Car owners are responsible for having auto insurance on any vehicle they own and operate on the roadway. This legal requirement is in place to protect both the driver of the automobile and the people and property that vehicle may come in contact with when on the road. The amount and type of car insurance is determined by state minimum requirements. For individuals who finance a vehicle, the lender may have additional minimum requirements until the vehicle is paid in full. Here we look at car insurance basics, with a focus on liability automobile insurance.

photo credit: Jovi Girl J

What types of coverage are available?

Automobile insurance is generally made up of six basic components. They include bodily injury liability, property damage liability, personal injury protection, collision, comprehensive, uninsured/underinsured motorists coverage and extra coverage such as roadside assistance. For the most part, minimum state requirements include liability coverage.

What is liability insurance?

Liability insurance provides coverage for individuals or property who may be injured or damaged as a result of an accident involving or caused by your vehicle. Your liability insurance will also protect you from legal bills that may result from an accident.

Bodily injury liability coverage.

photo credit: pinprick

This type of liability insurance will protect you and others if someone is injured in an accident that is your fault. This type of protection can provide coverage that includes:

• bills resulting from emergency aid
• bills resulting from bodily injury
• bills resulting from sickness or disease
• loss of income compensation
• funeral expenses
• fees and expenses associated with legal defense for yourself and anyone listed on your policy

Property damage liability coverage.

As the name suggests, this type of coverage provides protection in the event another person’s property is damaged as a result of an accident. Here are a few of the expenses covered by property damage liability insurance:

• replacement or repair of another person’s vehicle
• replacement or repair of stationary objects damaged by your vehicle
• damage to homes or other personal property

In addition to paying for the above items, property damage liability insurance will also protect your assets if you find yourself facing a lawsuit as a result of the accident.

How much liability insurance is enough?

It is important to understand that minimum requirements set forth by the state in which you reside may not be sufficient protection in the event of an accident. While maintaining the minimum amount of liability insurance will keep you on the right side of the law, it may not help you if the damage caused by the accident surpasses your maximum coverage. For this reason it is recommended that you carry as much liability insurance as you can comfortably afford. This will reduce the chances of being sued for the difference should the damages go beyond your coverage. Some insurance experts recommend carrying at least $100,000 in bodily injury insurance and a minimum of $50,000 in personal property liability insurance. When it comes to insurance, there are situations where it certainly pays to be over-insured versus under-insured.

No matter how secure you think your job is, how old you are, or how long you have been in your current position you should have a contingency plan for job loss. Job loss is generally seen as a negative and that is because most people aren’t prepared. Living week to week, paying large debts and maintaining an expensive lifestyle, if the income stops it is a disaster.

photo credit: SvobodaIT

However, if you plan for a job loss you are not encouraging it to happen. Instead you can feel sure that you and your family are secure no matter what happens and if you do lose your job in the future, you can look at it as an opportunity to move onto something better, rather than a desperate scramble to get back into the workforce.

To make sure your contingency plans are in place in case of job loss, look into how you could implement the following strategies:

• Income protection insurance. This will be a small premium to pay for a lot of peace of mind because you can often cover yourself and your income against job loss, as well against sickness or injury which prevents you from returning to work, or death. If you’re sick or injured an income insurance protection policy will usually pay out 75% of your income and if you die your family will receive a lump sum payment. just make sure that your income protection insurance policy specifically covered unemployment and will be able to cover your monthly bills and expenses as some policies will simply waive the premiums if you are unemployed, so you remain covered.
• Mortgage protection insurance. The reality is that if a loan to value ratio is more than 80% there is a 1% chance of mortgage default, on an LVR of 90% the likelihood is 2.5%. As a result, on loans with an LVR over 80% you will pay lenders mortgage insurance to protect the lender, but make sure you are protected too. Your lender may require you to cover your repayments or you can organize the cover yourself.
• A second income. Having a part time job to supplement your income or to act as income if you lose your primary job can help in the short term. However, keep in mind that as your second source of income you will not be eligible for a tax free threshold and so will be taxed at a higher rate. This could benefit you if you have a lot of deductions such as investment properties.
• Savings. The suggested amount of an emergency savings fund in case of job loss is three to six months worth of expenses. Even if you’re not there yet the sooner you start the better prepared you will be if the worst happens.
• Live on one income. This is a good habit to get into to ensure you and your family don’t live beyond your means and can be a great way to kick-start your savings by depositing one whole salary into a high interest account. Or you can use your second income to reduce bad debts such as credit cards and curb your outgoing expenses.
• Curb your outgoing expenses. The fewer bills you have to worry about if you lose your job, the easier the whole process will be. Therefore cut down your outgoing expenses as much as possible to ensure you are not living week to week. Pay down your credit cards to minimize bills and leave the credit line open because you can’t use the card if it’s maxed out.
• Know your payout entitlements. Without arousing suspicion at work, take a look at your contract and your company’s policy on job loss payouts. What is the difference if you quit, are fired or made redundant? You may be able to pursue compensation through state or federal laws or through your union.
• Government assistance. If you lose your job you can apply for government assistance for your rent or mortgage and family expenses. There is often a limit based on the remaining household income, and you must prove you are looking for work to be eligible for some assistance.
• Your retirement fund. If you are over 55 you may be able to access part of your retirement fund in a transition to retirement application. You can also apply for a lump sum payment on compassionate grounds or if you are under severe financial hardship to help pay significant bills such as your mortgage.

Feeling prepared and knowing the facts can help you remain secure and confident in your role at work, and show your family that even if the worst happens you can be prepared and you can not only survive, but excel.

Alban is a personal finance writer at Home Loan Finder, where he helps people to choose the best home loans

The union that represents the field agents at U.S. Immigration and Customs Enforcement has unanimously passed a “vote of no confidence” for the agency’s leadership, saying ICE (U.S. Immigration and Customs Enforcement) has “abandoned” its core mission of protecting the public to support a political agenda favoring amnesty.

Border
photo credit: t3hWIT

The resolution says that the leadership of ICE had “abandoned the agency’s core mission of enforcing U.S. immigration laws and providing for public safety,” instead it is directing its attention “to campaigning for programs and policies related to amnesty“and the creation of a special detention system for foreign nationals that exceeds the care and services provided to most U.S. citizens similarly incarcerated.

The National Immigration and Customs Enforcement Council of the American Federation of Government Employees represents over 7,000 ICE agents and employees.   With a vote of 259-0 for a resolution saying there was “growing dissatisfaction and concern” over the leadership of Assistant Secretary John Morton, who heads ICE, and Phyllis Coven, assistant director for the agency’s office of detention policy and planning.

“It is the desire of our union … to publicly separate ourselves from the actions of Director Morton and Assistant Director Coven and publicly state that ICE officers and employees do not support Morton or Coven or their misguided and reckless initiatives, which could ultimately put many in America at risk,” the union said.

In a strongly worded statement, the union and its affiliated local councils said the integrity of the agency “as well as the public safety “would be” better provided for in the absence of Director Morton and Assistant Director Coven.”    

More about the Statement:

The statement also noted that:

• The majority of ICE’s enforcement and removal officers are prohibited from making street arrests or enforcing U.S. immigration laws outside of the jail setting.
• Hundreds of ICE officers nationwide perform no law enforcement duties whatsoever because of resource mismanagement within the agency.
• ICE detention reforms have transformed into a detention system aimed at providing resort like living conditions to criminal aliens based on recommendations not from ICE officers and field managers, but from “special-interest groups.”
• The lack of technical expertise and field experience has resulted in a priority of providing bingo nights, dance lessons and hanging plants to criminals, instead of addressing safe and responsible detention reforms for noncriminal individuals and families.
• Unlike any other agency in the nation, ICE officers will be prevented from searching detainees housed in ICE facilities, allowing weapons, drugs and other contraband into detention centers — putting detainees, ICE officers and contract guards at risk.
• Senior leadership ignores reports that ICE internal investigations by the office of professional responsibility conceal agency and supervisor misconduct and are used to retaliate against employees who make whistleblower-type disclosures or question inappropriate policies and procedures.

ICE documents show that during the first nine months of fiscal 2010, a total of 279,035 noncitizens were removed from the U.S. as a result of ICE enforcement.

Union Claims:

According to the union, illegal immigrants now being held in state and local jails seek out ICE agents for deportation to avoid prosecution, conviction and prison terms. They also say criminal aliens “openly brag” that they are taking advantage of a broken immigration system and will be back in the United States within days to commit crimes — while U.S. citizens arrested for the same offenses serve prison sentences.

The no-confidence vote, taken in June and made public last week in a letter by the union, said the agency’s senior leadership dedicated “more time to campaigning for immigration reforms aimed at large-scale amnesty legislation than advising the American public and federal lawmakers on the severity of the illegal-immigration problems.”

What do others say?

Rep. Lamar Smith of Texas, ranking Republican on the House Judiciary Committee and a member of the House Committee on Homeland Security said that the Obama administration is “simply not serious about enforcing all of our immigration laws.”  He said ICE doesn’t have the resources because it didn’t ask for them, adding that “the Obama administration did not request a single new detention bed in their most recent budget request.”

Rep. Smith claims that the limits on detention capacity that they now claim hold them back from further enforcement are of their own making, he said. ICE is running under its average daily detention capacity and that the Obama administration is not even using all the resources it has.

Michael W. Cutler, a retired 31-year U.S. Immigration and Naturalization Service (INS) senior criminal investigator and intelligence specialist, said that it is clear that the marching orders coming from the administration have nothing to do with securing our nation’s borders or enforcing the immigration laws.  According to him ”It is an absolute absurdity to believe that our nation can successfully wage a war against terrorists who are determined to enter our nation and then embed themselves in our nation with virtually no fear of being identified, arrested or removed from our country”.

Janice Kephart, director of national security policy at the Center for Immigration Studies, described the no-confidence vote in a statement last week as an example of how ICE’s mission was being “skewed towards supporting an unflinching goal of amnesty by refusing to allow agents to do their job.”

Secretary John Morton, who heads ICE recently announced new guidelines telling his agents to focus on “apprehending terrorists and criminals”, causing many of agency’s rank-and-file agents to wonder who, then, is responsible for tracking down and detaining the millions of other illegal border-crossers and fugitive aliens now in the country.

The new guidelines note that ICE only has resources to remove approximately 400,000 aliens per year, less than 4 percent of the estimated illegal-alien population in the United States, and that as a result, it needed to focus wisely on the limited resources Congress had provided the agency.

He said the agency would prioritize the apprehension and removal of aliens who “only pose a threat to national security and/or public safety, such as criminals and terrorists.”  Lesser priorities were given to foreign nationals caught crossing the border illegally or using phony immigration documents to gain entry, and those identified as fugitives after failing to show up for immigration or deportation hearings.

More on Fox News – Neil Cavuto interviews Director Morton

I watched Neil Cavuto discussing this issue with Director of ICE John Morton today.  It became obvious that Mr. Morton was sticking to his talking points, defending the administrations position, defending all the work ICE has done and denying any fault.  Time and time again, he dodged the question of granting amnesty … simply repeating that he nor the administration support amnesty to “EVERYONE“.   (I don’t think anyone is suggesting it for … “EVERYONE”.)  Neil Cavuto continued to rephrase the question trying to get a straight answer.  Mr. Morton continued to dodge the real question by rephrasing his talking point and not answering the real question.

What do you say???  Papa B.

Chrysler’s Railroad … True or False???

The following story was sent to me via E-mail.  I did not write this myself and I am unable to verify all of it, but I also cannot find anything that refutes it.  At the very least, a large part of it, appears to be true!  Is there anyone out there that can shed accurate, verifiable, support to the validity of this story?  If it is actually true, it is a serious issue.  Papa B.

photo credit: wstera2

Below “The Story“ as I received it:

—————————————————————————–

Chrysler’s Railroad

This could be a scandal of epic proportions and one that makes Nixon’s Watergate or Clinton ‘s Monica Lewinsky affair pale by comparison.

Why was there neither rhyme nor reason as to which dealerships of the Chrysler Corporation were to be closed?

Roll the clock back to the weeks just before Chrysler declared bankruptcy. Chrysler, like GM, was in dire financial straits and federal government “graciously” offered to “buy the company” and keep them out of bankruptcy and “save jobs.”  Chrysler was, in the words of Obama and his administration, “Too big to fail,” same story with GM.

The feds organized their “Automotive Task Force” to fix Chrysler and GM. Obama, in an act that is 100% unconstitutional, appointed a guy named Steve Rattner to be the White House’s official Car Czar – literally, that’s what his title is.  Rattner is the liaison between Obama, Chrysler, and GM.  Initially, the national media reported that Chrysler ‘had made this list of dealerships’. … Not true!

The Washington Examiner, Newsmax, Fox News and a host of other news agencies discovered that the list of dealerships was put together by the “Automotive Task Force” headed by no one other than Mr. Steve Rattner.

The plot thickens.

Remember earlier we said that there was neither rhyme nor reason why certain dealerships were closed?    

Actually there’s a very interesting pattern as to who was closed down.  Again, on May 27, 2009, The Washington Examiner and Newsmax exposed the connection.

Amazingly, of the 789 dealerships closed by the federal government, 788 had donated money, exclusively to Republican political causes, while contributing nothing to Democratic political causes.  The only “Democratic” dealership on the list was found to have donated $7,700 to Hillary’s campaign, and a bit over $2,000 to John Edwards. This same dealership, reportedly, also gave $200.00 to Obama’s campaign.

Does that seem a little odd to you?

Steve Rattner is the guy who put the list together. Well, he happens to be married to a Maureen White.  Maureen happens to be the former national finance chairman of the Democratic National Committee.  As such, she has access to campaign donation records from everyone in the nation- Republican or Democrat.

But of course, this is just a wacky “coincidence,” we’re certain.

Another really wacky “coincidence” ???

On that list of dealerships being closed down, a weird thing happened in Arkansas , North Louisiana, and Southern Missouri.   It seems that Bill Clinton’s former White House Chief of Staff, Mack McClarty, owns a chain of dealerships in that region, partnered with a fellow by the name of Robert Johnson.

Johnson happens to be founder of Black Entertainment Television and was a huge Obama supporter and financier.  These guys own a half dozen Chrysler stores under the company title of RLJ-McClarty-Landers.

Interestingly, none of their dealerships were ordered closed - not one!

While all of their competing Chrysler/Dodge and Jeep dealership were!

Eight dealerships located near the dealerships owned by McClarty and Johnson were ordered shut down.

Thus, by pure luck, these two major Obama supporters now have virtual monopoly on Chrysler sales in their zone. Isn’t that amazing?

More to The Story:

According to the story:  Go look in The Washington Examiner, the story’s there, and it’s in a dozen or so other web-based news organizations; this isn’t being made up.

Chrysler now owned by Fiat?

Now if you thought Chrysler was owned by Fiat, you are mistaken. Under the federal court ruling, 65% of Chrysler is now owned by the federal government and the United Auto Workers union!

Fiat owns 20%.

The other 15% is still privately owned and presumably will be traded on the stock market.  Obama smiles and says he doesn’t want to run the auto industry.

As horrifying as this is to comprehend, and being as how this is still the United States of America , it would appear that the president has the power to destroy private businesses and eliminate upwards of 100,000 jobs just because they don’t agree with his political agenda.

If this story is really true, this is Nazi Germany stuff, and it’s happening right here, right now, in our back yard.  There are voices in Washington demanding an explanation, but the “Automotive Task Force” has released no information to the public or to any of the senators Demanding answers for what has been done.

Keep your ear to the ground for more on this story.  If you’ve ever wanted to make a difference about anything in your life, get on the phone to your national senator or representative in the House and demand an investigation into this.  Benjamin Franklin had it right when he said, “All that’s necessary for evil to triumph is for good men to do nothing.”

Car Czar No More

An amazing thing happened as this story was going to press.  Obama’s Car Czar, Steve Rattner, resigned on July 13 and was promptly replaced by former steel workers union boss Ron Bloom.

According to CBS News, Rattner left “to return to private life and spend time with his family. “Treasury Secretary Tim Geithner said, “I hope that he takes another opportunity to bring his unique skills to government service in the future.”

By the way, Rattner is under investigation for a multi-million dollar pay-to-play investment bank scandal in New York ….Uh-oh!

But, we’re certain that had nothing to do with his resignation.  And, according to several news sources out there, there are rumors he’s being investigated for what could be pay-to-play scandal involving the closing of Chrysler and GM dealerships. Really? Again, that couldn’t have anything to with his resignation-that’s ridiculous!  Like CBS said, this guy just wants to “spend more quality time with his family.”

Obama has 32 personally appointed “czars” who answer to no one but him, all of whom are acting without any Constitutional authority.

But hey, we’re sure they all have “unique skills,”……as Tim Geithner likes to say!

SOOOOO. HOW’S THE CHANGE WORKING FOR YOU?..

Check it out at the following websites…..

http://gatewaypundit.blogspot..com/2009/05/hope-change-car-czar-behind-chrysler.html

http://www.washingtonexaminer.com/politics/Obamas-auto-policy-All-in-the-Democratic-family-44414452.html -

This goes beyond corruption in high places – to gross criminal actions on the part of our government!  I hope you will spread this far and wide, and hopefully the taxpaying public will demand some of that transparency we were promised……followed by criminal prosecution of the perpetrators!

What a crooked government we have!!!!! Vote ‘em all out…November, 2010

End of Story!

———————————————-

The above story was as I received it!  Where do people come up with this Stuff???  Interesting … but can this actually be true?

Or… Is it just another day in Chicago/ Washington politics?

I will gladly post all comments.  Let the battle begin!   Papa B.

What happens if 70 becomes the new 65?  How does it affect you, the workplace, and your plans for retirement? Are Boomers re-shaping the economy, or is the economy re-shaping them?

photo credit: Squid!

Could 70 be the new 65?  It may have to be for some!  One effect of the recent volatility of the financial markets is that many Americans are electing to postpone their retirement.  If 70 becomes the new 65, it will result in many changes to the workplace.  These trends could affect you, your employer, and your financial future.

Retirement will no longer be an event.  It will become a process.  If 70 becomes the new 65, more people will probably leave the workplace gradually instead of automatically at age 65.  This may not be that bad for baby boomers that want to stay active and engaged.   A manager or VP who was used to working 50 hours a week may become a consultant or a coach working less than 8 hours a day or maybe three days a week.  He/she might simply want to work less, for less pay, but not be ready to call it quits.  He/she may wish to make a lateral move within a company that would allow an exit on his/her terms.

Will more Boomers have the opportunity to shape their exit?

More and more expect “mature” employees to negotiate the terms of their retirement.  As gradual retirement becomes more common, so will the options and alternatives.

• How many hours they will work on their way out?
• How accessible they will be?
• Will they work from home or the office?
• Who will take the reins from their hands someday?
• If a boomer offers a personal exit plan that will help a business to cut labor costs without losing a valued employee, isn’t that a favor to management?

Tough Decisions For Businesses and Government Organizations.

In June 2009, the Bureau of Labor Statistics estimated that 23% of Americans employed or seeking work were age 55-64.  The 2009 Retirement Survey from the Employee Benefit Research Institute found that 51% of Americans age 25 and older now think they will retire at age 66 or older. 

Universities, state and local governments and public agencies will probably not see the same kind of retirement turnover they did in the past.  For businesses, who want to pay older workers to retire so that they can stay profitable in this economy, this could become a problem.  Organizationally, what is the economic value of retaining wisdom and experience?  Should they stop or slow down the recruiting of new managers, new faculty, or new administrators for the near future?

Will There Be A Wave Of “Re-hirement”?

In the EBRI survey, of the roughly 1,200 respondents 20% felt they would never retire.  This compares to 11% in the 2007 poll.  Part of that increase reflects what happened in the stock market, but it also may represent a perception shift in progress.  Baby boomers, as a group are doers, proud contributors to society who are re-shaping the old retirement template.

Changes Boomers Can Believe In!

Two distinct phases of American life seem to be emerging.  The first phase is one in which you work for a “living”.  That is followed by the second in which you work for “meaning”.  A wave of mature employees, professionals and entrepreneurs may be one result, but is another possibly return to the past?

Is this a real change to the culture of the recent past where people continue to retire at an earlier age?  Could it result in a cultural change unlike any this country has never seen?  … Or maybe it is simply a return to a work ethic that this country had at one time, …by a large group of  people, who had it, … but for a while seem to have lost it?

Boomers are back and the work ethic taught to us by our fathers is really starting to show.

As for Papa Boomer, I gave it up at 54.  Didn’t have the option of three days a week,  just a lot less money.  Given some of the options above, I might go back in a flash.  In the mean time, … I’ll just spend seven days a week … b%#&ching …blogging about it!  PB.

Will health care reform mean headaches, increased costs, and penalties … or hidden dividends?

photo credit: wirwuenscheneinbierinternationalereisegesellschaft

What do the federal health care reforms mean for your company?  Will it mean increased costs or savings in years to come? … or …  Will it lead to thousands of dollars in extra costs and more paperwork?  Will federal subsidies make this a “game changer” for small companies that have struggled to provide insurance plans and actually improve the coverages for their employees and also offer a savings? …  or … Will it just drive them to pay penalties and  just let their employees purchase their own insurance.  Check below for how it may affect you.

If You Employ 50 or More People

If You employ 50 or more people you will face a major choice beginning in 2014:

• Sponsor a health plan for 100% of your workers (even those signed up for government-subsidized health insurance).

or

• Pay $750 per worker in penalties to the federal government.

A business might opt to take the penalty and do away with health insurance. Paying the annual penalty might be cheaper.  So that would leave the employees uninsured, and they would have to go to state health plan exchanges to buy health coverage that could be more expensive.  Some analysts warn that another macroeconomic effect might result – years of high unemployment.  They think that increased insurance costs will discourage business hiring in the next decade.

The new reforms don’t put any caps on health insurance premiums.  Insurers have every reason to hike rates before the new insurance markets come around in 2014 with added competition.

If You Employ 25-49 People

If you employ 25-49 people, you won’t face this choice.  The government won’t require companies with fewer than 50 employees to offer health insurance starting in 2014, and therefore these companies won’t have to contend with possible fines like their big brothers.  But while firms with 50 or fewer workers would be exempt from coverage provisions, they will still have to contend with rising premiums.

If You Employ Less Than 25 People

A major tax credit for smaller firms and “solopreneurs”?  (There’s a new word.)

If you employ less than 25 or are self-employed, you may find that the healthcare reforms actually bring you tax relief.

Beginning in 2010, companies with less than 25 employees that pay the majority of health care premiums for their workers qualify for a tax credit up to 35% of their premiums. (In 2014, that credit could be as great as 50% of premiums if you arrange insurance via one of the Small Business Health Options Programs, or SHOP Exchanges).

The tax break you get will depend on a couple of variables:

1. The number of employees you have
2. Their average salary.

What about Sole Proprietor-ships?

The above  tax break won’t be offered to sole proprietorships.  That factor may encourage you to incorporate or become an LLC.

If you own a smaller company, insurance might become cheaper.  The idea is that small businesses can pool together in the SHOP Exchanges and negotiate insurance coverage as a group.  Greater buying power, in theory, implies lower premium costs.

Businesses with 100 or fewer workers can jump into a state SHOP Exchange pool starting in 2014; states can also choose to limit the pools to firms with 50 or fewer employees through 2016.

The non-partisan Congressional Budget Office (CBO) estimates that the SHOP Exchanges would lower annual premiums for these businesses by 1-4% with a 3% increase in the amount of coverage.  That could mean a savings of more than $10 billion nationally.  That all remains to be seen.  Based on the accuracy of previous estimates, I wouldn’t hold my breath!

If You Work For Yourself

If you work for yourself, you will likely be able to take advantage of government health care subsidies in 2014.  If you are self-employed in 2014 and earn less than four times the poverty level, you can qualify for these subsidies.  In 2010, 400% of the poverty level comes to $88,200 for a family of four.

Some Important Notes for 2011.

1. In 2011 as a result of the new law, a business will have to report the value of an employee’s health care coverage on W-2 forms.
2. Many companies provide coverage for employee dependents not enrolled in other employer-based health plans up to age 22 or 23; next year, that age limit will rise to 26.
3. All lifetime caps on insurance policies offered through employer-sponsored plans will be eliminated in 2011.
4. Penalties will increase for the misuse of HSA funds.
5. Workers with FSAs and HSAs will not be reimbursed for money used for over-the-counter drug purchases.

THE 47% CONTROVERSY. About Half of Americans aren’t paying federal income taxes.  Can that be that right?  First of all let me clarify that we are only talking about “Income” tax.  But it is true!

photo credit: NObamaNoMas

A provocative statistic.  Last July, the nonpartisan Tax Policy Center (a joint venture of the Urban Institute and the Brookings Institution) estimated that 47% of Americans would not owe a penny to the IRS for tax year 2009.   The White House has projected the federal deficit at $1.6 trillion for 2010 – that’s about 10.6% of our GDP, a percentage unseen since the 1940s.   Is it fair to the nation that so many Americans are legally avoiding federal income taxes?  How does this happen?  

How it happens

A major reason?  Refundable tax credits.  The Making Work Pay credit and other tax cuts accompanying the federal stimulus gave millions more of us a refund this time around.  If these credits hadn’t appeared, the TPC says 38% of us still wouldn’t have owed federal income tax for 2009, thanks to assorted variables – astute tax planning, low taxable income, and other factors.

People who assume the rich are dodging taxes are misinformed.

1. The TPC found that only about 1.5% of those with taxable incomes of $1 million or more owed no federal income tax for 2009.
2. For those with taxable incomes from $500,000-$1,000,000, the estimate rises to just 2%.
3. If you made between $75,000-100,000 in taxable income in 2009, you may have been in the lucky 9.2% who the TPC says didn’t owe anything to the IRS.
4. In contrast, it figured that 61.8% of taxpayers who earned $20,000-30,000 last year and 47.5% of those with taxable incomes from $30,000-40,000 had no federal tax liability.

For another perspective and more information also see:  Guess Who really Pays the Taxes

1. The wealthiest 1% of the people pay 37% of the taxes
2. The top 10% pay 68% of the tax bill
3. The bottom 50% pay only 3% of the tax bill

Can you bring the deficit down without new or excessive taxes?

At first glance, it may seem impossible.  The Treasury, however, has a plan to do it, and it looks like this:

1. Cut war spending by $250 billion.
2. Save another $252 billion by letting tax cuts sunset for couples making more than $250,000 yearly.
3. Collect $331 billion in bank fees.
4. Save $105 billion from a selective federal spending freeze.

This could shrink the deficit to around 3% of GDP, which the Treasury feels is bearable.  That all sounds good except it doesn’t take into consideration that all of the new spending packages, including health care “reform“, “stimulus” pay offs, and “jobs” bills far exceed the saving provided above, even if they all came true.

A federal spending freeze might have worked about $2.5 trillion ago.  The only way out now is to cut, not freeze, spending and also raise taxes which is what we are about to see.

Higher federal income taxes and many new kinds of taxes seem to be looming in the future.  As for legislators figuring out a way to spare us from them, that would seem a long shot.  Hopefully, bipartisan politics will get in the way.  Watch out for the VAT tax.  It could be the single most inflationary type of tax I can think of!

The good news is 100% of the people will help pay for it!

The bad news is 100% of the people will pay for it by paying more for 100% of the products they buy!

Check out more info on the Value Added Tax.

Could we see a National Sales Tax or maybe a Value Added Tax

What are the chances of Americans paying a national sales tax?  Will a Value Added Tax (VAT) become reality?  What is a VAT tax?  Who pays it?  What is the affect on our economy?  Is it good or Is it bad?  What else can they come up with? An Internet tax? An Energy Tax?  First, let’s talk about the VAT tax.

photo credit: wstera2

How do you pay down an $8 trillion debt?   The Obama administration needs an answer, as the non-profit Congressional Budget Office says America’s debt could rise to $20 trillion by 2020.  One possible answer has a very European ring to it: a VAT, or value-added tax.

What is a Value added Tax?

A VAT of bubbling controversy. Last year, Obama administration economic adviser Paul Volcker mentioned the possibility of a value-added tax. The CBO is now studying the idea.

India and the member states of the European Union have VATs: sales taxes imposed on producers, distributors and consumers as a product makes its way through the marketplace.  VATs collect a great deal of state revenue while discouraging tax fraud.  In France, the VAT is 20%;in Germany, 19%.

Will a VAT Tax replace the Federal income Tax?

That is an easy answer … NO!  The VAT would not replace our federal income tax, just supplement it.  So the furor we saw over health care reform might pale in comparison to the protests over this.  Volcker thinks a VAT is “not as toxic an idea” to America in 2010 as it might have been decades ago.  White House budget director Peter Orszag thinks it will never fly, calling it “popular with academics but not seriously considered by policy makers.”  Let’s hope the latter is right.  

A VAT could generate trillions. The CBO says each percentage point of VAT could bring in $1 trillion in the next ten years. It also projects that the health care reforms will cost $2 trillion or more over that period.

Who Pays the VAT tax?

One major gripe about VATs around the world is that they burden the poor.  Certainly, poor people in America would be pinched by a VAT, possibly to the point of federal subsidy.  But the truth is everyone pays it.  It basically adds tax at every level of production and delivery of a product.  What that does is raise the cost of those products at every stage, which in turn increases the cost of living for all without increasing their income.  That is also called inflation!  The consumer pays 100% of it in the price of the products that are taxed.

It works much like Cost of Living Allowances (C.O.L.A.).  The cost of living goes up due to increase cost of products and services people must buy.  As the cost of living index goes up, people get cost of living increases … which raises the cost of the products they make … which in turn causes the cost of living index to go up again … which means they need another cost of living increase just to maintain where they were … which again causes the cost of products they make to go up again.  No one ever really gets ahead or a real raise. Cost Of Living  Allowances are guaranteed inflationary and destructive to any economy.  In Papa B’s opinion they should be illegal!

The VAT tax does the same thing.  It guarantees a rise in the cost of living by raising the cost of the products and services people purchase.  Who pays?  We do in the increased cost of every product we purchase.

Some economists and political analysts think a VAT is inevitable. Why?

Peter Orszag’s office, the Office of Management and Budget, has projected federal government expenses of $5.7 trillion for 2020.    However, it estimates that the government will only collect $4.7 trillion in total taxes in 2020, meaning a deficit of $1 trillion.  Well, at least that’s better than the 2010 shortfall of $1.6 trillion, right?  Yes, but … the OMB projects income tax receipts of just $2.3 trillion in that year.  So if Washington wants to wipe out a 2020 deficit using its #1 revenue generator, it would have to collect 44% more in income taxes, which is unthinkable.

Rather than trying to do that, it could put a VAT in place – a major tax to be sure.  Think double digits.  By federal projections, if the government charged Americans a 7% national sales tax on every consumable in 2020, then it could raise $1 trillion.  If it spared essentials like food and clothing from VAT (it likely would), then the VAT would need to be higher than 7%.

However, the government needs a lot of money in a short window of time, and the VAT is beckoning, with voices such as Volcker, Nancy Pelosi, and John Kerry bringing up the idea.

An Internet tax?

Back in 1998, President Clinton signed the Internet Tax Freedom Act into law, which prohibited federal, state and local governments from charging bandwidth taxes, email taxes and Internet access taxes.  It was extended in 2007 with President Bush’s signature.

However, the National Broadband Plan out in April from the Federal Communications Commission contains Recommendation 4.20: “The federal government should investigate establishing a national framework for digital goods and services taxation.” It also says, “Recognizing that state and local governments pursue varying approaches to raising tax revenues, a national framework for digital goods and services taxation would reduce uncertainty and remove one barrier to online entrepreneurship and investment.” (Huh?)
So far, this is as far as this idea has gotten. The governments of the United Kingdom and Canada are currently considering Internet tax proposals.

An energy tax?

In an interview with Charlie Rose on PBS last year, Volcker floated the notion of “a tax on carbon, tax on energy, that’s a big revenue producer if you’re willing to do it. Not very popular to say the least.” It was part of a roster of potential tax code changes presented to the President in December, and he brought it up again in April in New York City.

Just remember this.  Taxes are paid for by individual tax payers.  You and Me.

What does it mean for now, for later … and for you?

The debate goes on but seems to have gotten so boring that the news media has forgotten about it.  This is probably because it has little or no affect on most people in the immediate future.  A few nice, but non-consequential, things take place now to make it sound better.  The hard stuff doesn’t really become noticeable until after the mid-term elections.  It is not until then, and the following 48 months, that most people will be affected, and not necessarily in a good way.

photo credit: Fibonacci Blue

On March 23, 2010, President Obama signed “historic” health care legislation into law following a year-long struggle with congress to follow through on what was a pivotal piece of his administration’s domestic policy agenda.  The most “historic” thing about it was that it was something the majority of the American people did not want passed, but it got passed anyway by a totally partisan vote.  The rules for passing such wide sweeping changes were themselves swept under the rug and true Washington D.C. corruption … “Chicago style” took over.

Who is this bill Really for?

“I am signing this bill for all the leaders who took up this cause through the generations,” said President Obama, “from Teddy Roosevelt to Franklin Roosevelt, from Harry Truman to Lyndon Johnson …”  That may sound good in a tele-prompted speech, but the real reason he signed it was to try to salvage his own political future.  He used every type of leverage and political capital he had available, including bribery, extortion.  There is one person, and one only person, he signed it for.

But, with that said, what does it mean?

What Obama signed may not include all the provisions and changes you think it does.  Many alterations have been made along the way and, at this point, many Americans are unsure of exactly what the AHCA Act entails.

What changes are slated for 2010?

The “immediate” changes include:

1. Extending the length of time a child can remain on his/her parents’ plan – through age 26 (ending on the child’s 27th birthday).
   
2. Children can no longer be denied coverage due to pre-existing conditions.
3. Policies can no longer be rescinded by insurers when a person becomes ill (unless fraud or misrepresentation is proven).
   

In the immediate future that really doesn’t mean much because most people’s insurance options haven’t yet changed.  But, believe me they will.  In order to accommodate those kind of changes premiums will go up!  No where does it say in the bill that those changes are provided free by your insurance company!

What changes are slated for the future?

Some of the most sweeping reforms won’t take effect for a few years.  The biggest thing that has everyone buzzing involves required health care insurance.  Beginning in 2014, Americans (except those with religious objections, inmates and Native Americans) will be required to have health insurance coverage … or face an annual “penalty“.  The only good thing is that the penalty cost less than the actual insurance, and if you get sick you can go ahead and buy insurance after you have a problem, since they can no longer deny you coverage for pre-existing conditions.  That may be the best option.

And what about taxes?

The other big thing getting buzz involves tax increases: a new tax which starts in 2013 – a 3.8% tax on investment income for individuals earning more than $200,000 and households earning more than $250,000.  That doesn’t mean to say that people making less won’t also pay also.

Where can you get more information?  The White House has provided a website but, it is the last place I would look for an honest unbiased view.  You can visit whitehouse.gov/healthreform .  Just remember this is a very one-sided, slanted view of the bill, and does not give a fair representation of what it really means.

Is it settled?

Nope.  Amendments to the bill have already been proposed, and Attorney Generals from more than 14 states have filed a lawsuit claiming the new bill is unconstitutional.  Justice Department spokesman Charles Miller, however, is “confident that this statute is constitutional”.  Nothing would surprise me.

For it or Against it, one thing for sure … the way this was passed is the is the most corrupt action I have ever observed.  When one party, either party, controls both the House and the Senate as well as the White House there is no check and balance.  Corruption occurs.

Bribes and extortion  are not unconstitutional … they are criminal.  But, … someone has to initiate a unbiased investigation and that ain’t gonna happen.  That is reserved for the important stuff like Sarah Palin, Major League Baseball, and airport restrooms.  It’s time to take care of things at the voting booth.  Wait a minute isn’t that what happened last time?  Papa B.

Let’s call this our first “weekender”!  A good friend of mine sent me this You Tube video.  I am pretty sure some will find this offensive.  I know some will think it is funny.  Personally … I find it funny.  No matter, either way, let us know what you think.  Give us your opinion?  Papa B.