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I have been talking about this for a little while now because I want people to be aware of it. And also aware of the facts about how our government in the USA operates..
The so-called obama tax cut for 95% of Americans was introduced to HIDE a rather large tax increase that has already occurred.
The federal withholding tax went up for everyone this year.
The 2% cut to Social Security withholding serves two purposes.. It allows obama to say, truthfully, that he gave everyone a tax cut. And, number two, it protects tax refunds "for this year". So the sheeple who use large tax refunds as a savings account will still see those large refunds this year. Even though they have already experienced a tax increase that they are heretofore unaware of. (You KNOW you shouldn't do that because it's an interest free loan to the government. Pay YOURSELF first!)
The 2% Social Security tax cut vanishes after this year. However the increase in federal withholding will remain in effect. This means your taxes will increase by around 2% next year. This even though all you have heard about from the government and the main stream media is that you received a tax cut!
This brings up another issue that really bothers me about this..
Most all economists have been and continue saying that Americans have that 2% Social Security tax cut available as additional expendable income (an average of $1,000.00 to $2,000.00 this year). These economists also often state that the aforementioned tax cut should help consumer spending this year.
The increase in the federal withholding tax was designed to hide the fact that a George Bush tax deduction was discontinued last year. The disappearance of that Bush tax deduction would have caused tax refunds to be smaller this year. Which would negatively effect consumer spending. So.. the federal withholding tax was increased so sheeple, who depend on large tax refunds, would overpay their taxes to the federal government this year which would hide the elimination of the Bush tax cut by leaving federal income tax refunds pretty much unaffected.
So. The 2% Social Security tax cut this year in effect hides the fact that the federal withholding tax went up.
When that tax cut is eliminated next year your taxes will go up equivalent to the amount of the increased tax withholding.
So playing with the tax code results in the federal withholding tax held against the 2% Social Security tax cut = very close to a wash for most people, depending on income and tax bracket. Compare your net check amount now to the same period last year and you will see that it hasn't gone up or down much at all but should be relatively close to the same.
So my question is this..
Do professional economists not KNOW these important facts? Which would bring the intelligence of the entire industry into question. (If they have such ;)
Or DO they know about it? Are they fully aware of it and in collusion with the federal government to hide the facts from the American people? Which would make them complicit in the cover-up of a tax increase. Which would bring the integrity of the entire industry into question. (Again, if they have such ;)
Either way professional economists, in this particular instance are either stupid or intentionally obfuscating the truth.
I know this post is somewhat complex and difficult to understand. However, I suspect that a complex tax code is also by design. The tax code can easily be used to obfuscate the truth.
Obviously the USA now finds itself in dire need of additional revenue via tax increases. What better scheme than this by which to conceal such a tax increase?
So sheeple will have more spending money this year, which is apparently the intended effect of this tax code Tom foolery, since their refunds will remain about the same with a tax increase already on the books for next year.
So economists are not exactly lying about the $1,000.00 to $2,000.00 of extra spending money for consumers this year. They just won't see it until the end of the year in the form of a tax refund.
Greg
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