Monthly Archives: March 2019

Hidden taxes

Hidden taxes

We all aware of obvious of “upfront” taxes like sales, income, real estate, personal property and petrol taxes. What we many of us do not recognize are what I term “hidden” taxes. In a free market economy (a good thing) prices will adjust according to supply and demand and other market factors. In a competitive environment prices will tend to fluctuate. One example of a “hidden tax” is corporate income tax. Initially this appears as a good thing since companies make a lot of money and they should contribute to the running of the government. However, over time, much of this tax will be passed along to the consumer in pricing. So, who is paying the tax?                                                                                                                                                  My favorite “hidden tax” has to do with the cost of healthcare. Your elected representatives refuse to reduce this tax burden on you and this burden is much greater than the money you pay each year in income tax! Our current system for delivering healthcare is 2 ½ times the average of the EU countries and our overall quality of care is inferior.

“According to the IRS, Americans filed more than 150.6 million tax returns in 2015. During that year they also earned $10.17 trillion in adjusted gross income and had a total tax liability of $1.45 trillion. Some quick division means that the average gross income per return was $67,564 while the average federal tax hit was $9,655. That gives the average American family a federal tax rate of 14.3%.

However, the above figures above can be a bit misleading. Many low-income Americans actually have a negative federal tax bill thanks to the Earned Income Tax Credit. If you remove those returns from the equation then you are left with 99 million Americans who recorded an average federal tax hit of $14,654.”

The bottom line is that in 2015 the tax burden on families was $1.45 trillion while we spent $3.2 trillion on healthcare. Cutting this cost in half (which is possible) would more than cover our tax bill!

You ask why our costs are so high? There are several prior posts to this blog which detail the specifics, but to summarize it has to do which the many special interests that are profiting from the massive healthcare industry: Insurance administration & profits, obesity, RX companies (manufacturers & distributors), physician compensation, outrageous hospital charges and litigation.

This issue cannot be resolved by tweaking our broken system. We need to have the courage to admit that there are more effective system models out there and we should look at adopting the best features of systems that are effective and also provide a higher level of care. The only obstacle will be the special interests that are profiting for this massive “hidden tax” and their political influence is massive.

When is a tax increase not?

When is a tax increase not?

Keeping in mind, from the prior weeks post, that borrowing money to decrease taxes does not always result in a financial benefit the opposite can also be true. If the increase in tax is used to lower the deficit, or even better create a surplus, this accrues to the financial benefit of the tax payer. Thinking about your family unit it is akin to making a payment on a loan which reduces debt and also the amount of interest.                                                                                      A good example of this was the tax increase that was put into place by President George HW Bush. Keep in mind that as a Republican this action was political suicide. Not only did it set the table for his failed bid for re-election, it also created a significant split in his party. So why did he take this unpopular action? The simple answer is that it was in the best interest of the American people.                                                                                                                                             The economy was suffering and the national debt was rising. The action taken by President Bush initiated economic recovery and started the trend toward reducing the deficit. The unfortunate political outcome was that the results bore fruit during the tenure of President Clinton. The downward trend in deficit actually resulted in several years of surplus and a financial benefit to taxpayers.

                                     FY       Deficit   Increase in Debt   Deficit/GPD      Significant events

1991 $269 $432   4.3% Recession.
1992 $290 $399   4.4%  
1993 $255 $347   3.7% Clinton signed Balanced Budget Act.
1994 $203 $281   2.8% First Clinton budget.
1995 $164 $281   2.1%  
1996 $107 $251   1.3% Welfare reform.
1997 $22 $188   0.3%  
1998 ($69) $113  (0.8%) LTCM crisis.
1999 ($126) $130  (1.3%) Glass-Steagall repealed.
2000 ($236) $18  (2.3%) Surplus.
2001 ($128) $133  (1.2%) 9/11 attacks. EGTRRA.

Thank you

This post’s intent is to thank all of my subscribers for their participation. After three years in virtual obscurity about 10 days a the blog passed 200 subscribers! This achievement is entirely due to current subscribers recommending the blog to others. Thank you very much!

I thought it might be interesting to review the topics that have been posted over the past three plus years and which are still available on the site:

  1. Our broken system for electing representation and alternatives
  2. Our health care system and alternatives
  3. Gov’t funding for health education, why it is not working
  4. Overweight & obesity & a solution
  5. Not all Calories are created equal & the low/no fat myth.
  6. A case for Term limits and why they will likely never be implemented
  7. The Electoral College is it still relevant?
  8. The two-party system, the gangs of DC, and how they work together, but not for the common good
  9. The national debt, personal debt & scary unfunded federal obligations.
  10. Solutions to balancing the Federal Budget
  11. Distribution of taxes paid, who pays?
  12. You owe back taxes, why pay?
  13. The founders of our Democratic Republic, some interesting facts
  14. Let’s bash the President!
  15. The Cult of Government Bureaucracy
  16. Our insane federal tax code
  17.   Interest rate on the debt. It is low and is that good?
  18. Unemployment: Official vs. Reality
  19. Our elected representatives play by different rules, why?
  20. Our wasteful and unfair election process (revisiting topic #1)
  21. Life skills and the need to incorporate them early into the educational curriculum
  22. Incarcerations, prisons, the tax payer rip-off & a low cost alternative A
  23. All-natural foods are healthy and great, but can lower income folks afford them? Healthy alternatives.
  24. High frequency traders, bank and broker facilitators and how they rip off the small investor
  25. A relationship among lower incomes, cigarette smoking, the lotto & fast food
  26. Belief Systems: The good, the not so good & the ugly
  27. We are so smart, aren’t we?  (our changing knowledge base)
  28. The price of petrol is very low in the US, the good news and the not so good news
  29. Guns, guns and more guns!
  30. News or Agenda – CNN, Fox, Aljazeera
  31. Reality shows – from Wrestling to Springer to ….
  32. History of man, what do we really know?
  33. Auto Insurance the way I figure it could be free!
  34. The metric system and currency
  35. Civilization, did it commence 6,000 years ago?
  36. Nikola Tesla – the unappreciated prophet.
  37. Sophie’s Believe it or not!
  38. Just for fun – Aliens among us
  39. Just for fun – The Universe
  40. Accountability & Reputation
  41. Do I really have to pay for this?
  42. Just for fun, my favorite apps
  43. Test your perspective, just for fun
  44. America, the world’s cop
  45. High speed cop car chases, are they worth it?
  46. Prescription Drugs – why do we subsidize the rest of the world? 
  47. Overused and abused expressions that make little or no sense:
  48. Currency, does ours make sense?
  49. Distribution of Taxes, revisited
  50. The Outrageous cost of Advanced Education
  51. Amending our system: Issues & Solutions
  52. Just for fun: Area 51 (site S-4)
  53. The Important Issues & polarization (opinion)
  54. Ancient Ancestors & Current Aliens (just for fun)
  55. Searching for Balance
  56. Polarization & Control
  57. Should taxpayers be concerned by our National Debt?
  58. Our Neighborhood in Space (just for fun)
  59. NPC (Not Politically Correct)
  60. Alien Contact (Just for Fun)
  61. Violence in America  
  62. Violence and Incarceration
  63. Health Care revisited
  64. US Patriots Initiative
  65. Path to a Balanced Budget
  66. Follow on to Articles 1 -3, 4 & 7 of the US Patriots Initiatives – The Elect
  67. Tax & Spend vs. Reducing Taxes
  68. Judge Roy Moore
  69. New Tax Bill & the Debt Disaster
  70. Divide & Conquer
  71. Belief systems revisited
  72. Education Revisited    
  73.  The Illusion of Substance (Just for Fun)
  74. 74. The Wall
  75. 75. Politics as Usual
  76. 76. The 2nd Amendment (2)
  77. 77. China: Communism or Capitalism
  78. 78. Ban Guns, surely you Jest
  79. 79. Our National Debt – Update                                                                                                             
  80. The real top 5 unexplained (just for fun)   
  81. We’re number 1   
  82. The Wall  
  83.  Go forth and Populate the Earth   
  84.  Roundabouts  
  85. Polarization & control – revisited 
  86. Upstream vs. Downstream – Illegal immigration
  87. Upstream vs. Downstream – Healthcare 
  88. My Misinformation
  89. Polarization and solutions
  90. Two Americans in Europe
  91. Observations while traveling in Europe
  92. Americanize
  93. The Price of Medication
  94. You get what you pay for
  95. Kit Kat (a travel story)
  96. The Big Bang & common sense
  97. Your immune system
  98. A replacement for #3 in my top 5 unexplained
  99. More on Political Polarization
  100. Keynes vs. Friedman
  101. Name Nonsense – Just for fun                                                                                               
  102. Great Teachers – Life Lessons 
  103. Healthcare Costs & the Budget Deficit
  104. Renewable Ener
  105. The Obesity Epidemic Revisit
  106. When a tax cut is not?
  107. When is a tax increase not?
  108. Hidden taxes
  109. Life Expectancy vs HALE
  110. Moussa Castle
  111. Military Spending
  112. The Electoral College