Starving the Beast
With the failure of Boehner's "Plan B" it's looking more and more like we're going over this so-called "fiscal cliff," although it's nothing of the sort when compared to what lies ahead in our near future. Because we have a spending problem and not a revenue problem, worthless "solutions" that raise taxes without any real spending cuts will only send us over the looming debt cliff at a slightly different point in time, but over it none the less.
That said, now may be a good time to get your affairs in order?
It's clear that the burden of higher taxes will ultimately fall upon all taxpayers as there simply aren't enough "rich" to satisfy the enormous appetite of Obamanomics. Whatever the outcome of current negotiations, it may be time to try a variation of "starve the beast" as a way to force politicians to deal with this out-of-control government spending problem sooner rather than later.
There is a way to do this that would actually help individuals in the process and it could be done without an act of Congress. Critics may point out that this method won't halt the growth of government as the "beast" will still find other ways to satisfy its appetite, but its level of consumption under President Obama is now so gargantuan that it will only lead to further deterioration of its health and an even earlier death if not altered soon.
To help "starve the beast," perhaps more small business and middle class taxpayers should heed the advice of progressive judge Learned Hand:
Anyone may arrange his affairs so that his taxes shall be as low as possible; he is not bound to choose that pattern which best pays the treasury. There is not even a patriotic duty to increase one's taxes. Over and over again the Courts have said that there is nothing sinister in so arranging affairs as to keep taxes as low as possible. Everyone does it, rich and poor alike and all do right, for nobody owes any public duty to pay more than the law demands.
The "rich" already understand this, which is why they move their money into tax shelters or take other tax-reducing measures, just as progressive CEO Eric Schmidt does by sheltering Googles and Googles of dollars in no-tax Bermuda. This is but one reason why higher taxes on the wealthy often result in less revenue to the Treasury. Much of Obama's campaign was based upon the demonization of Mitt Romney for utilizing this very same strategy which just shows that one must be a liberal to be given a free pass for its usage. And trust me; wealthy liberals use it in order to retain every penny possible despite what they say publically.
But there are also tax-saving options available for small businesses and middle class workers which are often not utilized to their full potential. Opening an IRA retirement account, buying a health insurance policy and donating unused items to charity are just a few examples of ways to help "starve the beast" and offset some of the would-be gains to the Treasury when taxes go up (please retain the advice of a CPA though, as I am not one).
Many small businesses and middle class taxpayers currently miss out on these and other potential tax saving measures because, even though they would ultimately benefit financially from such options, extra money (which may or may not be available) needs to be spent up front to gain these deductions. But if much of this money is now going to be lost to the black hole of government anyway, why not arrange your affairs so as to make sure more of this money stays in your own coffers?
It's time for all producers to take full advantage of every legal tax-saving measure possible in order to help "starve" this enormous beast. This would have the added societal benefits of individuals being better prepared for the real fiscal cliff as well as being less dependent upon government.
There is talk of politicians confiscating our retirement plans but fortunately -- for now -- the U.S. government is unable to move quite as quickly as the communist government of China is and "get it done," as General Electric CEO and Obama Jobs Council Chairman Jeffrey Immelt seems to long for.
Scott blogs at www.politiseeds.com