Tax disincentive

There are two certainties in life: Death and taxes. And a third, “if it sounds too good to be true, it isn’t true”. But there is also another truth. Politicians, bureaucrats and their backers (the news media, bankers, billionaire investors, or celebrities), all stir up chaos for their opponents, whip up groups of like-minded people by pretending to care for them, and make all sorts of speeches promising better times ahead.


The only difference between death and taxes is that death doesn’t get worse every time Congress meets.

Will Rogers, via Brainyquote.com

While people my age have heard all this nonsense before and are less inclined to go along, the palaver is not meant for my age group. Psychological journals, in various published studies, revel in the obvious. Young adults between 18 – 27, are more idealistic, much less structured in goals, exhibit more fluid work ethic, and are more motivated by income “fairness” and other talking points they read on social media. By the time men and women reach their Thirties, with stable jobs, goals, and families, these issues, rhetoric, and ‘social-justice’ activism become much less an influence. But the common talking points in social media and in politics today is how unfairly wealth is distributed. As a child, I was raised that hard work, skilled effort, ethics and morals would, over time elevate my station and economic success. There was plenty of room for anyone to become wealthy and provide for their families without blaming and taking from others. What changed?

Paying their “fair” share?

In 2019, I fear that people who have contributed to the economic well-being of the country for the least amount of time or produced the least amount of economic goods and services are being made fools of, by the wealthiest, least added-value members of society: politicians and bureaucrats funded by taxpayers. It is not that young people are in any way less important or less credible in their contributions and feelings, but forty percent of the Congress is far wealthier than those they represent. While every taxpayer in the United States can voluntarily contribute more to fund the Government, donate to charities for causes they feel strongly, and volunteer to aid those they feel are under-served, are there any who voluntarily give more than they are legally required? But most demand that Government support causes and constituents that are better served through local donations. And despite all the rhetoric we hear, does any public servant reside in public housing, use public transportation, or donate salaries and perks to the underprivileged?

Many, like one of my old college buddies, are worked up frequently about the lack of fairness and greed exhibited by members of a certain American political party, though there is plenty of blame to go around. Tonight, I am more worked up by my miscalculation on our annual income tax returns for Federal and State. We owe a large amount of income taxes due to the change in the approved deductions and income limits for other deductions. This is due to the “Trump Tax Cut” enacted in 2018. Researching the new tax policy, there are two ends of the economic spectrum that are benefiting, though the wealthiest Americans are benefiting far more.

Who benefits from the new tax plan?

With change in the standard deduction, doubling it to $24000 for those who file a joint return, many do not have to file complex returns. While there is some who think that increasing the “standard deduction” will reduce the incentive to make charitable contributions by lower middle-income workers, the tax policy really changes the taxes owed by the higher wage households- reducing the graduated scale of highest earning workers from 39 to 37 percent. And if those individuals are business owners, the rate may drop to 20 percent.


The people are hungry: It is because those in authority eat up too much in taxes.


Lao Tzu

For those caught in the “middle”, such as older taxpayers whose grown children are no longer family deductions, their seniority at work may elevate their incomes to higher tax brackets, and all the expenses of living and home ownership, there are disincentives to continuing to be an employee. But retirement also may come at a cost. Withdrawals from qualified retirement plans prior to age 59.5 incur income taxes and penalties. Some states like California tax retirement pensions, and with public service pensions largely unfunded, these states increase taxes to provide benefits and sacrifice the maintenance of infrastructure – roads, schools, and vital services.

Entrepreneurs and tax sense

Like many, I chose security of being an employee over most of my working life. But being a “worker” and not a “business owner” in 2019 has its tax disadvantages. Fair, ethical, and legal provisions used in the last twenty years have been significantly changed. While younger workers at lower wages and with young families may find some benefit from new tax provisions, others in the “Middle Class” are not as fortunate. Older, still working, married adults with now-adult children, who may still be providing for certain of their needs – no longer can claim them as deductions for tax purposes. Those fortunate to own homes in high property tax states, are limited in the amount they can claim federally- basically paying taxes a second time on the same income. Others, such as small business owners have complex tax rules to follow. The “Trump Tax Cut” seems to be flawed.

Some regulations should have come with bold print. With retirement savings such as employer 401K plans, IRAs and healthcare savings accounts available, these come with certain stipulations. Pre-tax income placed in flexible health spending accounts must be used within the calendar year or are lost; certain employer health plans can place pre-tax earnings in an account which can grow year after year, even into retirement, but must be used for medical expenses – or are taxed heavily. And for higher wage earners, traditional Individual Retirement Accounts, money invested for the purpose of reducing income taxes does not provide the immediate benefit sought.

The wealthiest Americans are fairing a lot better in 2019 than before. While true that the top 20 percent of all wage earners contribute the largest share of the revenue to fund the Government (50 percent of working Americans pay little income tax, while three percent contribute most of all), the overall taxes for those wealthiest Americans – many of whom are business owners – dropped significantly. I’m beginning to think that wealthy politicians are being disingenuous. They are not feeling nor acting in private like the outraged they claim to represent.

If people want to participate more fully in the “American Dream”, operating a successful business seems to be the vehicle to do so in 2019 and into the future. Except perhaps in California, or should the country decide to follow the anti-capitalist and anti-constitutional policies that have been voiced since the President’s election. A look at statistics indicates that the country is not in jeopardy of an economic crisis as some suggest. In the United States in 2017, the median family income was $61,000; in California, $81, 000, according to the US Census Bureau. While there are many who are at the extremes in California and elsewhere, there are many who have gained wealth and property through operating successful businesses.

Paying closer attention to income tax, balance sheets, and government policies that affect income is necessary. But that comes with age and the acquisition of property. All the rest is just politics.

Sandcastles

a tale of three citizens

“A house divided against itself cannot stand.” I believe this government cannot endure, permanently half slave and half free. I do not expect the Union to be dissolved — I do not expect the house to fall — but I do expect it will cease to be divided. It will become all one thing or all the other.” Abraham Lincoln

https://www.goodreads.com

Allen

As you sip a latte at Starbucks, feeling outraged by a President who apparently does not share your social conscience, you wonder how the country has become so brazenly racist and homophobic. While you have not seen any negative impact to your paycheck nor fewer clients to your business, the economy is horribly worse because others are earning significantly more. You did not vote in the Presidential election, though you like what you hear about the new Congress: a Muslim woman and a Green social media-savvy gadfly. When not supporting gender-equality pastry shops, you purchase organic, locally-grown produce at Trader Joe’s. You buy Emerging Markets coffee beans online from a group that supports Guatemalan children. And you truly believe your Tesla, Prius, or Audi lessens your carbon footprint.

Yrena

As an immigrant who saved up the required fees, filed for the visas and immigration forms, and emigrated to her new country according to the laws and practices of each nation, you are diligently working to learn the language, customs and history of your new home. You know your ethnic community in the area you have settled have members – family and extended family perhaps- who live in violation of the law. Some overstayed their student visas, and other came across hiding in a van or in leaky boats that beached one moonless night. You are working two jobs to pay for your daughter to attend community college. She will become the first college-educated member of your family. Your son is learning to be a mechanic after school. When the television, newspapers and the Internet declare that you support wholeheartedly the new ‘migrants’ and see them being pandered to by politicians and journalists, you are conflicted, upset, or angry. And your family are not “hyphen” Americans. You are American.

Cole

As an Iraq War veteran, you do not understand people who hate you sharing your opinions, and do not financially support veteran suicide-prevention projects but pay to hear activists demean America at college campuses. You are irritated by people who do not remember what happened on 9/11 or tell you how the current Administration is working with the Russians. Like your father before you, you are teaching your son or daughter firearm safety and how to hunt for deer, elk, or boar. You may not be religious, yet you assert your rights as parents to approve what they are taught as curriculum. You know when you are being played by b.s. artists in government, the media and education – that was one of the skills learned from military service and especially from time in a war zone. You don’t trust politicians or bureaucrats. Not from any party.

Politics and personal loyalties based on ideology fluctuate over time. Human nature is flawed and subject to the same weaknesses. Politicians acquire power from citizens, and get more corrupt as the citizens get more aloof. Without unity, a house divided cannot stand. And observing all the past civilizations collapsed in the dust of history, the lack of unity of a people accelerate the incoming tide.

Thanks Pepsi, I’ll still drink Dr. Pepper

9c871-perfect-harmony
Coke: Nobody opposed singing  

One of the bloggers I follow posted on the recent Pepsi ad that features Jenner and scenes that bring up all the controversial issues in the USA today.  I appreciate reason and tolerance.   Some people are ‘offended’ by everything from colors to messages.  As a retired Navy Chief,  happily heterosexual man, a disciple of Jesus, and a California-born, social conservative, I probably offend some who have never met me.   Though educated by world -travel, technical and university scholarship, and nearly six decades of examining human behavior,  I lament the end to civility, tolerance, and nationalism.

The rub is to tolerate differing opinion – without shutting down the one who differs. That’s the real underlying message of the media and school programs which seek uniformity of thought along the guidelines they establish.  Pepsi and other companies, will test the wind and see that ‘inclusion’ is the marketing tool of today.

May I use pitbull dogs as a metaphor for the messages in that ad?   Some will hate that breed regardless of evidence.  If there are a million dogs that have some Staffordshire Terrier in whole or part, perhaps ten thousand have been exposed to dog-fighting abuse. Some people will examine each animal  individually, to see what they were exposed to and whether they can be placed with children or other pets.  Some want to exploit fear and doubt of the breed for power.   Some will see dogs abused to kill and maim as misunderstood.   Some will adopt pitties and then neglect them.   And if a community legally forces everyone to adapt by banning ‘pitbull’ ownership; by fining disobedience and by teaching that anyone who believes differently is maladjusted, can we still sing of “land of the free, and home of the brave”?

And so corporations – Pepsi, NCAA, NBA, and socialist governments- especially, the California legislature —  do not try to force my thinking or my life into your determination of ‘inclusion’.   While I will render to Caesar what is Caesars, I will not spend discretionary money on you.  I will follow Thoreau and Civil Disobedience.   I will join like-minded voters and oppose policies by the process we initiated in 1789 and worked well for 230 years.

Impressionable

When Al Qaeda terrorists attacked on September 11, 2001,  I was a 42 year old reservist; I was absolutely willing to go if called up.  One of my mentors while I was on Commander, Third Fleet staff (1997-99),  had been killed when the Pentagon was attacked.   While my unit’s signals analysts were mobilized,  as an electronics maintenance supervisor, I was not.   As the war continued, members of our larger community went into harm’s way and some died in combat.

While many young Americans today have been conditioned to think we are aggressors in many places,  they have no firsthand experience with people or places outside North America.   My peers and I have firsthand experience of the difficult, dirty, dangerous and often violent world people live in.  Twenty years ago, I had conversations and developed acquaintances while traveling around the Mediterranean, Bulgaria, Russia, Turkey,  Egypt, Israel,  Central America,  South America, and Asia.  Most of these relationships may have lapsed but people I know who still travel to those places know that the same struggles continue.   Every week we are witness to violence that occurs in the name of a religion or a faction that Westerners want to blame on secular causes.  Military members have been often marginalized by critics including academics and journalists for behavior or biases that may be exacerbated by tours in those regions.  I trust military service members understand  better than noisy college protesters and  Facebook ranters who complain from the comfort of the United States.

I’m first to admit that I don’t have boots on the ground exposure to the war in Afghanistan or Iraq.   My service in the operational theater aboard a Spruance -class destroyer occurred over 20 years ago following the combat phase of the Gulf War.  I was there when we launched 15 Tomahawks to destroy Saddam’s Intel center; it was retaliation for plotting to kill former President G.H.W. Bush.   But every IED, every homicide attacker against our troops and against civilians since the 1990s has been funded and armed, directly or through proxies, by the Iranians.  Some terrorists have used US arms we stupidly provided to extremists because the “enemy of my enemy is my friend”.  Today we are rejuvenating a relationship with the one democracy there – Israel.  Those politicians will not admit that just about every Islamic group we have given arms to in the past 40 years has at one time or another been used against civilians or against us.  When the terrorists were not Sunnis killing Shia or Shia killing Sunnis, they were blowing up soldiers, sailors, contractors, police and aid workers.  Only through constant training and force was any semblance of peace being fostered there.  And today, while we consider adding to the presence in that region, the entire Western European and Arab worlds are succumbing to a misguided and poorly implemented influx of refugees.   In the 1990s, we named the breakdown into factions and groups unwilling to assimilate into the culture of the host countries “Balkanization”.  This has certainly been seen to exist in many nations where the influx of Islamists have not assimilated.

Combat veterans have a unique position to support, refute, or respond to policies of the United States that engage us in conflict; however,   I think all veterans have a moral duty to protest when policies or bureaucrats fail to support those who returned from a conflict.   For more than thirty years, my friendship with a Vietnam combat veteran and scholar, whose acerbic commentary on all things involving politicians,  military affairs & particularly anything that can be ascribed to failures of the Republican Party – has continued as I respect someone who has been at the “pointy end of the spear”.   Another veteran, a retired USMC Colonel also has acerbic commentary, but would likely be diametrically in opposition to the other combat veteran.  This continues to keep me mentally sharp to engage in debate.

I hope to add my voice and watchful eyes to call the Government to account for many shabby incidents of treatment for honorably serving veterans.    I am hopeful that a website for combat veterans,  The War Horse,  started by a combat veteran of this most recent conflict will help veterans.   I have a son serving in the Army today and know that the culture in the military often puts the military family at odds with young people who have not experienced military service.    I am also leery of the biases and motivations of journalists and academics who generally have been critical on all things American, who now promote a combat veteran’s experience toward journalism and academics.    Yet I will add this to my reading list on conflict, coping with the aftermath, and the promises kept and broken by the nation that sent them to war.

 

 

40, 7 and 2: lucky numbers

I moved my first attempt at blogging from Blogger to WordPress today.  My other blog  are observations of daily life mostly reflected in adventures and sometimes misadventures of my two dogs.   This blog,  Truths, Half-truths and Sea Stories,   I hope you will find entertaining and thought-provoking.    It is my second blog hosted on WordPress, and expresses more salty insight into daily events.

I retired in April 2010 ( 7 years ago),  after combined Active, Retired, and Inactive service of more than 32 years in the United States Navy.   I took my initial ASVAB aptitude test while the Vietnam War was all but ended ( 1975), entered bootcamp when Jimmy Carter was President (1977), and then re-enlisted into Active Duty after George H. W. Bush succeeded Ronald Reagan as President.  Since I retired as a Reservist,  I am eligible to claim a pension starting at age 60 ( 2 years from now).