How will the new UNCONSTITUTIONAL fiscal cliff tax deal effect our economy?
I’ll get back to that but first…
Let me count the ways.
First of all, the new legislation sets the standard for “rich” at $400k for an individual or $450k for a family rather than the $250k originally desired by the Emperor.
This will leave some small business in the NON rich category but not ALL small businesses.
Those small businesses which exceed the “rich” limit will have some options available to them. They can simply put the breaks on any planned growth of their business which will be the case for those approaching the limit or, they can downsize if they are just barely OVER the limit.
What will be the MOST likely scenario will be businesses raising the cost of goods or services to compensate for their increased tax bill.
THAT, of course means, those who BUY those goods or services will have THEIR taxes raised by proxy.
Then there is the fact that EVERYBODY…not just the “rich” will see a tax increase.
That’s right…Part of the new fiscal cliff tax deal is that everybody…EVERYBODY will see their PAYROLL taxes go UP which means EVERYBODY will have LESS take home pay.
All that talk from the Emperor during his campaign about making sure that the middle class would NOT have their taxes raised?
We told ya so and I don’t hate to say it.
Less take home pay of course means decreased spending which leads to a slowdown of the overall economy which is already barely crawling along.
Individuals making $250k or more and married couples making $300k or more will have new limits placed on charitable deductions under the new tax laws.
That means those most capable of making large donations will be cutting back on what they give to charity.
Let’s face it, charitable giving SHOULD come from the heart no matter what BUT, reality dictates that a great deal of charity has been driven by the ability to deduct it at the end of the year and the negative effect could well reach up top $7 billion per year.
While the BIG GOVERNMENT proponents say the measure could save the Government up to $50 billion per year, one wonders how many charitable organizations will be forced to fold due to a lack of donations and what the cost to the government…You and me…Will be when government has to take over the care once provided by organizations and groups.
Let’s not forget the dividend tax.
That’s going up too.
What THAT means is that there will most likely be LESS investing by those in the markets and that too, will cause the economy to drop.
The fact of the matter is, if you’re going to get ripped on your tax bill for dividends on investments, why knock yourself out trying to make those investments to begin with?
The Capital Gains tax rate is going UP.
Under the Bush era rates, Capital Gains were taxed at 15% and now, with those rates expired, the Capital Gains taxes are at 20%.
That means if you see a business for a profit you’re paying an extra 5% in taxes ON it.
Let’s say you…YOU BUILT a successful business and had the idea of selling that business. With the profits you were going to invest a large portion, maybe travel or but a new home, maybe upgrade the home you now have.
Any dividends on those investments is going to be hit at a higher rate, major donations to charity are going to be stung and whatever profit you make will be nailed by an extra 5% to the government.
More and more people are going to be sitting on whatever money they have and, while there is now SOME degree of certainty in the tax code, businesses STILL won’t be open to expansion.
Because of Obamacare.
There are 21 new taxes in Obamacare and businesses know full well that expansion, growth and hiring will be heavily penalized by Obamacare.
In fact, over the last couple of months, an ever growing number of companies have been CUTTING their workforce BECAUSE of Obamacare thus placing more and more people on unemployment.
The less people that are working means less payroll taxes being collected, less money being circulated through the economy, less money being invested so…Less dividend taxes being collected…
Reasonable, sane people can clearly see the problem.
Socialists, not so much.
Now, while we’ve really only scratched the surface on the new taxes let’s take a look at other factors involved in the economy stemming from this new socialist tax plan.
In the fiscal cliff “deal” there is a 40 – 1 divide between increased taxes and spending cuts.
We all know there has never been a tax increase in history that government doesn’t spend so, that means…for every dollar collected or, pillaged from the people by government under the Emperor’s new plan…THE GOVERNMENT WILL BE SPENDING 40 DOLLARS.
Let me say that again just to be clear.
FOR EVERY DOLLAR TAKEN IN BY THE GOVERNMENT UNDER THIS NEW TAX BILL…THE GOVERNMENT WILL BE SPENDING $40.00.
That, naturally, will be driving our national debt and annual deficits into orbit.
The effect of THAT will, I believe, soon be felt by yet ANOTHER downgrading or our national credit rating.
Moody’s has already suggested such a move and it is my guess that it could come within DAYS, not months and another downgrade WILL have a negative effect on the markets and the economy.
If the 40-1 ratio isn’t enough for Moody’s to downgrade our credit rating on its own, remember this little tidbit…
As we approach $16.5 TRILLION dollars of national debt…THAT number doesn’t take into account ANY of our ENTITLEMENT spending.
Believe me, Moody’s is FULLY aware that neither the Emperor nor the seated socialists have ANY plan OR desire to deal in ANY WAY with ENTITLEMENT spending and THAT will play a BIG part in THEIR decision to DOWNGRADE our credit rating.
Also, just a little something else to chew on…Bernake has EVERY intention to CONTINUE PRINTING MONEY.
THAT makes EVERY dollar YOU have worth LESS and drives UP inflation.
According to the Tax Policy Center and the CBO…We are headed directly for a double dip recession and due to this new fiscal cliff tax deal alone…an increase in our national debt of at least 4 TRILLION DOLLARS over the next 10 years.
We have the debt ceiling debate coming up in the next couple of months too so hang on folks.
We have NOT averted a fiscal cliff disaster at all.
We’re just going to be bouncing off small ledges all the way to the bottom unless someone in the House GROWS a set and takes this whole fiscal cliff “deal” to court as UNCONSTITUTIONAL because…
According to Article 1, Section 7 OF the Constitution:
“All bills for raising revenue shall originate in the House of Representatives; but the Senate may propose or concur with amendments as on other Bills.”
THIS FISCAL CLIFF “DEAL” ORIGINATED IN THE SENATE AND THEREFORE…THIS LAW IS UNCONSTITUTIONAL!!!!!