Your Taxes Will Go Up If Earn Less Than $250,000

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Your Taxes Will Go Up If Earn Less Than $250,000

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January 30, 2012

I watched the second half of the State of the Union last week. Needless to say that after listening to the program and then all of the commentary after, it confirmed in my head how far out of touch our current administration is with reality. Maybe a better way to put it is that they are in touch with how to wordsmith conversations as many politicians do with their campaign speeches. To lead the public on that there will be no tax increases if they make less than $250,000 . . . well I guess it can be done if you want to defy centuries of simple accounting principles.

Let's be clear first all that what the current administration is talking about when they say there will be no tax increases is INCOME TAX. Income tax is only one form of tax that generates revenue. Let's list below just some of the kind of taxes that you could pay as an individual.

  • Federal Income Tax
  • Social Security Tax
  • Medicare Tax
  • Federal Unemployment Tax
  • Capital Gains Tax
  • Corporate Income Tax
  • State Income Tax
  • Real Estate Tax
  • County Tax
  • Local City Tax
  • Personal Property Tax
  • Sales Tax
  • Gasoline Tax
  • Inheritance Tax
  • IRS Penalties (On Top Of Tax)
  • Alcohol Tax
  • Telephone Federal Excise Tax
  • Vehicle Sales Tax
  • Luxury Tax
  • And another 30 to 40 more I could name . . . .

So, let's talk about basics of accounting principles. As of January 29th, the U.S. National Debt is close to 15.3 Trillion Dollars and counting even as I write this article. (http://www.brillig.com/debt_clock/) That means the average share of the debt for every American citizen including children is closing in on $50,000 per person to make all the debt go away. For those of you, who have a sizable mortgage; just think about the interest payment per month on a 15.3 Trillion Dollar note compared to your mortgage that may be $300,000 or $400,000. Since our current revenue runs a shortfall against our current expenses, we continue to see that debt clock increase every day. The big question is how do we get out of this mess?

Like any business, you can only cut expenses down so far before you reach the bone. It's likely we cut expenses, but the question on how far down the U.S. Government can cut its expenses is a story that is still unfolding. Even if our debt gets downgraded again, it's unlikely we'll file bankruptcy. An event like that would create a colossal meltdown around the world. With that being said, the answer is to grow revenue. To grow revenue, you have to grow your tax base. Per the list I shared in this story, it can come from many areas including tariff taxes, corporate taxes, and many more places. Taxing millionaires alone won't solve the revenue problem. Heck, in 2012 the inheritance tax collected from the very wealthy only covered enough expense money to keep the Government open for 3 ½ days of 2012. It will come through a very strategic set of tax acupuncture that will affect all families in America both large and small if we really want to balance the budget and pay of the large national debt.

You can listen to all the campaigning you want from the current administration and even future administration because the debt isn't political. It's factual. It's accounting 101. It's a function that we have more expense than we do revenue. This is how people get into credit card debt. They spend more than they make. It's exactly what we did as a country. And now it's time to pay. Don't get fooled that it won't be you who doesn't pay and listen closely to just which tax won't go up or you'll wake up an hour later feeling no pain but a slew of pins and needles in your back.

Written by:

Ted Jenkin, CFP®, AAMS®, AWMA®, CRPC®, CMFC®, CRPS®

Co-CEO and Founder of oXYGen Financial, Inc

Visit to www.oxygenfinancial.net to request a free consultation with the leading financial experts for people in their 20's, 30's, and 40's in the country.

Securities and Investment Advisory Services offered through NFP Advisor Services, LLC (NFPAS), Member FINRA/SIPC. Oxygen Financial is not affiliated with NFPAS. NFPAS does not provide tax or legal advice. This site is published for residents of the United States only. Registered Representatives and Investment Advisor Representatives of NFP Advisor Services, LLC (NFPAS) may only conduct business with residents of the states and jurisdictions in which they are properly registered. Therefore, a response to a request for information may be delayed. Not all products and services referenced on this site are available in every state and through every representative or advisor listed. For additional information, please contact NFPAS Compliance Department at 512-697-6000. PLEASE NOTE: The information being provided is strictly as a courtesy. When you link to any of the web sites provided here, you are leaving this web site. NFP Advisor Services, LLC makes no representation as to the completeness or accuracy of information provided at these web sites. Nor is NFP Advisor Services, LLC liable for any direct or indirect technical or system issues or any consequences arising out of your access to or your use of third-party technologies, web sites, information and programs made available through this web site. When you access one of these web sites, you are leaving our web site and assume total responsibility and risk for your use of the web sites you are linking to.

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Securities offered through Kestra Investment Services, LLC (Kestra IS), member FINRA/SIPC. Investment advisory services offered through Kestra Advisory Services, LLC (Kestra AS), an affiliate of Kestra IS. oXYGen Financial is not affiliated with Kestra IS or Kestra AS. Kestra IS and Kestra AS do not provide tax or legal advice. https://Bit.ly/KF-Disclosures

This site is published for residents of the United States only. Registered Representatives of Kestra IS and Investment Advisor Representatives of Kestra AS may only conduct business with residents of the states and jurisdictions in which they are properly registered. Therefore, a response to a request for information may be delayed. Not all products and services referenced on this site are available in every state and through every representative or advisor listed. For additional information, please contact Kestra IS Compliance Department at 844-553-7872.

PLEASE NOTE: The information being provided is strictly as a courtesy. When you link to any of the web sites provided here, you are leaving this web site. Kestra IS and Kestra AS makes no representation as to the completeness or accuracy of information provided at these web sites. Nor is Kestra IS and Kestra AS liable for any direct or indirect technical or system issues or any consequences arising out of your access to or your use of third-party technologies, web sites, information and programs made available through this web site. When you access one of these web sites, you are leaving our web site and assume total responsibility and risk for your use of the web sites you are linking to.