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Thoughts on the "Fiscal Cliff"

First my apologies, for these comments on the "fiscal cliff" will not be as complete as I would like.

Based on information from a financial advisor, I understand the "fiscal cliff" to consist of the following events:
  • Expiration of general tax cuts, which will result in $255 billion revenue
  • Expiration of payroll tax cuts, which will result in $112 billion revenue
  • Sequestration hits which will cut $55 billion from the military budget (which could continue each year for 10 years), and cut $55 billion from non-defense spending in 2013
  • Implementation of an Alternative Minimum Tax patch, which will increase revenues by $38 billion
  • Implementation of PPACA (Obamacare) taxes on investments, which will generate $21 billion in revenue
This will result in a total of about $536 billion in additional revenue, or 3.5% of America's GDP, which will result in a negative GDP for early 2013--the "fiscal cliff."

I find it reprehensible that our national "leaders" are posturing as if they are our saviors from the "fiscal cliff" when they are the ones who created this problem.

Our "leaders" involved us in two wars, one (Iraq) most certainly a war of choice, on the cheap, meaning that the American people got tax breaks while the debts from the wars piled up.  It was as if we were being bribed to accept the wars, and now we are paying the price.  Anytime America chooses to go to war, the price of war needs to be immediately felt by the People so that we are more thoughtful about the wars we undertake in the future.  Now we see these wartime tax cuts going away--one component of the "fiscal cliff."

Our "leaders" passed Obamacare, another (unnecessary) component of the "fiscal cliff"...and a threat to our liberties.

Sequestration will happen because the budget supercommittee could not reach an agreement on how to cut $1.2 trillion deficit reduction package as per the Budget Control Act (August 2011). (source)  Another component of the "cliff."

And now we expect our "leaders" to do the right thing.  How can we when their behavior is to the contrary?  For example, the Senate has failed to pass a budget for the past four years.  This is clear dereliction of duty and Congress should either not receive their salaries until they pass a budget, or just go to jail.  And these are the people who will "save" us now?

Our current crisis has been generated by the national "leadership" on both sides of the aisle, not by some alien from another world.  They should be held accountable.  We need to go over this "fiscal cliff" and more so that the American people finally wake up and see our "leadership" for who they are and demand accountability.

It is clear by their actions that the people in all three branches of the government no longer represent We The People, but something else.  This drama being played out over the "fiscal cliff" obscures the real problem which is a true existential threat to our nation: our accelerating national debt.

--Against All Enemies

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Disclaimer: These opinions are solely my own, and do not reflect the opinions or official positions of any United States Government agency, organization or department.
Posted by Unknown at 04.45, Add Comment
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Romney May Have Paid No Federal Income Tax From 1999 to 2001

Romney May Have Paid No Federal Income Tax From 1999 to 2001


are guessing that Romney may have paid near zero federal taxes in 2009 due to losses on his investments resulting from the financial crisis. They probably have the right idea, just the wrong year.
It is true that Romney suffered capital losses on his investments in 2009 that might act to shield much of his income in that year from taxes, but he would have to be a complete idiot to allow his tax planners to file a return showing no income taxes paid just as he was gearing up for a presidential run. But, then again, we are talking about someone who waited until 2010 to close his wife's Swiss bank account.
Much more likely to this writer is that Romney probably does have one or more years in his recent history where he paid near zero taxes, but the year in question is probably not 2009. Much more likely candidates are the tax years 1999 to 2001 when he supposedly left his high paying job at Bain and accepted a smaller $275,000 salary to head the winter Olympics in Salt Lake City. It is reported that once the Olympics showed a profit, Romney ended up donating his salary to charities, thus further lowering his reported income for tax purposes.
His lower salary and loss of some board member compensation would mean less current income to shelter from 1999 to 2001. But, his tax shelters would have lost none of their potency. He was already utilizing IRAs and 401(k)s to shelter much of his investment income, possibly worth as much as $100 million today, from taxes. He was already making use of numerous off-shore tax havens in the Cayman Islands and other foreign locations and admits to having had a Swiss bank account in his wife's name. He admits that he had a trust established for his children to shelter as much as $100 million more of his wealth from taxation. And much of his income came from Bain Capital private equity investment funds located offshore so much of their profits could be deferred for ten years or limited to a maximum tax rate of 15 percent, a special tax provision only available to private equity and hedge fund managers.
Also, the leveraged buyout business took a big hit in 1999 and 2000 as the country entered a recession so he likely had significant capital losses to deduct. This was followed in 2001 by the dotcom collapse. As a large wealthy investor it is likely he was being put into numerous IPO's available only to the well-connected and many of these high-tech investments most likely soured in 2001 leading to further tax deductible capital losses.
Some may argue that someone who donates his salary to charity or has investment losses deserves to pay no taxes. But, they are missing the point. Romney's vast personal fortune of between $100 million and $200 million at the time was accreting at some 20 percent per year so how should he able to avoid paying taxes on the $20 to $40 million of dividends and interest income and profits and capital gains he must have been receiving on his investments? Donating a $275,000 salary to charity is chump change compared with avoiding taxation on tens of millions of profits each year.
Of course, some will argue that this is all just speculation. What else are concerned citizens to do when a candidate for president, running on a platform of being business smart and the man to fix the economy, refuses to tell us how he made his money and whether he paid his fair share of taxes along the way?
Some may argue that this is all legal. That our laws allow for the wealthiest to accumulate $400 million plus fortunes and pay little to no taxes. But, that is exactly the point. Who do you think is writing our tax laws? It is the wealthiest of our country that are lobbying our government for tax breaks and making large campaign contributions to elected officials to ensure these tax breaks not only continue, but are amplified and extended. And who is their boy, Mitt Romney.

John R. Talbott is a best-selling author and economic consultant to families whose books predicted the housing crash and the economic crisis. 
Posted by Unknown at 18.07, Add Comment
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