to a trillion.

Think about this the next time you hear a politician talk, or when you look at the deficit calculator.

Larry Kopsa CPA

GOVERNMENT TRUE-ISMS

"Suppose you were an idiot. And suppose you were a member of Congress....But then I repeat myself." -Mark Twain

READ MY LIPS, NO NEW TAXES

One of President Obama’s pledges was that he would only increase taxes on those wealthy Americans who make over $250,000 per year. I’m not sure exactly what he meant by this but it appears to me that with some of the proposals they’re talking about in the health care reform, it seriously increases people’s taxes.

Here’s an example. I just had a young couple in my office. Both are college graduates who are working hard. He is a banker and she is a nurse. Between them, they are making close to $100,000. The income they are making throws some of their income into a 25% federal bracket and a 7% state bracket. In addition to this, they have to pay social security of 7.65% which is matched by their employers.

As we discussed their situation, the conversation evolved into health care reform. Currently, their company is providing them with $4,200 of health insurance. They are putting $5,000 into a cafeteria plan and they are completely funding a health savings account in the amount of $5,950. In Washington D. C. they are discussing eliminating the deduction for all of these items. If this were the case, I calculated that their tax will increase by $5,551. They couldn’t believe it. They don’t have an extra $5,551 with three children, house payments, etc.

I told them it’s actually worse than this. If they consider it, their tax cost is actually $5,551. In their tax bracket, they would have to go out and earn an additional $9,200 to bring home this amount of money. In addition to this, their employer would have to pay social security on those funds which would cost the employer an additional $700 in taxes.

Although President Obama didn’t say, “Read my lips,” as the first president Bush did, he certainly doesn’t seem to be following his promises. If they pass these measures to fund health care, he definitely isn’t following his promises.

WHO ARE AMERICA'S LARGEST POLITICAL DONORS?

A political action committee, or PAC, is a private group that organizes to elect political candidates. PACs receive and raise money from the group’s constituents and make donations to political campaigns. PACs that donate to federal races (e.g., U.S. Senate and House races or presidential races) must report all of the financial activities to the Federal Election Commission (FEC), which makes the reports available to the public.

To see the list of top political contributors go to: Top Political Donors.

THE GOVERNMENT DEBT CLOCK

I wonder what you would do if this was your personal debt clock or a debt clock for your business? Just how long can this go on before people realize that the country will not be able to pay for all of this?

Both the conservative and liberal economists are in agreement that we are creating some very serious problems for our future. See my earlier posting from Fortune magazine.

http://www.usdebtclock.org/

WHEN CONSERVATIVES AND LIBERALS AGREE I PAY CLOSE ATTENTION

Normally Paul Krugman, the liberal pundit and Nobel laureate in economics, and Paul Ryan, a conservative Republican congressman from Wisconsin, share little in common except their first names and a scorching passion for views they champion from opposite political poles. So when the two combatants agree on a fundamental threat to the U.S. economy, Americans should heed this alarm as the real thing.

See the entire article from Fortune magazine at CNNMoney.com/Fortune.

REMEMBERING THE PAST

Cartoon from 1934 Chicago Tribune
Those who cannot remember the past are condemned to repeat it.
George Santayana, The Life of Reason, Volume 1, 1905

LET'S THINK ABOUT THIS

WANT TO SEE PRESIDENT OBAMA'S TAX RETURN?

Drudge has a link to download the 43 page pdf copy of the Obamas' 2008 income tax returns, showing their income of almost $2.7 million. Maybe I need to write a book.

Minor picky point - This tax return is for 2008, before they took over the White House. Yet, look at what they showed as their occupations for 2008.

POLITICALLY CORRECT GREETING

For those of you so inclined, here’s a Christmas greeting that will offend no one whatsoever. Well, let me re-phrase that…it might very well offend Christians but no one else.

A Politically Correct Holiday Greeting

Best wishes for an environmentally conscious, socially responsible, low-stress, non-addictive, gender-neutral, winter solstice holiday, practiced within the joyous traditions of the religious persuasion of your particular choice, but with respect for the religious persuasion of others who choose to practice their own religion, as well as those who choose to not practice any religion at all. Additionally, a fiscally successful, personally fulfilling, and medically uncomplicated recognition of the generally accepted calendar of 2009, but not without due respect for the calendars of choice of other cultures, whose contributions have helped make our society great, without regard to race, creed, color, religion or sexual orientation.

(Disclaimer: This greeting is subject to clarification or withdrawal. It implies no promise by the wisher to actually implement any of the wishes for him/herself or others, and no responsibility for any unintended emotional stress these greetings may bring to those not caught up in the holiday spirit.)

The American Legion Magazine, December 2008

CALL TO ACTION

A NEW ADMINISTRATION….NOW WHAT?

As we have heard, “change is coming.” We are concerned that one change that is coming is higher taxes! Given the projected increases in the federal income tax, capital gains, and qualified dividend rates, you may want to take action before December 31st to keep more of your money in your pocket. To determine if you'll be affected, we have prepared the enclosed checklist for you. Please click on this link to review the checklist: Call to Action Checklist.

If you feel that you might be impacted by any or all of these items, contact us! If you already have a pretax appointment scheduled with us, we will be discussing these items at that time.

We are watching the activity in Washington D.C. very closely so that we can best serve you, therefore we will keep you posted. Let us know if you have any questions.

It is a pleasure serving you!

Larry Kopsa CPA