Tax Cuts Expire - Damn Fiscal Cliff

Well, it's like a fire sale, no matter who wins the election your going to see higher taxes. If Congress does nothing, tax rates on income, capital gains, dividends and estates will increase on ordinary income would reach 39.6 percent, up from 35 percent, and the top rate on capital gains would be 23.8 percent, up from 15 percent. That is why you see so many McMansion homes on the market today!

About 88 percent of households would see a tax increase. Those who would avoid it include people who don’t have wage income subject to the payroll tax and who don’t make enough from other income to pay taxes. This group includes low-income senior citizens on Social Security. The estimated $536 billion tax increase will have a potential economic effect of tax increases, particularly for business owners who report their profits on individual returns. How the hell is that going to create more jobs?

Congress fiscal cliff pushing you off?  It's not clear yet, for the numbers are not in, for the simple reason they won't be starting on this till tomorrow after the election. The Republicans want to keep the tax breaks but who knows? We're going to find out, let's face it the fiscal cliff is Congress, they're broke and were going to pay! The top statutory tax rate on ordinary income would reach 39.6 percent, up from 35 percent, and the top rate on capital gains would be 23.8 percent, up from 15 percent.

History of the Income Tax in the United States

Source: Tax Foundation

The nation had few taxes in its early history. From 1791 to 1802, the United States government was supported by internal taxes on distilled spirits, carriages, refined sugar, tobacco and snuff, property sold at auction, corporate bonds, and slaves. The high cost of the War of 1812 brought about the nation's first sales taxes on gold, silverware, jewelry, and watches. In 1817, however, Congress did away with all internal taxes, relying on tariffs on imported goods to provide sufficient funds for running the government.

In 1862, in order to support the Civil War effort, Congress enacted the nation's first income tax law. It was a forerunner of our modern income tax in that it was based on the principles of graduated, or progressive, taxation and of withholding income at the source. During the Civil War, a person earning from $600 to $10,000 per year paid tax at the rate of 3%. Those with incomes of more than $10,000 paid taxes at a higher rate. Additional sales and excise taxes were added, and an “inheritance” tax also made its debut. In 1866, internal revenue collections reached their highest point in the nation's 90-year history—more than $310 million, an amount not reached again until 1911.

The Act of 1862 established the office of Commissioner of Internal Revenue. The Commissioner was given the power to assess, levy, and collect taxes, and the right to enforce the tax laws through seizure of property and income and through prosecution. The powers and authority remain very much the same today.

In 1868, Congress again focused its taxation efforts on tobacco and distilled spirits and eliminated the income tax in 1872. It had a short-lived revival in 1894 and 1895. In the latter year, the U.S. Supreme Court decided that the income tax was unconstitutional because it was not apportioned among the states in conformity with the Constitution.

In 1913, the 16th Amendment to the Constitution made the income tax a permanent fixture in the U.S. tax system. The amendment gave Congress legal authority to tax income and resulted in a revenue law that taxed incomes of both individuals and corporations. In fiscal year 1918, annual internal revenue collections for the first time passed the billion-dollar mark, rising to $5.4 billion by 1920. With the advent of World War II, employment increased, as did tax collections—to $7.3 billion. The withholding tax on wages was introduced in 1943 and was instrumental in increasing the number of taxpayers to 60 million and tax collections to $43 billion by 1945.

My friends, that is why seen on your birth certificate your name is in all CAPITAL LETTERS and on every document you sign. You are treated as a corporation when you were in school you learned to write your name as one capital letter first then lower case after. All capital letters are not the real person, look this up. This is known as your STRAW MAN  (I'll make this fun).

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I said this before there is no election this year, no society has survived the test of time, we are going to be no different. So enjoy a new song from the Stones, kind of fitting for the times. Reason being Florida had not counted all the votes even though the election was over but all the electoral college votes were counted, the rest would be counted by Saturday. The 91st Congress took this on and tried to abolish electoral vote, it did not pass. This was OK in the day when few people lived in many states and those with large population would dominate the vote, you need a balance. The electoral vote worked, also the public was not informed back then as to now. The electoral college can appoint a president but the public needs to vote for them. Those who stood in line down in Florida,  how does it make you feel the election was over and your vote was not counted yet?   

2nd term for President Obama

Well Obama wins,  Wall Street will be down tomorrow. Wall Street invested millions in Romney's candidacy in large part because Obama has antagonized the financial community with calls to raise taxes on the wealthy as part of any deficit reduction package. In addition to the Obama victory, Democrats will maintain control of the U.S. Senate. That means the agenda of the conservative House of Representatives has a much harder path to realizing its policy hopes of big tax and spending cuts. We're going to find out. 

Best to you Pod!

TheRollingStones