Author: Jason Webb
Source: articleage.com
I like most American's complain about taxes and how the rich keep getting richer and the poor keep getting poorer. You've heard the arguments, the poor can't pay taxes because they are poor, the rich don't pay enough, and the middle class is left to pay the brunt. I complain not only as a cynic but also as a hopeful citizen that someday, something will change. I don't wish to be seen as a socialist nor a bigot along class lines. I just want everyone to pay a fair share of the collective burden as our founding fathers intended.
Do you think the rich have paid their fair share? Do you feel that after paying taxes on several hundred thousand dollars the burden should be lessened because you've paid enough or more than the average amount per capita? Do you think it is fair or unfair that one person should pay more than another for the same services received?
According to the 16th Amendment on income taxes, "The Congress shall have power to lay and collect taxes on incomes, from whatever source derived, without apportionment among the several States, and without regard to any census or enumeration."
Without apportionment, what does that mean?
Here is a quote from Supreme Court Justice Paterson in Hylton vs U.S. (3 US 171 [1796]): "The constitution declares, that a capitation tax is a direct tax; and both in theory and practice, a tax on land is deemed to be a direct tax... The provision was made in favor of the southern states; they possessed a large number of slaves; they had extensive tracts of territory, thinly settled, and not very productive. A majority of the states had but few slaves, and several of them a limited territory, well settled, and in a high state of cultivation. The southern states, if no provision had been introduced in the constitution, would have been wholly at the mercy of the other states. Congress in such case, might tax slaves, at discretion or arbitrarily, and land in every part of the Union, after the same rate or measure: so much a head, in the first instance, and so much an acre, in the second. To guard them against imposition, in these particulars, was the reason of introducing the clause in the constitution."
Without apportionment, means quite clearly that the government has the power to tax people at different rates. In Justice Patterson's explanation, the reason for taxing people at different rates is, some can afford to pay more than others based on their productivity and it is the governments duty to guard those less able to pay, against imposition.
It does not take a genius to understand that sharing the burden equally does not mean we divide up the national debt evenly and each pay one share. Sharing the burden equally means we all carry that portion of the total burden we are capable of carrying (paying).
Unfortunately the current tax structure soaks both the poor and middle classes only to spare the rich. The "Who Pays" national study finds that poor and middle income families pay a much higher percentage of their income to taxes than do the rich. The wealthiest pay non federal taxes at a rate equaling 7.9% of their income while the middle class and poor pay 9.8% and 12.5% respectively. In the United States, a country with the phrase "In God We Trust" bannered on its currency, this seems unconscionable. How can those with the least be expected to contribute the most by percentage? What happened to guarding against imposition?
Taxes are our collective duty, a price of continued enjoyment of the privileges of being a U.S. citizen. When I hear that extremely privileged people can't afford to pay the same percentage of income in taxes that the poor and middle class pay, I find myself hoping their investments fail miserably so that they will be able to afford to pay their share of the burden. If we are Americans collectively and we all enjoy the benefits collectively, then we should pay collectively and accordingly to what our means allow us to contribute. This may seem a harsh view, driven along class lines, but even some of America's wealthiest hold this true to one extent or another.
Warren E. Buffett, George Soros, and Ted Turner, have warned about the concentration of wealth and how it can turn a union based on merit into an aristocracy. Economic growth can be hindered by allowing a nation's capital to sit idly in, income tax bracket, the hands of inheritors instead of funneling it back thru the ranks to a new generation of innovators and workers. Even Alan Greenspan, the Federal Reserve chairman, warned in Congressional testimony, "For the democratic society, that is not a very desirable thing to allow it to happen", speaking on the concentration of wealth in our country.
F. Scott Fitzgerald said the very rich, "are different from you and me," to which Ernest Hemingway replied, "Yes, they have more money." To this I would add yes and they pay a disproportional smaller percentage of taxes on that money. This means the wealthiest one percent, are enjoying an unfair economic advantage over the rest of us beyond what they have earned.
Before you gather up arms against your local doctors and lawyers thinking they aren't paying their share, you should understand I'm not talking about them at all. I am talking about nobody you will, in all likelihood, ever see much less meet. What the average American sees as a person of wealth is more likely a true middle class or upper middle class person. In fact the richest or wealthiest person you know is probably in the 50% tax bracket, fully half of all their earnings going to one tax or another. No, it isn't these people I am speaking of at all.
The persons I'm talking about are the true upper five percent of Americans, those making over ten million dollars a year. Did you know the wealthiest 5% have collected 59% of the money but only pay 38 % of the taxes? Did you know it gets worse? The wealthiest 1% own 38% of all wealth in this country and pay only 25% of the taxes. Does this seem fair and like a shared burden?
Knowing this, would you now be surprised to learn that the bottom 40% of tax payers (you and me), have an average net wealth of $1100.00 hundred dollars? We on average are worth $1100.00 dollars and are paying on average $1793.00 in taxes. This is 163% of our net worth gone every year and people are still wondering why they can't seem to get ahead in life. Why are we paying so much? It's easier to answer this when you consider the wealthiest are paying 3.5 percent of their wealth in taxes. We pay 163% and they pay 3.5 %. The money has to come from somewhere after all.
What does this mean in plain English and what is the solution?
If all taxpayers paid the same 10.5 percent of their wealth in taxes as a median income family pays, the taxes of the lowest 40 percent (you and me) would be cut by 94 percent while the taxes of the wealthiest would triple. Source: Congressional Budget Office and United for a Fair Economy
"We the people", need to print this up as a bumper sticker, spread the word and start firing the political puppets of the rich. I for one do not hate the rich, they are Americans also. I just want them to pay the same 10% I feel obligated to.
Born in Southern California in 1964, Jason Webb Considers himself a student of life. He is currently attending the University of Northern Iowa pursuing a degree in communication.
Showing posts with label wealth. Show all posts
Showing posts with label wealth. Show all posts
Tuesday, December 22, 2009
Saturday, November 14, 2009
Retirement Planning & 401 K Investing: Secrets to Keeping the IRS Out of Your 401K
Author: Paul Hooper
Source: download
At some point in the future, you will no longer be working where you are. Whether it's because you retire, get laid off or change employers, it's your responsibility to be prepared. It's a necessity -- your retirement depends on it.
That's because when it comes to your pension funds, you have several options open to you when you leave your job. And if you don't know what those options are, and choose the wrong one, you will have the IRS smack dab in the middle of your IRA. This means your chances of having the opportunity for long-term tax deferred wealth building become very slim.
Option 1: Taking a lump-sum distribution (cash out)
Off the top, you will lose 20% of your accumulated money because your employer is required to withhold this amount for federal taxes. Cashing out your retirement plan is counted as receiving ordinary income, and depending on your tax bracket (ordinary rates now reach 35%) you may end up owing even more than that 20%, and that doesn't include the state taxes that may apply as well.
Furthermore, if you are younger than 59ฝ (age 55 in some limited cases) you will be penalized for an additional 10% off the top. So, our old pal Uncle Sam just slashed your retirement savings you have accumulated for your Golden Years by a third or more!
Avoid this entirely. (In fact, it's difficult to even think of it as an "option.")
For example, Dan, age 50, left his job. He had $100,000 in his employer's 401(k) plan. Dan decided to take the money from the plan and open a self-directed IRA account. As a result Dan's former employer sent him a distribution check for $80,000 -- Dan's $100,000 account balance, less 20% withholding. To avoid all income taxes and penalties, Dan must not only deposit the $80,000 check within 60 days of the distribution, he also must deposit $20,000 (the amount withheld by his employer) by that same date. The $20,000 must come from sources outside of the distribution. If Dan does not have $20,000 from other sources, that amount will be treated as a distribution and will be subject to income taxes and penalties.
Sure, Dan will get this $20,000 back in the form of taxes withheld when he files his tax return, but that could take a number of months. Why go through this hassle when using the correct transfer method will avoid the 20% withholding and will not make you scramble to find funds to cover the withholding amount?
Build Your Wealth and Retire Financially Secure With Your 3 Other Options
Your other options include (1) leaving your money with your former employer's plan; (2) rolling it over to your new employer; or (3) rolling it over to an IRA.
Each of these options will help keep the IRS out of your IRA, if you choose wisely and follow all the rules, which can be complex. However, there's more to consider than merely the tax implications. What about growth? Safety? The next Enron?
Retire Financially Sound or Retire With Debt - It's Your Responsibility To Make The Right Choice
So, in conclusion, taking a lump-sum distribution (cash out) from your 401K means that all the money you withdraw will be subject to income tax at ordinary income rates that now reach 35%. And don't forget that additional penalty of 10 percent on top of the ordinary income tax if you leave your job before age 55. This will leave you with no tax deferred wealth building for you and your family, which means there is a good chance you will not retire financially secure. Is that what you want for you and your family?
Avoiding all the pitfalls and dangers can be accomplished by choosing the right kind of rollover for your IRA, based on your specific, individual and unique situation.
Remember, this is your retirement nest egg. The better you can protect it and invest it, the farther along the road to a glorious retirement you will find yourself.
Paul Hooper, President of Marketracker Capital Management, Inc. can help you keep the IRS out of your IRA. Learn how to make smarter choices with your money by emailing paul@marketrackeronline.com to receive a FREE SPECIAL REPORT full of ideas and tips on how to keep the IRS out of your IRA and roll it over, income tax bracket, in a way that will lead you to a life of prosperity. Be sure to include SPECIAL REPORT in the subject line to ensure a safe delivery.
Source: download
At some point in the future, you will no longer be working where you are. Whether it's because you retire, get laid off or change employers, it's your responsibility to be prepared. It's a necessity -- your retirement depends on it.
That's because when it comes to your pension funds, you have several options open to you when you leave your job. And if you don't know what those options are, and choose the wrong one, you will have the IRS smack dab in the middle of your IRA. This means your chances of having the opportunity for long-term tax deferred wealth building become very slim.
Option 1: Taking a lump-sum distribution (cash out)
Off the top, you will lose 20% of your accumulated money because your employer is required to withhold this amount for federal taxes. Cashing out your retirement plan is counted as receiving ordinary income, and depending on your tax bracket (ordinary rates now reach 35%) you may end up owing even more than that 20%, and that doesn't include the state taxes that may apply as well.
Furthermore, if you are younger than 59ฝ (age 55 in some limited cases) you will be penalized for an additional 10% off the top. So, our old pal Uncle Sam just slashed your retirement savings you have accumulated for your Golden Years by a third or more!
Avoid this entirely. (In fact, it's difficult to even think of it as an "option.")
For example, Dan, age 50, left his job. He had $100,000 in his employer's 401(k) plan. Dan decided to take the money from the plan and open a self-directed IRA account. As a result Dan's former employer sent him a distribution check for $80,000 -- Dan's $100,000 account balance, less 20% withholding. To avoid all income taxes and penalties, Dan must not only deposit the $80,000 check within 60 days of the distribution, he also must deposit $20,000 (the amount withheld by his employer) by that same date. The $20,000 must come from sources outside of the distribution. If Dan does not have $20,000 from other sources, that amount will be treated as a distribution and will be subject to income taxes and penalties.
Sure, Dan will get this $20,000 back in the form of taxes withheld when he files his tax return, but that could take a number of months. Why go through this hassle when using the correct transfer method will avoid the 20% withholding and will not make you scramble to find funds to cover the withholding amount?
Build Your Wealth and Retire Financially Secure With Your 3 Other Options
Your other options include (1) leaving your money with your former employer's plan; (2) rolling it over to your new employer; or (3) rolling it over to an IRA.
Each of these options will help keep the IRS out of your IRA, if you choose wisely and follow all the rules, which can be complex. However, there's more to consider than merely the tax implications. What about growth? Safety? The next Enron?
Retire Financially Sound or Retire With Debt - It's Your Responsibility To Make The Right Choice
So, in conclusion, taking a lump-sum distribution (cash out) from your 401K means that all the money you withdraw will be subject to income tax at ordinary income rates that now reach 35%. And don't forget that additional penalty of 10 percent on top of the ordinary income tax if you leave your job before age 55. This will leave you with no tax deferred wealth building for you and your family, which means there is a good chance you will not retire financially secure. Is that what you want for you and your family?
Avoiding all the pitfalls and dangers can be accomplished by choosing the right kind of rollover for your IRA, based on your specific, individual and unique situation.
Remember, this is your retirement nest egg. The better you can protect it and invest it, the farther along the road to a glorious retirement you will find yourself.
Paul Hooper, President of Marketracker Capital Management, Inc. can help you keep the IRS out of your IRA. Learn how to make smarter choices with your money by emailing paul@marketrackeronline.com to receive a FREE SPECIAL REPORT full of ideas and tips on how to keep the IRS out of your IRA and roll it over, income tax bracket, in a way that will lead you to a life of prosperity. Be sure to include SPECIAL REPORT in the subject line to ensure a safe delivery.
Friday, November 13, 2009
Uncle Sam's Snake Oild
Author: James Burns
Source: download
Uncle Sam and his band of merry-men, better known as Congress, have been pushing snake oil on the unsuspecting public in the form of retirement plans. But wait, isn't a pension plan one of the perks we look to when shopping for an employer? Well, not all pension planning is created equal and in most cases, quite disastrous.
Distributions from all qualified plans must begin no later than April 1st of the calendar year following the year that the participant attains age 70 1/2, or the calendar year in which the employee retires. Special rules apply if the distribution is made to a 5 percent owner of the business. The purpose of minimum distribution rules for retirement plans is to force the owner or participant of the pension plan to withdraw money from the plans, thus triggering an income tax on these monies. On April 16, 2002, the Internal Revenue Service issued final regulations as to these distributions.
Generally, the idea pursuant to the regulations is to have the owner or participant of the pension plan begin taking the money out of the pension plan beginning at the later of when he finishes working or age 70.5. One purpose of this is to insure that these monies will be subject to income tax prior to the death of the owner.
Based on the current system the government has created with pension plans, the average retired couple will pay eight to twelve times more in taxes on their IRAs and 401(k)s during their retirement years than they saved during their contribution and accumulation years. Generally, it is understood that you put money into your pension plan and tax is deferred and this is a great thing. Unfortunately, you may well be in a higher tax bracket if your pension accumulation is done right.
In addition to a higher tax bracket upon reaching retirement, many people find themselves with a free and clear home; they no longer have mortgage interest deductions to offset income tax. Many Americans find they are now paying back everything they saved in taxes during their accumulation and contributions years within the first two years of distributions. Therefore, there is an insidious income tax awaiting most people and if they didn't plan their estates, double taxation in the form of both income and estate tax.
Many postpone the transfer of their qualified funds until age 59 ฝ in order to avoid the 10% tax penalty. Sometimes by delaying the payment of taxes, retirees will find themselves in a higher tax bracket after age 59 ฝ because Congress could raise tax rates because of a political change. Inevitably, one must pay the piper now or later.
What is the answer? Simple, investment grade life insurance. This type of life insurance is not the same as the one you get countless letters about in the mail. This is life insurance that is focused on building up a triple compound because it is tax deferred. The difference between the deferral that life insurance experiences and pension plans is that when it comes time for payout, life insurance is received as a loan. This is a powerful concept because the proceeds will not be taxed; loans are not a form of taxable income. However, as a loan you will have interest on the payments. Most people mistakenly think they are going to pay interest on their own money with life insurance. While in theory that is true, the best insurance carriers provide for zero wash loans where the interest, income tax bracket, basically is forgiven or taken out of the death benefit when a person passes on. We are talking about real life insurance not the typical death insurance that most people have because you use it while you're alive.
The best candidates for creating amazing wealth with investment grade life insurance are those in the age rages of thirty to fifty. Once committed and in the proper product it is foreseeable they will retire wealthy and without the annoying taxation that surrounds a pension plan. There are even strategies to start a contribution plan to your investment that only requires repositioning your current finances. To see a presentation on ways to finance your retirement go to www.abundantmoney.com.
If you are over fifty, I'm sorry we missed you. If you have children don't let another day go by without them starting a plan because 79 million people are heading for the social security hand out in the next few years. Despite Social Security getting a 2.7 percent boost next year (2005), Medicare will eat up much of the increase and when the 79 million qualifying Americans sign-up - look out below.
James Burns, Esq.
Law Office of James Burns
18662 MacArthur Blvd., 2nd Floor
Irvine, CA. 92656
Jambur64@cox.net
(949) 440-3243
James Burns is an attorney with 2 law degrees one in tax and has trademarked financial concepts to assist individuals in creating wealth, protecting it and eventually transferring it to loved ones.
Source: download
Uncle Sam and his band of merry-men, better known as Congress, have been pushing snake oil on the unsuspecting public in the form of retirement plans. But wait, isn't a pension plan one of the perks we look to when shopping for an employer? Well, not all pension planning is created equal and in most cases, quite disastrous.
Distributions from all qualified plans must begin no later than April 1st of the calendar year following the year that the participant attains age 70 1/2, or the calendar year in which the employee retires. Special rules apply if the distribution is made to a 5 percent owner of the business. The purpose of minimum distribution rules for retirement plans is to force the owner or participant of the pension plan to withdraw money from the plans, thus triggering an income tax on these monies. On April 16, 2002, the Internal Revenue Service issued final regulations as to these distributions.
Generally, the idea pursuant to the regulations is to have the owner or participant of the pension plan begin taking the money out of the pension plan beginning at the later of when he finishes working or age 70.5. One purpose of this is to insure that these monies will be subject to income tax prior to the death of the owner.
Based on the current system the government has created with pension plans, the average retired couple will pay eight to twelve times more in taxes on their IRAs and 401(k)s during their retirement years than they saved during their contribution and accumulation years. Generally, it is understood that you put money into your pension plan and tax is deferred and this is a great thing. Unfortunately, you may well be in a higher tax bracket if your pension accumulation is done right.
In addition to a higher tax bracket upon reaching retirement, many people find themselves with a free and clear home; they no longer have mortgage interest deductions to offset income tax. Many Americans find they are now paying back everything they saved in taxes during their accumulation and contributions years within the first two years of distributions. Therefore, there is an insidious income tax awaiting most people and if they didn't plan their estates, double taxation in the form of both income and estate tax.
Many postpone the transfer of their qualified funds until age 59 ฝ in order to avoid the 10% tax penalty. Sometimes by delaying the payment of taxes, retirees will find themselves in a higher tax bracket after age 59 ฝ because Congress could raise tax rates because of a political change. Inevitably, one must pay the piper now or later.
What is the answer? Simple, investment grade life insurance. This type of life insurance is not the same as the one you get countless letters about in the mail. This is life insurance that is focused on building up a triple compound because it is tax deferred. The difference between the deferral that life insurance experiences and pension plans is that when it comes time for payout, life insurance is received as a loan. This is a powerful concept because the proceeds will not be taxed; loans are not a form of taxable income. However, as a loan you will have interest on the payments. Most people mistakenly think they are going to pay interest on their own money with life insurance. While in theory that is true, the best insurance carriers provide for zero wash loans where the interest, income tax bracket, basically is forgiven or taken out of the death benefit when a person passes on. We are talking about real life insurance not the typical death insurance that most people have because you use it while you're alive.
The best candidates for creating amazing wealth with investment grade life insurance are those in the age rages of thirty to fifty. Once committed and in the proper product it is foreseeable they will retire wealthy and without the annoying taxation that surrounds a pension plan. There are even strategies to start a contribution plan to your investment that only requires repositioning your current finances. To see a presentation on ways to finance your retirement go to www.abundantmoney.com.
If you are over fifty, I'm sorry we missed you. If you have children don't let another day go by without them starting a plan because 79 million people are heading for the social security hand out in the next few years. Despite Social Security getting a 2.7 percent boost next year (2005), Medicare will eat up much of the increase and when the 79 million qualifying Americans sign-up - look out below.
James Burns, Esq.
Law Office of James Burns
18662 MacArthur Blvd., 2nd Floor
Irvine, CA. 92656
Jambur64@cox.net
(949) 440-3243
James Burns is an attorney with 2 law degrees one in tax and has trademarked financial concepts to assist individuals in creating wealth, protecting it and eventually transferring it to loved ones.
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