Are You Rich?

We learned Monday that the Central Planners have proposed a $3.8 trillion budget, with $2.0 trillion of tax increases, $1.0 trillion coming by increasing income taxes on families who earn more than $250,000. For those of you earning $250,000 in your families, which is about $125,000 after taxes using current tax rates, I ask you the question, are you rich? You are paying $1,200 a month in health insurance, paying $40,000 a year in college tuition with no scholarship help because you make too much money, and had 40 percent of your stock investments and 20 percent of your real estate investments wiped out the past three years. You pay three times as much in real estate taxes on the same home you lived in ten years ago. Are you rich? You work for a firm that could downsize or go bankrupt at any moment. Are you rich?

Government tax revenues decline due to economic recession, and government spending increases because that is what Central Planners do under the guise of stimulating the economy; they target-spend money for the mere power of it all. As a result, budget deficits increase, and they decide to raise income and other taxes. By sucking money out of the general economy through higher taxes, they retard economic recovery. The failure of the economy to rebound means lower income tax revenues in the future, which leads the Central Planners to further increase taxes. This dance is a self-perpetuating spiral of a declining private sector economy, increased taxes, and increased government expenditures as a percent of Gross Domestic Product. This is a formula for an economic depression, which is what large degree patterns in stock markets suggest is in fact coming.

 

It takes $7 of government spending to create $1 of private sector spending. Consumer spending is 70 percent of GDP in a capitalist economy. The Central Planners clearly have a strategy in place to change that, to reduce consumer spending to something less than 70 percent. Who knows what their target is, maybe 60 percent, maybe 50 percent. The Central Planners believe you should not have your money, but rather, they should have your money. They believe they are better suited to decide how your dollars are spent, than you are. They accomplish this by creating an angry fervor of the have nots against a phantom bad guy, the "rich." They preach the mantra, "Your neighbor has a cow, we know your pain, that you do not have a cow. We will take your neighbor's cow away from him." The sheeple buy this nonsense. Once nobody has a cow anymore, they next target who has a cat. If you have a cat, but your neighbor does not, guess what, this Central Planner group will confiscate your cat next. It was okay when it was your neighbor's cow at issue. But now it is your cat at issue. What goes around comes around. And so on until nobody has anything left except the Central Planners. We are witnessing the socialist destruction of capitalism. Capitalism works best when households are the engine of economic growth, not large money center banks or government.

 

It is time for a new contract with America , along the lines of the 1994 Congressional contract. Taxes need to be reduced and rebated in a big way across the board to all households. That is the correct economic capitalistic policy that will return prosperity to America , will create real jobs, high paying jobs, real economic growth, stability to financial markets. Kennedy did it. Reagan did it.

 

So far this earnings season, revenues have increased over last year for only 40 percent of the reporting companies. The 2010 stock market recognizes this. GDP growth the fourth quarter was not real growth, but was fueled largely from a build up of inventories. Not retail sales. Who is going to buy those inventories? Where is the demand going to come from? The Central Planners maybe? Not households, that is for sure. Not with 10 percent unemployment. Not with 17.5 percent underemployment.

 

Are you rich? If you grossed $250,000 last year, are you rich? Because the Central Planners have targeted you as those big bad rich people that need to be taxed more. You fat cats are going to get yours, yep, your income taxes are going up in 2011 if this Central Planner group has anything to say about it. This Central Planner group, the champion of the poor and their definition of the middle class, are going to get even for them, they are going to stick it to you rich $250,000 earners. Yep. You guys and the Wall Street executives getting their $1 million to $100 million bonuses are the rich dudes that the Central Planners are finally going to do something about.

 

If you make less than $250,000, do not aspire to make more money, because you too will be targeted as rich. You too will get taxed back to a take-home level where the Central Planners believe you should be. So be satisfied with less, or else. Send your kids to college? Good luck with that dream.