Posted on 04/16/2003 7:28:39 AM PDT by George Frm Br00klyn Park
WorldNetDaily / Commentary
Shock and awe not only for Iraqis
Posted: April 16, 2003
1:00 a.m. Eastern
By Joan Veon
© 2003 WorldNetDaily.com
While jubilant Americans can't help but be fixated on "revolutionary" military operations they have witnessed on television for the past two weeks – called "Shock and Awe" – most are not aware that Americans are about to receive their own economic "Shock and Awe."
Many forget that while Rome burned, Nero was busy deflecting attention away from the real center of action. For example, the front page of the March 8 Washington Post featured a huge picture showing the burning of Baghdad with all but 5 percent of the front page devoted to the war in Iraq. However, at the bottom was the "bunker buster" which will shatter our own field of dreams here in America.
While the house voted well past midnight several weeks ago to approve the full tax plan of $726 billion, the Senate cut it by half when they voted several days later. While you may think this is not a sure thing, a recent editorial, entitled "Lay off the Tax Candy," in the Washington Post explained the deceptive game now being played. They said that there is some fine print in the Senate version that provides for some fancy footwork which gives them the ability to vote for the full amount, while making it look like they are against it.
Unfortunately, our government has not really made clear what this tax law is all about. From the extensive research I have done, I consider this proposal to be the most heinous change as it will destroy the ability of the middle class to sustain their economic power while enhancing the upper classes.
If enacted, this legislation, will deliver the final blow to the ability of "Joe and Jane Average" to get ahead. It should be pointed out that its title is a misnomer. This plan will not stimulate the economy but will cause much larger deficits, which will be borne by Americans as a result of the war, which is being waged.
Recently at the G7 finance ministers meeting, Secretary Snow, who likes to snow people, basically said that this increased deficit spending could be seen as a type of "capital spending" that most companies do when they want to expand. If it does not work, it is not the shareholder who has lost out, it is the entire populace of America. After the $4 to 6 trillion Nasdaq crash, most Americans who suffered any type of substantial loss are not looking to the market for answers.
The proposed legislation will, instead, change the entire tax code of America from a tax on income to a tax on consumption over a 10-year period. At this point in history, we are the only developed country not to have this form of taxation – which means Bush is globalizing our tax laws. In other words, he is harmonizing our tax laws and system to conform to what the major European industrial countries have. In my opinion, this basically will set the platform for a global IRS. By the way, the United Nations has been working on these kinds of ideas for the last 30 years.
Under this VAT (value-added tax), every time a purchase is made, there will be up to a possible 27 percent tax on it. This tax could replace the tax on income, making only consumption taxable while all forms of income are tax-free. There are some countries that have a value-added tax plus a tax on income while America is the only country without a VAT, but has a tax on income.
For those who have enough savings to live off of their income, this is a windfall, but for those who have only debt with little or no savings, this will create a financial burden equal to the Israelites having to make bricks without straw.
At the heart of this plan is the elimination of tax on corporate dividends. Again, if you obtain your living from stock dividends, this will be like going to heaven. No tax on income – only a tax on what you buy. Let's look at three different sets of individuals.
First we have Old Money Harry. He has never had to have a real job because he gets his living from the family trust. All of the family assets – the fabulous house, the cars, the summer homes, the yacht, the Mercedes and Rolls are held by the family trust, along with title to three large commercial pieces of real estate. Harry made several killings buying and selling real estate because the gains were tax-free since they were inside the family trust. The only downside is that the income from the trust is taxed.
However, under the proposal to reduce tax brackets – which is necessary in order to make the rates flat – from 38 percent to 21 percent, it won't hurt as much. Harry will have 17 percent more to spend. Only what you buy will be taxed – however, if you have it in a trust, no tax. Old Money Harry will achieve growth unsurpassed under the proposed tax-stimulus plan, just like the Kennedys, the Rockefellers, the Mellons and anyone else with this arrangement.
Next are John and Jane Middleclass. Both have reasonably good jobs with attractive incomes. They both have advanced degrees and live in the "executive home" to match their rising social status. They lease a Lexus and Jaguar and think nothing of packing up and going to Vale or to the Bahamas at a moment's notice. They have re-financed the house several times to add a new wing, exceptional landscaping and a pool.
While they know they are basically spending everything they are bringing in, they rationalize by thinking about the rising equity in their home and how much they will be able to cash out when they retire. Unfortunately their 401ks got zapped during the NASDAQ crash.
Donnie and Susie Squeeze are 25 years old. Donnie served in the military and works as a mechanic for the local Honda dealer. They have three small children and Susie works part-time at the local grocery store. They are saving for a down payment on a home and hope to send their kids to college if they can afford it. Right now they are just barely making ends meet.
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In order to explain the proposed tax stimulus program, let us take a look at who will come out like a bandit. Old Money Harry will be able to double his assets because he has the right tools: a pile of money and a trust. He will basically pay very little tax considering his income and assets. The stock dividends will be tax free, and other sources of income may be tax free, depending on if he takes advantage of the new Lifetime Savings Accounts.
Joe and Jane Middleclass will experience some drop in tax on income. However, once the proposed stealth tax is in full force, they probably will not have any tax break from the mortgage interest expense because it had to be sacrificed in order to pay for the other parts of the tax package. Since they have no savings outside of their 401ks, they won't have any benefit from the tax-free sources of income.
But because they like to spend, they will pay 21 to 27 percent every time they make a purchase. There is no doubt their spending habits will change. If the economy tanks and one of them gets laid off, they might have to sell the house. If the economy is not doing well, who will buy their house and at what price?
Donnie and Susie Squeeze are about to be squished. Their tax bracket will have to rise in order to help pay for the new tax law, but since they have very little savings they really won't feel the benefit of tax free dividends and investment income. Since they are still accumulating, every time they buy a car, a dishwasher, etc., they will pay a hefty consumption tax.
Unfortunately, the thought of buying a house might be out of the picture since it too will have a 21 to 27 percent tax. Depending on whether the U.S. can stimulate the economy enough to pay for the war, they may be on the hook for the cost of war.
You "crapped" in Jim Robinson's "living room" (post 163). The mess you left behind has been cleaned up by the moderator. And all you can do is plead monkey see, monkey do. Grow up!
What's so difficult? You have no problem spewing the numbers as fact...present the facts.
BTW, Walter Williams also said a hurricane in Florida increasing the price of plywood for the entire country was a good thing for America...I know idiots when I see them thanks.
Tax incentive purposes?
Was there part of the phrase 'knock it off' you failed to understand?
Dead wrong. This is the person who stands to lose the most under the plan.
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S9, I wrote about those people who STILL have income coming in from interest on their investments. For MANY, this is into the millions of dollars. Those living off social security are among the lowest earners and as you say will be hurt the worst. My statement was NOT "dead wrong". A sales tax of any kind is designed by the wealthy FOR the wealthy. NOT for people on limited fixed income, or those who are just starting out. Peace and love, George.
Yep ole Water is an Idiot all right! LOL!
Be seeing ya Looie!
You know I thought my line about rolling over and taking like a Frenchman was pretty good.
Still no facts to back up the tired old line though huh.
As to "Water" (as you called him) he has a lot of room to talk about anyone being non-productive. My business has done considerable amounts of work for some of those non-productive accountants and even bankruptcy attorneys, but I've never done any for a non-productive know it all economist.
BTW, didn't you write that whiney 'I can't take it anymore' letter taxman submitted to the Ways and Means Committee? The one where you(?) gave up because you(?) couldn't cope with everything every other successful business has to cope with?...
If so, or even if not, is there any reason I should pay any attention to your un-informed essays on what businesses would do in any given situation, tax law changes or otherwise?
You know I thought my line about rolling over and taking like a Frenchman was pretty good.
So that's how you like it. Listen, I'm straight heterosexual and don't do the Frenchman thing so don't go getting any ideas.
Are you really a complete idiot or do you just play one on the web? The line was meant for you.
Looie you have been presented so many facts so many times by so many people it is pathetic! You have had your arguments destroyed so many times on these threads that you are a laughing stock yet you keep coming back with the same tired old B.S. again and again. Frankly I find that tiresome but, since I know that you have converted more people to my way of thinking than I ever could have, I guess it has been worth it!
BTW, didn't you write that whiney 'I can't take it anymore' letter taxman submitted to the Ways and Means Committee? The one where you(?) gave up because you(?) couldn't cope with everything every other successful business has to cope with?...
No Looie, it wasn't me, I'm coping quite well thank you.
...is there any reason I should pay any attention to your un-informed essays on what businesses would do in any given situation, tax law changes or otherwise?
What you call uninformed Looie a GREAT many find to be quite the opposite but, again, your obstinance and pure stupiditiy has been exposed for all to see and, quite frankly Looie I could care less whether or not YOU ever catch on! The NRST is coming Looie so you might as well get used to the idea!
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