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Subject: TAXES YOU NEED TO BE AWARE OF


In just six months, the largest tax hikes in the history of America will take effect.
They will hit families and small businesses in three great waves on January 1, 2011:


First Wave: Expiration of 2001 and 2003 Tax Relief

In 2001 and 2003, the GOP Congress enacted several tax cuts for investors, small business owners, and families.
These will all expire on January 1, 2011:

Personal income tax rates will rise. The top income tax rate will rise from 35 to 39.6 percent (this is also the rate at which two-thirds of small business profits are taxed). The lowest rate will rise from 10 to 15 percent. All the rates in between will also rise. Itemized deductions and personal exemptions will again phase out, which has the same mathematical effect as higher marginal tax rates. The full list of marginal rate hikes is below:

- The 10% bracket rises to an expanded 15%

- The 25% bracket rises to 28%

- The 28% bracket rises to 31%

- The 33% bracket rises to 36%

- The 35% bracket rises to 39.6%

Higher taxes on marriage and family. The �marriage penalty� (narrower tax brackets for married
couples) will return from the first dollar of income. The child tax credit will be cut in half from $1000 to $500 per child. The standard deduction will no longer be doubled for married couples relative to the single level. The dependent care and adoption tax credits will be cut.


The return of the Death Tax.
This year, there is no death tax. For those dying on or after January 1 2011, there is a 55 percent top death tax rate on estates over $1 million. A person leaving behind two homes and a retirement account could easily pass along a death tax bill to their loved ones.


Higher tax rates on savers and investors.
The capital gains tax will rise from 15 percent this year to 20 percent in 2011. The dividends tax will rise from 15 percent this year to 39.6 percent in 2011. These rates will rise another 3.8 percent in 2013.


Second Wave: Obamacare

There are over twenty new or higher taxes. Several will first go into effect on January 1, 2011. They include:
The �Medicine Cabinet Tax� Americans will no longer be able to use health savings account (HSA), flexible spending account (FSA), or health reimbursement (HRA) pre-tax dollars to purchase non-prescription, over-the-counter medicines (except insulin).


The �Special Needs Kids Tax�
This provision imposes a cap on flexible spending accounts(FSAs) of $2500 (Currently, there is no federal government limit). There is one group of FSA owners for whom this new cap will be particularly cruel and onerous: parents of special needs children. There are thousands of families with special needs children in the United States , and many of them use FSAs to pay for special needs education.

Tuition rates at one leading school that teaches special needs children in Washington , D.C. ( National Child Research Center ) can easily
exceed $14,000 per year. Under tax rules, FSA dollars cannot be used to pay for this type of special needs education.

The HSA Withdrawal Tax Hike.
This provision increases the additional tax on non-medical early withdrawals from an HSA from 10 to 20 percent, disadvantaging them relative to IRAs and other tax-advantaged accounts, which remain at 10 percent.



Third Wave: The Alternative Minimum Tax and Employer Tax Hikes

When Americans prepare to file their tax returns in January of 2011, they�ll be in for a nasty surprise�the AMT won�t be
held harmless, and many tax relief provisions will have expired. The major items include:

The AMT will ensnare over 28 million families, up from 4 million last year. According to the left-leaning Tax Policy Center , Congress� failure to index the AMT will lead to an explosion of AMT taxpaying families�rising from 4 million last year to 28.5 million. These families will have to calculate their tax burdens twice, and pay taxes at the higher level. The AMT wascreated in 1969 to ensnare a handful of taxpayers.

Small business expensing will be slashed and 50% expensing will disappear. Small businesses can normally expense (rather than slowly-deduct, or
�depreciate�) equipment purchases up to $250,000. This will be cut all the way down to $25,000. Larger businesses can expense half of their purchases of equipment. In January of 2011, all of it will have to be �depreciated.�

Taxes will be raised on all types of businesses. There are literally scores of tax hikes on business that will take place. The biggest is the loss of the �research and experimentation tax credit,� but there are many, many others. Combining high marginal tax rates with the loss of this tax relief will cost jobs.

Tax Benefits for Education and Teaching Reduced.
The deduction for tuition and fees will not be available. Tax credits for education will be limited. Teachers will no longer be able to deduct classroom expenses. Coverdell Education Savings Accounts will be cut. Employer-provided educational assistance is curtailed. The student loan interest deduction will be disallowed for hundreds of thousands of families.

Charitable Contributions from IRAs no longer allowed. Under current law, a retired person with an IRA can contribute up to $100,000 per year directly to a charity from their IRA. This contribution also counts toward an annual �required minimum distribution.� This ability will no longer be there.

PDF Version Read more:
http://www.atr.org/six-months-untilbr-largest-tax-hikes-a5171##ixzz0sY8waPq1


Now your insurance is INCOME on your W2's......

One of the surprises we'll find come next year, is what follows - - a little "surprise" that 99% of us had no idea was included in the "new and improved" healthcare legislation . . . the dupes, er, dopes, who backed this administration will be astonished!


Starting in 2011, (next year folks), your W-2 tax form sent by your employer will be increased to show the value of whatever health insurance you are given by the company. It does not matter if that's a private concern or governmental body of some sort. If you're retired? So what; your gross will go up by the amount of insurance you get.

You will be required to pay taxes on a large sum of money that you have never seen. Take your tax form you just finished and see what $15,000 or $20,000 additional gross does to your tax debt. That's what you'll pay next year. For many, it also puts you into a new higher bracket so it's even worse.


This is how the government is going to buy insurance for the15% that don't have insurance and it's only part of the tax increases.

Not believing this??? Here is a research of the
summaries....

On page 25 of 29: TITLE IX REVENUE
PROVISIONS- SUBTITLE A: REVENUE OFFSET PROVISIONS-(sec. 9001, as modified by sec. 10901) Sec.9002 "requires employers to include in the W-2 form of each employee the aggregate cost of applicable employer sponsored group health coverage that is excludable from the employees gross income."


Joan Pryde is the senior tax editor for the Kiplinger letters. Go to Kiplingers and read about 13 tax changes that could affect you. Number 3 is what is above.

People have the right to know the truth because an election is coming in November.

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Retread: My thoughts in ALL CAPS and BOLD

Originally Posted by Retread
Subject: TAXES YOU NEED TO BE AWARE OF


In just six months, the largest tax hikes in the history of America will take effect.
They will hit families and small businesses in three great waves on January 1, 2011:


First Wave: Expiration of 2001 and 2003 Tax Relief

In 2001 and 2003, the GOP Congress enacted several tax cuts for investors, small business owners, and families.
These will all expire on January 1, 2011:
THIS IS ONE OF THE GREATEST "GOTCHAS" IN HISTORY. THE GOP CONGRESS HAD 6 YEARS TO MAKE THESE THINGS PERMANENT, BUT DID NOT. EVEN IF MCCAIN HAD WON, HE WOULD BE STRUGGLING WITH RETAINING THESE RATES...
Personal income tax rates will rise. The top income tax rate will rise from 35 to 39.6 percent (this is also the rate at which two-thirds of small business profits are taxed). The lowest rate will rise from 10 to 15 percent. All the rates in between will also rise. Itemized deductions and personal exemptions will again phase out THEY DO THIS ALREADY, which has the same mathematical effect as higher marginal tax rates. The full list of marginal rate hikes is below:

- The 10% bracket rises to an expanded 15%

- The 25% bracket rises to 28%

- The 28% bracket rises to 31%

- The 33% bracket rises to 36%

- The 35% bracket rises to 39.6%

Higher taxes on marriage and family. The �marriage penalty� (narrower tax brackets for married
couples) will return from the first dollar of income. THE MARRAIGE PENALY WAS NEVER "REMOVED" AND IS STILL SEVERE. I ADVISE YOUNGER, WELL OFF, CLIENTS *NOT* TO GET MARRIED wink The child tax credit will be cut in half from $1000 to $500 per child. The standard deduction will no longer be doubled for married couples relative to the single level. The dependent care and adoption tax credits will be cut.

The return of the Death Tax.
This year, there is no death tax. For those dying on or after January 1 2011, there is a 55 percent top death tax rate on estates over $1 million. A person leaving behind two homes and a retirement account could easily pass along a death tax bill to their loved ones. THIS BY FAR IS THE ONE THAT THE GOP PLAYED CHICKEN WITH. THEY HAVE SAID THAT THEY HAVE "REPEALED" THE DEATH TAX. YES, FOR one year! BUT THEY PASSED NO PROVISION TO CONTINUE IT, OR TO LOCK IT AT SOME REASONABLE NUMBER. ASK THE FAMILIES OF MR. WILLIAMS IN TX, OR THE STIENBRENNERS OF FLA IF THEY LIKE THIS RULE...


Higher tax rates on savers and investors.
The capital gains tax will rise from 15 percent this year to 20 percent in 2011. The dividends tax will rise from 15 percent this year to 39.6 percent in 2011.YOU WILL ALWAYS PAY THE CAPITAL GAIN TAX AT YOUR BRACKET RATE TILL YOUR BRACKET RATE EXCEEDS 20% DIVIDENDS WILL BE TAXED LIKE INTEREST, AT YOUR REGULAR RATE. SAVERS WERE NOT FAVORED UNDER THE OLD LAW, ONLY INVESTORS. These rates will rise another 3.8 percent in 2013. THIS I PRESUME IS THE $250K OR MORE OF INCOME EXCISE TAX. NOT FOR EVERYONE BELOW THAT


Second Wave: Obamacare

There are over twenty new or higher taxes. Several will first go into effect on January 1, 2011. They include:
The �Medicine Cabinet Tax� Americans will no longer be able to use health savings account (HSA), flexible spending account (FSA), or health reimbursement (HRA) pre-tax dollars to purchase non-prescription, over-the-counter medicines (except insulin).


The �Special Needs Kids Tax�
This provision imposes a cap on flexible spending accounts(FSAs) of $2500 (Currently, there is no federal government limit). There is one group of FSA owners for whom this new cap will be particularly cruel and onerous: parents of special needs children. There are thousands of families with special needs children in the United States , and many of them use FSAs to pay for special needs education.

Tuition rates at one leading school that teaches special needs children in Washington , D.C. ( National Child Research Center ) can easily exceed $14,000 per year. Under tax rules, FSA dollars cannot be used to pay for this type of special needs education.

The HSA Withdrawal Tax Hike.
This provision increases the additional tax on non-medical early withdrawals from an HSA from 10 to 20 percent, disadvantaging them relative to IRAs and other tax-advantaged accounts, which remain at 10 percent.LEAVE YOUR MONEY IN THE HSA AND JUST WITHDRAW IT FOR MEDICAL PURPOSES, MANY TAXPAYERS ARE USING THEM LIKE IRA'S, AND I THINK ITS A GOOD IDEA.



Third Wave: The Alternative Minimum Tax and Employer Tax Hikes

When Americans prepare to file their tax returns in January of 2011, they�ll be in for a nasty surprise�the AMT won�t be held harmless, and many tax relief provisions will have expired. The major items include:

The AMT will ensnare over 28 million families, up from 4 million last year. According to the left-leaning Tax Policy Center , Congress� failure to index the AMT will lead to an explosion of AMT taxpaying families�rising from 4 million last year to 28.5 million. These families will have to calculate their tax burdens twice, and pay taxes at the higher level. The AMT wascreated in 1969 to ensnare a handful of taxpayers.
THE AMT IS HORRENDOUS. CONGRESS HAS PASSED A "STOPGAP" MEASURE TEMPORARILY INCREASING THE AMT EXEMPTION FOR THE PAST 15 YEARS OR SO. NO REASON TO THINK THAT THEY WON'T DO IT FOR ANOTHER YEAR. A PERMANENT INFLATION ESCALATOR WOULD BE NICE.
Small business expensing will be slashed and 50% expensing will disappear. Small businesses can normally expense (rather than slowly-deduct, or
�depreciate�) equipment purchases up to $250,000. This will be cut all the way down to $25,000. Larger businesses can expense half of their purchases of equipment. In January of 2011, all of it will have to be �depreciated.�

Taxes will be raised on all types of businesses. There are literally scores of tax hikes on business that will take place. The biggest is the loss of the �research and experimentation tax credit,� ITS THE RESEARCH AND DEVELOPMENT TAX CREDIT BTW, AND THIS IS ONE OF THOSE EXTEND IT EVERY YEAR FOR THE PAST 20 YEARS CREDITS. but there are many, many others. MANY EXTENDED EVERY YEAR Combining high marginal tax rates with the loss of this tax relief will cost jobs.

Tax Benefits for Education and Teaching Reduced.
The deduction for tuition and fees will not be available. Tax credits for education will be limited. Teachers will no longer be able to deduct classroom expenses. $250 A YEAR! WOW. THAT SAVED MOST ABOUT $63.. Coverdell Education Savings Accounts will be cut. Employer-provided educational assistance is curtailed. WHICH OF THESE EMPLOYER-PROVIDED CODE SECTIONS GO AWAY? 162? 132? 127? 117? NONE OF THESE GO AWAY, SO I DON'T UNDERSTAND? The student loan interest deduction will be disallowed for hundreds of thousands of families.

Charitable Contributions from IRAs no longer allowed. Under current law, a retired person with an IRA can contribute up to $100,000 per year directly to a charity from their IRA. This contribution also counts toward an annual �required minimum distribution.� This ability will no longer be there.

PDF Version Read more:
http://www.atr.org/six-months-untilbr-largest-tax-hikes-a5171##ixzz0sY8waPq1


Now your insurance is INCOME on your W2's......

One of the surprises we'll find come next year, is what follows - - a little "surprise" that 99% of us had no idea was included in the "new and improved" healthcare legislation . . . the dupes, er, dopes, who backed this administration will be astonished!


Starting in 2011, (next year folks), your W-2 tax form sent by your employer will be increased NO IT WON'T to show the value of whatever health insurance you are given by the company. It does not matter if that's a private concern or governmental body of some sort. If you're retired? So what; your grossNO IT WON'T will go up by the amount of insurance you get.

You will be required to pay taxes on a large sum of money that you have never seen.NO, YOU WILL NOT Take your tax form you just finished and see what $15,000 or $20,000 additional gross does to your tax debt. That's what you'll pay next year. For many, it also puts you into a new higher bracket so it's even worse. NO IT WON'T

YOUR EMPLOYER WILL BE REQUIRED TO *NOTE* THE AMOUNT OF HEALTH INSURANCE THAT WAS PAID ON YOUR BEHALF IN 2011. THERE WILL BE A NEW BLOCK, OR A NEW CODE ON THE W-2 WITH THE AMOUNT OF HI PAID FOR YOU. IT WILL *NOT* INCREASE YOUR GROSS OR TAXABLE INCOME

This is how the government is going to buy insurance for the15% that don't have insurance and it's only part of the tax increases.

Not believing this??? Here is a research of the
summaries....

On page 25 of 29: TITLE IX REVENUE
PROVISIONS- SUBTITLE A: REVENUE OFFSET PROVISIONS-(sec. 9001, as modified by sec. 10901) Sec.9002 "requires employers to include in the W-2 form of each employee the aggregate cost of applicable employer sponsored group health coverage that is excludable from the employees gross income."
NOTICE IT SAYS "EXCLUDABLE"? THEY JUST HAVE TO REPORT THE AMOUNT. I AM NOT GOING TO SAY THAT 3 YEARS FROM NOW, THEY AREN'T GOING TO MAKE IT TAXABLE, BUT YOU ARE *NOT* PAYING TAX ON YOUR EMPLOYER PAID HI NEXT YEAR.

Joan Pryde is the senior tax editor for the Kiplinger letters. Go to Kiplingers and read about 13 tax changes that could affect you. Number 3 is what is above.

People have the right to know the truth because an election is coming in November.

JUST SO YOU KNOW, I AM A REPUBLICAN. AND A CPA. I DO TAXES ALL DAY LONG. AND I DON'T LIKE'M EITHER. BUT I PREFER THE TRUTH TO HALF-TRUTH AND OUTRIGHT LIES INSIDE.

LG

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We NEED to raise taxes so we can help pay for this:

http://johnmccain.com/images/uploads/Stimulus_Report.pdf

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lousygolfer,
Thanks for the comments in bold. I sent this to several other accountant friends of mine. Quick replies listed more taxes that were not in here.

The reason I posted this is that this recession was caused by high taxes, and it certainly won't be cured by raising tax rates or tax revenues.

In fact, the deficit won't be decreased one cent by raising tax rates, because...

1. Each tax increase moves investment money from the private sector to spending money in the government sector. Less investment means less economic growth.

2. Lower incomes, lower profits, and high unemployment means there is less to tax.

Medicare and PelosiCare are on a trajectory to consume most of the federal budget. Social Security went bankrupt again in May 2009, and is now being propped up with deficit money, unable to even pay for current retirees from current tax revenues. There is no "trust fund", never was.

The government doesn't need all this money. We would all be better off if FICA and the entire income taxes were abolished tomorrow. But realistically, I could phase them out in less than 10 years.

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On the 22nd of July of this year the federal deficit was 1.46 trillion dollars.

To put that into perspective...

If you spent 200000 dollars per day for the last 2000 years you would just now be approaching 1.46 trillion dollars.

The debt load per person in the US of A right now is 119 thousand dollars PER PERSON just for the federal deficit.

That 1.46 trillion dollars is what the government has to borrow in order to get through the current year. Where does that money come from? It comes from money the business could borrow in order to put folks back to work.

AND it comes from foreign investment from places like China.

But when the payment on those loans come due, where does the money come from then?

It comes from additional borrowing or from a systematic devaluing of the dollar by simply printing more money, which causes the cost of everything to increase thereby reducing the ability of everyone to buy or to pay for what they already have.

The demise of Social Security took place when the "surplus" in the fund was placed into the general fund of the federal government and spent because it wasn't needed for the few that received benefits from the fund at the time. But as the number of retirees increased and the money had already been spent, the fund dwindled until there was insufficient money to pay for those reaching retirement.

So they increased the age to retire and cut back on adjustments for inflation and still the fund went broke...

And now those who followed down that path claim that the problem doesn't lie with the way they spent the money on things that had nothing to do with return on investment or setting aside to care for the aged but with the idea that the people who saved for their own retirement, left money to their children and invested in businesses that turned a profit because they fulfilled the vision of their founders to provide products and services that were in demand don't pay enough taxes to keep up with the entitlement and ill spent spending programs of the last 60 years.

JMO.

VOTE!

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crap

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What's the problem, Pepperband?

I happen to be a consulting business economist who sees no social benefit to most taxes, especially to bankrupt ones which actually prevent people from saving money for real retirement plans (SSI), and which interfere with their ability to save for their own medical care (Medicare). Show me an economist who favors more taxes and I will puncture his argument for it, if he actually tries to make one, rather than just pointing to his diploma, as most do.

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Originally Posted by Retread
What's the problem, Pepperband?

You misunderstand.

I am eligible for SS next summer.

So, I say

double crap ... crybaby

I intend to enroll for SS the first moment I can ... because I don't think it will be around.


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And I'm in Limbo...

I'm currently unemployed. But I -am- working --to get a startup business off the ground. It's my hope that when things get rolling (had some good news today, but I don't want to be premature) I'll be in a position to benefit.

Right now though, I'm living in a house that I'm in under water, paying my bills from my savings (I haven't yet touched my meager retirement savings, yet), have a ten year-old car that is going to need repairs soon (and a second car --my ex's-- that I also owe more on than it's worth).

This isn't complaining -- I'm confident that my personal situation will straighten out. But I look down the road at this tax situation and see why companies are putting plans on hold, aren't looking to hire more people, and how the cost of everything is going up. Heck, I've seen my basic utility costs go up just these past few months!

So, when I finally get my head above water, I think the water level is going to rise. This is NOT what I was looking ahead to in my old age...


Preach the Gospel every day. When necessary, use words.
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Sorry, for the misunderstanding, Pepperband.

I never expect to collect SS. I planned to wait until I was 70, to maximize benefits. By then, they are talking of having the standard age raised to 70, from 65. They will keep borrowing money from Red China to float SS as long as they can, because when it goes, all the incumbents who lied about SS are going to be out of office and looking for Salman Rushtie's plastic surgeon.

FRED,
I hear you, buddy.
The average yokel and his Congressman think starting a business is just like going to an hourly job: the work is already there and laid out for you, just work less, do what you want, and collect more money from those huge profits.

They don't care about risk, don't know what it is. All those years you lost money, Uncle Sam was nowhere around, too busy helping those struggling Fortune 500 companies. But when the farmer makes a bumper crop, the wildcatter strikes oil on his 20th hole, or the landlord finally pays off the mortgage and starts seeing some income - guess who's your partner, come for his half.

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Originally Posted by Retread
I happen to be a consulting business economist who sees no social benefit to most taxes

Someone on this forum ( you perhaps ? ) recommended THIS BOOK .

I borrowed it from the library.
It was VERY GOOD.

I was not able to finish it due to other issues.
Maybe I'll borrow it again.

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Quote
I planned to wait until I was 70

I am currently eligible when I turn 62, next year.
At a reduced rate, of course.
But, if I wait for my 66th birthday, which is when the full amount kicks in ... I think SS may be null and void.
I anticipate them raising the age requirement with the influx my group of Baby Boomers.

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Just think how I feel. I'm 21 and I get to pay for something I'll never see.

Nothing against people who've earned it, of course. I'm just a trifle upset.


One year becomes two, two years becomes five, five becomes ten and before you know it, you've wasted your whole life on a problem you can't solve. That's one way to spend your life. -rwinger

I will not spend my life this way.
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Originally Posted by karmasrose
Just think how I feel. I'm 21 and I get to pay for something I'll never see.

Nothing against people who've earned it, of course. I'm just a trifle upset.

Me too. We're going to earn it by paying into it our entire lives, and then it won't be there when we need it.

My retirement will be spent selling flowers on the side of the road.


Me: BS/FWW: 48
BS/WH: 50
DS: 30, 27, 25
DD: 28
OC: 10
BH and I are raising my OC together.
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Pepperband,
I see you read ECONOMICS IN ONE LESSON, which I recommended here a while back. That's the most concise explanation I ever found, a real classic. I must know 100 people who read that since the 1970s and never forgot it. Should be required reading for every high school student, with an exit exam.

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Originally Posted by writer1
Originally Posted by karmasrose
Just think how I feel. I'm 21 and I get to pay for something I'll never see.

Nothing against people who've earned it, of course. I'm just a trifle upset.

Me too. We're going to earn it by paying into it our entire lives, and then it won't be there when we need it.

My retirement will be spent selling flowers on the side of the road.


Yup - I'm in the same boat as you two - I'm 28 so I know I'll never see that money...already started saving for retirement just so we'll have something....ugh


Me & DH: 28
Married 8/20/05
1DD, 9 mo.
Just Lookin' and Learnin'
HIYA!
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Originally Posted by Pepperband
Quote
I planned to wait until I was 70

I am currently eligible when I turn 62, next year.
At a reduced rate, of course.
But, if I wait for my 66th birthday, which is when the full amount kicks in ... I think SS may be null and void.
I anticipate them raising the age requirement with the influx my group of Baby Boomers.

Pep:

Your safe. You will get what you were promised.
In Karma's case, and like my 17 year old son, the rules will be different. The "normal" retirement age is now 67. I expect them to cut the "early" retirement age at 62 completly in the future or raise it to 67, and then move the "normal" retirement age to 70, and maybe 72.

SS isn't going away. It will change. Like it did in 1983, when they instituted the new "normal" retirement age of 67. And doubled the FICA tax collected. And added the inflation based annual limit, currently $106,800.

Medicare and SS will devour the federal budget over the next 30 years. What I was promised at 25 may not be what I get at 70. I was never promised a Rose Garden. I would even hope to see 70. Peopele who are about 75 now, probably recieved EVERYTHING they paid into SS within about 3-4 years of drawing the first check. That number will go to 6-7 years in the future for the average worker.

But these were promises made in a different time and place. And now, the feds have got to support those promises. They can CHANGE the promise, and they have and will. But it will still be there.

LG



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Social Security is no different than the scheme run by Bernie Madoff. Legally, it is a welfare program, which Congress can reduce or eliminate at will. There is not obligation to pay anyone a nickel. No one has a legal claim to the money except under whatever the current laws give them. They have no property rights. It is not a retirement plan. There no accounts, no annuity, no pension, no insurance fund.

The only way Social Security has been paying benefits is with each month's FICA tax receipts being paid to next month's recipients.

Now, it, is unable to do that. It cannot even take money at the expense of other social programs, military and infrastructure spending, because revenues are down. So it is running off deficit borrowing until the economy improves enough to sustain itself at the expense of the other federal programs, for a few more years.

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Retread:

This line:
Quote
Social Security is no different than the scheme run by Bernie Madoff.

SS has always been a Ponzi Scheme.

But it used to have 16 "suckers" for every one collecting. Its going to be 3 "suckers" for every one collecting soon.

LG

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Retread,

SS didn't start the way it is now. It began as a payment/benefits structure and though the first to pay in were paying for those who became eligible in the first group to collect benefits, the program very rapidly built a huge surplus as more and more folks joined the work force that was paying into SS while those already collecting was a much smaller number.

But in the 50s congress decided that this huge surplus sitting around was doing no one any good and there was much debate on how to handle the funds. Some, those who were looking forward and not at immediate entitlement programs or pet pork projects suggested that an investment program be established to actually grow the dollars into something that could pay not only current expenses but also adjust for inflation and create a buffer for the day when boomers began to retire.

On the other side were those who felt that the primary importance was to fund current budget concerns and reduce the over all debt load of the federal government. The Cold War was serious business and lots of money was being spent on R&D and weapons systems. New entitlement programs were coming into existence almost daily and a bunch of small "brush fire" wars were breaking out all over the globe.

Eventually, in the name of "fiscal responsibility" the money taken in by SS was transferred to the general fund and it became just another revenue stream to be spent on whatever congress decided to spend it on. At that time it became a purely put and take system with many more paying than receiving and as those of us who were paying the bulk of the funds aged and reached retirement age, the funds, which were being spent on other things were pretty much hopelessly in the red forever.

I recall the conversations my parents, grandparents and family friends had about exactly this mess when I still had no idea what retirement or any of that stuff even meant. But I can remember the conversations and the concerns my parents raised at the time and that it wasn't their own retirement they were concerned with but mine and that of my children, though I was but a wee lad at the time.

What makes it doubly bad, IME, is that the government has also penalized and discouraged private investment for retirement in many ways during the same time period. Those who want to set aside money for retirement get hit either with taxes on the growth of their funds or on the overall total at the time of retirement. The tax savings for retirement investment are based on having a lower income when we retire and so the tax burden being less. But what I see happening is that if I make wise investments and earn several hundred thousand dollars or perhaps a couple of million, when it comes time to dip into those funds, perhaps to pay for even medical expenses to prolong my life, I now end up in a HIGHER tax bracket for those funds than when I first earned them. So I end up paying taxes in the highest tax bracket by limiting my spending and fighting to save money for a rainy day and at the end of my life I pay as if I had been earning a million dollars per year for the last 40 years.

I need to get back to work. This will only make me crazy...(er)

Mark

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