For several years I have enjoyed the services of a very professional certified public accountant who knows the U.S. Internal Revenue Code and understands its intricacies and pitfalls. As a self-employed attorney and writer with a “subchapter S” corporation, I pre-pay estimated income taxes to the IRS every three months, hoping when the year ends I won’t owe more.
When my CPA, Steve, and I talked about last quarter 2014 taxes, he suggested I should pay immediately what I consider a large amount for the lowest tax bite, rather than waiting until April 15.
As a single filer, if I earned over $400,000 (which I don’t) I would pay close to the 39.6% maximum U.S. income tax rate. As it is, after deductions I pay more than 25% of all that I earn to the U.S. government to squander as it and Congress sees fit.
The pending tax dent to my wallet got me thinking about taxes, deficit spending, and the very real costs the U.S. Congress imposes on individual Americans.
U.S. Debt Affects Families in More Ways Than You Expect
Let’s start with the ominous numbers.
Out of a total U.S. population of 320 million, only 117 million pay income taxes. Well over 50% escape income taxes through a number of what those of us might call “loopholes.”
The current U.S. national debt exceeds $18 trillion. That figures out to $56,583 owed by each U.S. citizen, but a much larger $154,000 is owed by each taxpayer.
While those numbers are impressive and depressing, they seem far removed from our everyday lives — until you break down individual actions taken by the Congress and what they cost for each American household in increased tax burdens.
Take for example what happened in Washington when you were busy preparing for Christmas.
In a last-minute deal between President Obama and Senate and House Republican leaders, Congress passed a massive 1,603-page “CROmnibus” funding bill for the fiscal year (2 1/2 months late). Through a mix of unwarranted exemptions, sham offsets and hidden spending, that bill forces another $315 in debt onto each U.S. household. Then as a stocking stuffer for businesses, policymakers reinstated a number of expired tax breaks, costing each and every household another $440.
In a revealing article, Maya MacGuineas, president of the Committee for a Responsible Federal Budget, lays bare exactly what each American household recently has been forced to pay by Capitol Hill politicians — for highways (+$60), expanded veterans care (+$100), Medicare doctors’ fees (+$50) and emergency funds to fight ISIS in the mid-east and Ebola (+$105).
As Ms. MacGuineas says: “While billions and trillions are hard numbers to grasp, American families should not be duped into thinking that the massive run-up in the debt won’t ultimately affect their own bottom line.”
You can bet that with this ocean of debt and deficits, Congress will be looking for more revenue to keep government afloat. Taxpayers are the logical source for more ready bailout cash.
Get Your Retirement Away From Uncle Sam
There has been much scary talk about a one-time confiscatory wealth tax as suggested by the International Monetary Fund (IMF). In its most shocking and brutal form, in 2013 bank account holders in Cyprus awoke to find an overnight wealth tax had cut their funds drastically.
Nothing so dramatic is likely to occur in the U.S. while the Republicans control the Congress, but the 2016 elections could change that.
The temptation for big spenders is enormous. There is an estimated $15 trillion stored in private retirement plans in the United States — $4 trillion in IRAs alone. This constitutes 35% of all private assets in America.
Ever since Obama became president there has been constant chatter by Democrats about government “guarantees” (read “confiscation”) of private pensions and retirement plans. One scheme is to force everyone to convert retirement cash into U.S. Treasury bonds. We’ve already seen hits of this with the introduction of “MyRa” in Obama’s State of the Union address in 2015.
What can you do in 2015 to defend against such madness?
As a possible defense against tax confiscation a growing number of Americans already have moved their retirement plans offshore. They recognize that placing some retirement money overseas eases worries about the eventual decline of the U.S. dollar. This diversifies their cash into stronger currencies and more sound economies. Offshore IRAs can also purchase and hold Swiss annuities and life insurance — neither option is subject to attack or repatriation under Swiss law. And an offshore IRA can invest in unreportable precious metals or real estate that is difficult for the U.S. government to reach.
The Sovereign Society can recommend reliable, SEC-registered offshore advisors and investment managers, as well as U.S. attorneys, all of whom handle the creation or conversion of U.S. retirement accounts. We will be pleased to provide these contacts upon request.
Yours for liberty,
Bob Bauman JD
Chairman, Freedom Alliance