Should We Still Be Spending Money And Having Fun While Deep In Consumer Debt?

Anthony Weiner Speaking At Rally In NYC

Anthony Weiner too stubborn to quit. NYC 2013.

During the depths of the financial crisis, one of the proposals I sent to the Obama administration was to institute spending curbs based on high school or college grade point averages. It didn’t matter whether you went to Community College or UC Berkeley since everybody’s circumstances are different. What matters is how well you did in school to justify want based spending as opposed to need based spending.

For example, if you were a D+ student (sub 2.0 GPA out of 4.0) you are only allowed to buy generic clothing and ride public transportation to work for the rest of your life. No car or lollipops for you. If you were a B student, then suddenly that new $20,000 Honda Civic is available to you after the dealer scans your ID to check the government GPA database. If you are an A student, then you are free to buy whatever you want because logic dictates that if you are smart enough to study hard in school then you are smart enough to practice good financial habits.

I was shocked Obama never acknowledged my letter because my proposal would only help the government expand their authority (think PRISM) over the people of this great nation. We voted for Big Government and I wanted to support the cause as much as possible as I figured out a way to go John Galt. Although Washington DC stayed silent, fellow patriotic Americans voiced their opinions in the comments section of the post, Tax Rates Based On Work Ethic Shall Fix The World. It’s all about creating incentives.

Just imagine a world where everything is rational. Imagine everybody reading their mortgage contracts before signing so that they are aware of their financial obligations instead of blaming others when they can’t pay. Imagine if everybody adopted the attitude of not deserving something until worked for? Now imagine a country where everybody is middle class and pitches in to support our country. There would be no socioeconomic warfare, just equality. We can always dream right?

DO WHAT YOU WANT WITH YOUR FINANCES, JUST DON’T HURT OTHERS

How To Avoid An Audit Based On Discrimination By The IRS

IRS pick pockets your moneyIt should come as NO surprise to long time Financial Samurai readers that the IRS admitted to targeting conservative groups since Obama became President. The government already discriminates against those who make over a certain amount by charging higher taxes even though they already pay for the majority of all taxes. Meanwhile, the deductions and credits you get for things such as education and children get eliminated if you make over an absurdly low amount. Conducting body cavity searches to shake more tax dollars out of Republicans is business as usual.

Make no mistake that if a Republican was President, liberal groups would also be targeted by the IRS. Everybody naturally discriminates against everybody. Sometimes the discrimination is overt and evil, other times the discrimination is covertly done out of convenience until discovered as is the case with the IRS.

The bottom line is that people have a strong proclivity to take care of their own, no matter what. In this article I’d like to discuss ways in which people can significantly reduce their chances of getting audited by the most powerful organization in America.

THREE EFFECTIVE STRATEGIES TO AVOID AN IRS AUDIT

“Why Work If We’ve Got Obama?” Said My Rich Friend….

A retired man overlooking the fog over the Golden Gate Bridge.

Jaabir, one of the poorest richest friends I know, decided to take a vacation from not working by driving down to Indian Wells, California to watch the BNP Tennis Open last month. The tennis tournament is considered “The Mecca” for tennis fans everywhere given the terrific turnout of the world’s top pros and the intimate setting.

Before Jaabir left for the seven hour drive south, he urged me to go down with him for a week. I wanted to go, but I couldn’t because I had an interview lined up with a promising new company. I also wanted to be on standby just in case I got word from another potential employer. In other words, I was a dog on a leash. Woof.

To make myself feel better for not going, I started pressuring him to stay so he could do his duty as team captain by recruiting more ringers to help us defend our city championship. Why should he have all the fun right? I learned this strategy from so many who try and bring folks down if they can’t succeed themselves.

As usual, Jaabir brushed off my wishes because he’s free. “Sam, don’t worry! I’ve got everything under control. You are rich, why not live it up a little? Why do you not come with me to Indian Wells? Why work if we’ve got Obama, babay!?

Hmm, what the hell Jaabir! America ain’t no welfare country!” I retorted. But then I got to thinking about my own situation. Maybe Jaabir is right. Even though I was smarting for not being able to join Jaabir to tennis Mecca, I decided to write this post as a way to better understand his viewpoint.

WILL OBAMA SET US ALL FREE?

Cyprus Reminds The World To Diversify Our Assets And Never Trust The Government

Funny Bathroom SignImagine diligently saving $100,000 over 10 years only to wake up the next day to see $93,250 in your account. Now imagine having to fork over $99,000 of your $1,000,000 nest egg right before you plan to retire. The Cyprus president has basically negotiated a 6.75% tax on all deposits under €100,000 and a 9.9% tax above this amount in order to receive bailout money from the EU!

There are so many things wrong with this scenario:

* Trust of the government is now completely broken.

* The government is asking savers to foot the bill instead of spenders.

* The policy promotes moral hazard as any reasonable person will simply spend everything they have and wait to get bailed out by more fiscally responsible citizens.

* The media will capture images of bank run frenzies, causing more panic to spread to anybody who has access to a TV or internet connection.

* Citizens of weak EU countries like Portugal, Italy, and Greece may start withdrawing cash further hurting their economies.

* Equity risk premium rises causing a sell-off in stock markets overall which dampens returns, earnings, and corporate enthusiasm for spending and hiring.

HOW THE CYPRUS BANK RUN IS RELEVANT TO YOU

The Solution To Social Security Problems: Die Young & Stay Single

Presidio Golf Course In RetirementImagine working for 40 years, each year paying Social Security taxes and dying at the age of 62 with no spouse to bequeath. The Government is going to secretly laugh at you because they now get to keep the hundreds of thousands of dollars you paid into the system for free, baby!

Meanwhile, if you get married the Government will make sure to tax you at a higher rate (marriage penalty tax) to ensure they get more of your money and perhaps even deter you from getting married so they can pay out less in Social Security benefits. Makes you think, doesn’t it?

Why else do you think the income threshold for a 35% income tax rate stays at $400,000 and jumps to only $450,000 for a married couple instead of $800,000? Not sticking to the $200,000/$250,000 income threshold for tax increases helps thousands of people living in expensive areas survive. Ironically, the $200,000/$250,000 income threshold was more fair since $50,000 divided by $200,000 = 25%. Now, $50,000 divided by $400,000 is just 12.5%. The Government is sexist and wants one spouse to just stay at home or make less money if they get married. Absurd!

The maximum taxable earnings amount for Social Security (OASDI) taxes is roughly $113,700. There is no limitation on taxable earnings for Medicare’s Hospital Insurance (HI) taxes.

The Social Security tax for 2013 reverts back to its normal rates. The tax rate for 2013 is:

  • Employee-portion: 6.2% of wage earnings, up to the maximum wage base of $113,700;
  • Employer-portion: 6.2% of wage earnings, up to the maximum wage base of $113,700;
  • Self-employed persons: 12.4% of net self-employment income, up to $113,700.

For 2011-2012, the employee-portion of the Social Security tax was reduced from 6.2% to 4.2%. Self-employed persons also received the same reduction from 12.4% to 10.4%.

WHAT ARE YOU GOING TO DO ABOUT BEING SHORTCHANGED?