 SM
|
|
|
|
Who We Are
Money Focus Mutual Funds Insurance Mortgages Taxes Step by Step Hot Topics Contact the Editor
Featured Site AfterHourTrades.com, Inc. Featured Columnist: 
All content is © copyright (1998-2003) BonPaulProductions (all rights reserved) |
Order your copy of Building Wealth in a Paycheck-to-Paycheck World by Paul Petillo. It is packed with safe, proven wealth-building strategies that cover all the major components of a balanced financial plan, including:
Sounds so much better than wealthy, doesn't it? Just kind of rolls of the lips of those who say it. It is phonetically easier than entrepreneur. And wealthy is too broad a term. But Economic Activists has the ring of speciality. Almost as if these folks will use there enormous coffers to further the economic good of us all.
The habit of favoring this group through enormous tax breaks has become commonplace in Washington over the last two decades or so. Many of us are angry at Washington for doing nothing for us, unaware that their thinking is that these private pools of money will be all of the stimulus that we need to feel better. Reagan did it. Clinton did it. Bush is doing it. It is how it is done that is the most insidious.
Tax expenditures take more money from the government that any single source. These exemptions allow companies and private citizens to keep more of their pretax dollar year after year. If the government gives a tax break to a company that supplies health insurance to its employees, aren't they really subsidizing health benefits? If a company is allowed to keep more of its tax dollars by deducting pensions, isn't the government paying? If a corporation takes advantage of accelerated depreciation, isn't that benefit being paid for by Uncle Sam?
Home deductions cost the federal government somewhere n the neighborhood of $100 billion. The larger the home, the bigger the mortgage, the bigger the deduction. The larger the contribution to retirement savings, the larger the deduction.
The more disturbing of these figures reads like this: The top 10% of wage earners receive 24% of employer sponsored health benefits. Jacob Hacker of Yale estimates that this is like the federal government giving $1700 to every wage earner in the $100,000 to $200,000 bracket for health insurance benefits. Take that down to the $10,000 to $20,000 level, and the number diminishes to $150.
Pension and IRA deductions are received by 66% of the greatest wage earners. These same folks will more than willing take a college tuition credit even though their children would probably attend college anyway.
The overall cost to the government for running what amounts to a welfare for state is $800 billion to $900 billion in lost revenue. Clinton added expenditures for health insurance, retirement, and long term care. Bush will add more than twice the current IRA deduction by the time the dust settles on his tax plan adding twice the loss of potential revenue. This is despite the fact that a very small percentage of Americans even reach the current $2,000 limit.
It wouldn't hurt legislators to reconsider how these deduction and expenditures are allotted. Scaling back some of these deductions would even the playing field for the Economic Inactive.
|