Financial Meltdown
The American economy barely handled the financial jolt during the 2008 and 2009 meltdown. It appears that economic distress has been muted and is leveling off. Unfortunately, the fiscal policies by the administration have not and will not produce any lasting economic or job growth. The monetary policies by the Federal Reserve have been very accommodating. The American economy needs both policies in concert in order to be effective.
Business people are not hiring due to lack of demand, uncertainty about increased regulation, potential burdened costs of a new healthcare system, and most importantly, a major increase in taxes for everyone starting January 1, 2011.
Any improvement so far in the 2010 GDP is nothing more than purchases being made now in advance of tax increases in 2011. Therefore, 2011 will be another down year in GDP, possibly greater than the 2008 and 2009 drop.
Here are some statistics on how much in Federal Income Taxes are being paid. Keep in mind taxes are going up in 2011, and the system is now set where 55% of Americans are paying taxes so that 45% (who do not pay taxes) are receiving benefits. The administration’s plan is to move it to where 45% will pay taxes to support 55%. This is going to lead to an upside down pyramid that will fall over.
MORE PAID BY THE TOP GROUP – In 1980, the top 1% of taxpayers paid 19.1% of all federal income tax (FIT) and the bottom 50% of taxpayers paid 7.1% of FIT. In 2007, the top 1% of taxpayers paid 40.4% of all FIT and the bottom 50% of taxpayers paid 2.9% of FIT. Thus since 1980, the top 1% of taxpayers has gone from paying nearly 3 times the FIT of the bottom 50% of taxpayers to nearly 14 times as much (source: Tax Foundation).
There are many solutions to solve our economic problems…(1) cutting taxes always brings more money into the Treasury; (2) real spending cuts in all areas (see what the new Governor of New Jersey just proposed); (3) decrease regulations.
May I suggest you read a new book by Arthur Laffer, Return to Prosperity. Laffer has been on the President’s council of Economic Advisors, was responsible for “the Laffer Curve,” and has consulted businesses and governments worldwide. I think you will accept his flat tax proposal that he has advocated for 30 years. Now, you will accept the idea if you pay taxes…if you do not pay taxes and receive benefits from the government, well, you will not embrace it. It is time to do something quickly before it is too late. Ah yes, discipline or regret!