Showing posts with label Obamacare. Show all posts
Showing posts with label Obamacare. Show all posts

Wednesday, April 15, 2026

Tax Day

Tax Day


"Tax Day," typically the 15th of April every year since 1955, is the day where that most odorous of civic duties compels citizens, residents, and even those Americans living far abroad to offer "their fair share" of taxation to the municipal, state, and federal governments.

For those who pay, I salute you. The annual redistribution of income, wealth, and labor should be recognized as the blight it has become on the growth of this nation; economically, socially and morally by the establishment of a National Holiday.

The flag should be flown at half staff on Tax Day to recognize the continuing sacrifice millions of taxpayers make to their government(s) annually. Sadly, this sacrifice is largely wasted by that very government. Fraud, waste, and abuse have been well-documented at every level of government and continue largely unabated daily. By some estimates, nearly 80 cents of every dollar is wasted.

The Founding Fathers were geniuses...they knew government would ultimately grow to become both uncontrollable...and unaccountable. The U.S. Constitution was specially written NOT to have income taxes. Indeed, an argument can be made America was born of resistance to taxation. Yet there is no creature more oft-maligned than your everyday taxpayer.

The everyday taxpayer goes to the back of the line, every time. Some 250 years ago this country began with NO income taxes at any level and seemed to do just fine, but government itself was hungry for the wealth and power the people had accumulated and so the cycle began again...this time cloaked under "fairness."

In 1913 everything started unraveling with the passage of the 16th Amendment which was an answer to the lowering of tariffs. Prior to this legislation, America ran on tariffs. Goods were taxed and consumers ultimately paid these taxes based on their consumption of said goods. Nobody was forced to buy certain goods or services, like say healthcare.

The 16th Amendment, however, changed everything; now a person would be taxed on BOTH their consumption of goods (tariffs did not go away completely) AND how much INCOME they derived on an annual basis.

"Progressive" Democrats at the time sold this to their constituents as perhaps the first instance of "tax the rich." It would not be the last, and it ultimately failed as every other attempt has, but not before the 16th Amendment shackled millions of Americans to a new form of economic slavery.

Initially pitched as "only 1% of people will be affected," the new income tax spread like wildfire from the Federal level, to the State level, ultimately to the municipal level. This obscene cash gusher was the beginning of the end for low-friction growth. Insidious like a cancer, and just as malignant, the income tax spread both horizontally and vertically across every part of the body of society.

In 1913 the original plan was to apply a 1% federal tax on all incomes over $3K (or $4K married.) A graduated scale rose to a maximum marginal tax of 7% on incomes overs $500K. There were no State taxes at this point. And taxes were paid annually. Consider what this has become over the next 100+ years.

First, vertical layers of taxation were added: local/municipal taxes, State taxes, and Federal taxes. Next taxation expanded horizontally like a locust plague...licenses, sales tax, usage tax, gas tax, water tax, etc. ad infinitum. Of course the brackets themselves expanded to capture nearly everyone. Remember, $3,000 in income in 1913 is equivalent to $300,000 today. So imagine everyone today making $300,000 (or $400,000 married) having ZERO income tax at either the Federal or State level!

Finally, the SPEED of taxation increased to zero. Zero? Correct! What once was paid annually in arrears, is now paid instantly at the point of sale. Who says the government is not efficient? They have compressed time to zero! That is just how far we have "progressed."

And the rates themselves? 1% is long gone. The lowest rate is now 10%. That's right, 10X the original lowest RATE! The moment someone starts to make a little bit more money their silent partner is also making a LOT more. The Federal Tax rate now peaks at 37% for those making over $626,000 (married.) Then add in State taxes, with California topping out at 13%. Add in local/muni taxes, sales taxes, gas taxes, etc. and high earners can easily drop 60% of their income to taxation.

What does all of this taxation support? Sadly, larger and larger government that wastes more and more of your money. The problem is that the taxpayer does not have a champion. Congress is tasked with SPENDING our money so it is pointless to approach them. The Executive Branch is the beneficiary of the spending and the Judicial Branch enforces the spending via "interpretation" (read Obamacare.) 

What can the average taxpayer do? Nothing. What can the savvy taxpayer do? Become an expert on the tax code to maximize your situation. There is a reason why the rich hire teams of CPAs. You may not need a team, but becoming knowledgeable on the tax code, geography, and strategy can help immensely.

For most, the "shakedown" will continue for a lifetime, and beyond if you do really well. Careful planning and execution can help sharpen the blade so the various immortal government entities cut off only what they are legally entitled to and not an ounce more. Sadly, after 250 years we have become a nation of taxation without representation. Happy Tax Day.



Saturday, July 23, 2022

ACA Gravy Train

ACA Gravy Train

In the annuals of history, there has naught been a bigger Gravy Train than the passing of the "Affordable Care Act" on March 23rd, 2010. It is a day that will live in infamy.  Imbued with the power of nation-states by the Sun King Barrack Hussein Obama, health insurers were granted pass-through monopolies.

Consider the charts above of the four largest remaining publicly traded health insurance companies. Almost to the day of ACA passage there has been a meteoric rise in their respective share prices. How is this possible? Amazing care? Deft management? Sweeping reform? Oh no dear readers, these companies have the implicit power to charge whatever the market will bear...and if you can't afford it, the government will pay your premium, but if you can afford it and DO NOT pay, then you can go to jail (the government of course determines "affordability.") Got that? 

So while Chicago burns this summer (both figuratively and literally), its most famous son, who vowed that "the South Side of Chicago is my Martha's Vineyard," is inking yet another lucrative media deal at his estate in...Martha's Vineyard.

The hypocrisy is as thick as our vast oil reserves that can't be pumped. In terms of corruption and maleficence perpetrated on the American people, the ACA ranks high. Consider the fallacy of mandating purchases, at any price, from private companies with geographic monopolies, of a product you may or may not use, but you are required to buy less face the loss of your freedom. Preposterous.

If there's one thing we've learned at ILAF though, crazy pays. Consider all the innovation in the tech space over the past decade. Or in EVs. Or in just about EVERY industry. The only thing healthcare seems to have innovated is consolidation, increased premiums, and higher share prices. Now that dear readers is true innovation! 


Friday, February 4, 2022

Fighting Inflation

 Fighting Inflation


Americans will be fighting inflation for the next 3 years as the Biden Administration is pursuing higher taxation, increased regulation, and significantly more spending without driving growth. These three elements will combine to cause lasting and harmful inflation that stifles the economy. What can you do?

Financial farmers and readers of this blog, like most fighters, don't want to ever get caught on their heels. Most studies indicate the vast majority of Americans are only one financial crisis away from bankruptcy, and typically this ruin is caused by not the loss of a job, loved one, or even the stock market. Rather this "risk of ruin" is directly related to a medical emergency. So rule one: To avoid the greatest risk of ruin, make sure you have medical insurance! If you're a worker, under Obamacare you're most likely paying for multiple people not in your immediate family too. That's just how criminal medical costs have become.

Next, inflation eats away at your earning power and cash value. So make sure your salary is keeping up or exceeding inflation; if the government is saying inflation is at 7% assume it is at least double. So you should be negotiating a 15% raise THIS YEAR to make up for lost buying power. Make sure you get you yours. Amazon is, they just jacked up Prime membership by 17% to $139/year!

Lots of cash sitting in a bank or checking account? Hmmm...well a certain degree of cash is good, no doubt. But are you really losing 1-2% of buying power PER MONTH by having a lot of cash in an inflationary environment? Also who can seize your cash on a whim? (Hint: They take some of your paycheck every month too.) Rule Two: Mind your cash. That might involve old school mattress stuffing or burying. I kid you not. Physical gold makes cents (see what I did there?) to me too.

Finally, what isn't affected by inflation? Nothing. That's right. So look for assets in terms of ownership percentages increasing, increasing cash flow, alternatives to actual cash (it still takes a LOT of effort to mine a troy ounce of gold), and companies buying back their shares all benefit you. Real estate becomes a double-edged sword in the sense that since rates will increase, demand drops for housing. So buyers MIGHT pay less, but their loans cost more. But does a 30-year mortgage @ 3% really matter when inflation is running 7-14%? Seems like a decent bet. Plus you get to homestead and live there. That's nice.

Until inflation is tamed, which I don't think happens in the next 3 years, investors need to be on their toes. Nothing kills work and productivity more than inflation. It is the "silent killer" which reduces the value you receive for labor, innovation, toil, everything. So increase YOUR price and look for assets that pay you to own them. Be wary of leverage. Embrace quality cash flow. Stay in the ring and land some punches!