Regardless of where you turn there is a tax – income, sales, property, gas, estate, gift, liquor, tobacco, telephone, import, export, capital gains, unemployment, Social Security, Medicare and several hundred more that you pay knowingly and unknowingly. The National Bureau of Economic Research has estimated that the average worker is in the 40% marginal tax bracket. It has gotten so bad that not only must you pay a S.S. tax while working but you’ll most likely pay income taxes on the SS benefits you receive. In fact, about the only tax that has been abolished in a retiree’s lifetime is the “poll tax” – you are no longer taxed for voting. It seems that new taxes are being invented at an alarming rate. Politicians are fond of taxing corporations because they don’t vote. Generally “tax-the-corporation is acceptable to citizens” because most think corporations actually pay taxes. Corporations do not pay taxes – they simply pass them forward to customers in the form of higher prices and lower wages/benefits.
Currently the economic and financial situation is in awful shape; as mentioned in this retirement blog. Elected officials, and the regulators that they have appointed to run our country’s institutions, have grossly mismanaged our economy to the brink of absolute failure. Our government has taxed us to the hilt to support entitlement programs promises they can no longer deliver. To compound the problems they have foolishly gotten involved in war after war by rationalizing that our “national interest is in jeopardy”. Certain businesses have enjoyed favorable tax treatment and/or allowed to operate with little regulation to the detriment of the general population. Our financial institutions have been encouraged to promote spendthrift ways to foster consumption today and pay tomorrow. In recent years the nation’s saving rate has plummeted into minus territory as we’ve borrowed against the equity in our homes to take vacations, buy bigger cars, update wardrobes and buy second homes for relaxing from the stress-filled environment of a helter-skelter life of making more money to spend. The government solution to all these excesses is, you guessed it, spend our way to prosperity. This will lead to the cruelest tax of all, the silent killer that affects those least able to afford it and the one tax that few of use call a tax: inflation. Continue reading ‘You, Taxes and Retirement – Annuities, Roth IRAs, Social Security, & Life Insurance’ »