Post by jeffolie on Jun 30, 2013 16:37:22 GMT -6
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Who Pays Taxes, Is The Real Game
Buy a house, for 600k in California pay a property tax of $6,000 a year. Buy a car for 40K. Pay $4,000 in sales tax. Buy $10,000 of taxable goods add on another $1,000. Income tax on 100K add on about $18,000. Social Security and Medicare, add about another $10,000. Then there is a gasoline tax, telephone tax, electricity tax. The tax people pretty much know where you live.
So for a 100k salary, with husband and wife working, looking at the chart below, after taxes, you’ve got 71K. Subtract the other items on the list and what’s left over---about $6,000.
Figure the same scenario for a family of 4 with one wage earner making 50K. No new car, figure same amount on taxable goods of 1,000, zero income tax. Rent payment figure $20,000, no health or student loan. Take off 3k for utilities, forget car insurance and figure 4 k for gas and car repairs. The same 6k as rich people for food. No day care, the wife doesn’t work. Spending money after expenses is about 10K. The $10,000 is almost illusionary for this group, going to the dentist or one car accident is all it takes.
Surprisingly the third group living at the poverty level on my spread sheet seems to have the ability to get by almost as well as the middle group earning 50K. Food stamps are a big item, as well as one adult being able to stay home to manage the children without having to pay for day care. With the medical benefits, there is almost an assumed incentive for larger families.
What can we learn from all of this? First off, I should probably be shot for the quite arbitrary excel spread sheet. I kind of modeled the spread sheet to my family even though we don’t have expenses for student loans, car payments or day care. Of course having a son going to Berkeley is kind of a wash. The thing that impressed me was the realization, that 100K of income in California is not upper middle class. What do I have left to put in the bank? It feels good only because we can remember making a lot less in the past.
When I was an engineering student, many a time we took a napkin and with some rudimentary drawings, we arrived at answers that pointed to problems that were not apparent. It’s obvious to me that in order to save more for retirement, there isn’t much left that our family can cut. It also appears, that many people in this country will when given time figure that health care and car insurance are not a necessary thing. This is probably where Obamacare will crash and burn on the economic highway. It is obvious that Congress needs to raise taxes, and I cannot afford to pay more, to support those now paying less. How do we as a nation determine what is each person’s fair share of taxes? Let's tax those that pay no taxes now and cut off benefits to those that have not paid taxes. The damn thing is that won't float, no Democrat would ever get reelected. Go Figure! I'm really getting tired of the free lunch program. This country was founded on "Pay as you go," not,--- "Go until you get paid."
Posted by Jim in San Marcos at 6:59 PM 7 comments: Links to this post
Saturday, June 22, 2013Commodity Prices Are Dropping
Gold, Platinum and Silver have taken quite a hit in the last few weeks. To a lot of people these metals are investment and as such, they follow the prices quite intensely. I know my wife has been tracking their prices for quite a while. So she sees a loss in our portfolio from their highs to their present lows and points out to me that we could have purchased a BMW with our losses.
There is a reason for buying gold and silver and it has nothing to do with investments. If Bernanke starts this tapering off of purchasing T-bills and real estate paper, interest rates have to rise. If they rise to 8.5 percent, the total amount collected in taxes in the United States will only pay the interest on the National Debt and at that point, the country is bankrupt.. I was discussing this conundrum with my wife; she said “well they will just print more dollars to pay it off.”
The thing to realize here is that gold, silver and platinum have value not determined by any government. Their net worth at any point in time tends to be relative to wages in general. As a measure of worth, assume that an ounce of silver is one day’s wages, an ounce of gold is one week’s wages and an ounce of platinum is probably worth a lot more. Don’t hold me to the values stated; they are just a guide for survival. What you are looking at here is a way to preserve part of your wealth in a tangible way. 1,000 ounces of silver is going to provide you about three years of income if the dollar was to tank. One ounce of gold would pay the rent for a month. What we are really purchasing is peace of mind and security for the future.
To a lot of people, if gold went to $10,000 an ounce, they would sell, but think about it. Has gold or silver really appreciated over time? In 50 years silver has risen from a dollar an ounce to about $20 an ounce. Real estate prices have risen in the same time span from $28,000 to $280,000. A pack of cigarettes has risen from 21 cents a pack to six dollars. Do you sell gold at $10,000 only to find out that a loaf of bread and a package of hot dogs is $5,000? If you think gold could drop to 30 dollars an ounce, do you think that cigarettes could drop back to a quarter a pack?
So when you see the price of silver and gold drop, relax it is of little concern. Realize one thing, the reason you are holding them is because of government foolishness. Inflation is their mistress. Profit is not your motive; preservation of a portion of your wealth is the objective.
Just as food for thought, in 1964, when I was being paid $2.00 per hour, I could buy 16 ounces of silver for a day worked. So take 16 oz. of silver time $22 spot today and you get $352. Divide that by 8 hours and you get $44 dollars an hour. I guess that explains why my mom didn’t have to work when I was a kid. People made real money back then. Our standard of living has dropped considerably, both the husband and wife work today. But by God, we are making 10 times the $5,000 my dad brought home a year—and paying 10 times more in taxes. Anybody catching on to what is happening? Our employer gives us a pay raise because the government printed more dollars? We get happy. Are we getting richer? The raise feels good, it just doesn’t go very far.
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