Defining Moment #2 starts with a quote from the former Comptroller General of the United States, David Walker:
“We are heading for a future where we will have to double federal taxes or cut federal spending by 60%”.
The rapidly changing demographics of our country are going to impact everyone’s lives in our nation. Simply believing we are a great nation will not continue to make us one. To compete and survive we will have to change and that change may not come easy.
Alan Greenspan said:
“As a nation we have already made promises to coming generations of retirees that we will be unable to fulfill.”
Keep in mind, this was well before the last two years of IMMENSE additional spending by the Obama Administration.
That’s why Defining Moment #2 is critical to understand, it states that “this may be the lowest tax bracket you will ever be in.”
As you are reading this post, the U.S. Federal Government continues to spend more than it takes in from tax revenues. The debt in our nation is growing over one million dollars an hour. And it keeps going up.
What does that mean to every person in the United States? Well, in order to pay for this government burden every citizen in the country would have to pay about $174,000 or for every household $664,000 (as of September 2010).
The purpose of telling you this is not to scare you but rather to make you aware that all the conditions are in place for everyone’s taxes to increase.
We know this isn’t new information you but you can’t just take this for granted anymore. You must understand the importance of planning for not only the demographic changes (be looking for future posts on this very topic) but the serious problem our government has created for itself and exactly what it means to you.
Traditional thinking professionals may be willing to avoid this problem that is out there right now until it becomes a crisis for you. For example, are you still being told to defer your taxes now by contributing to a qualified plan (401k, SEP, IRA, 403b, etc) that will be most assuredly taxed at a higher rate later?
Times are changing and if you’re being told to just wait it out and see what happens, it is simply going to be too late to react to the problem.
Future taxes that you pay will be the largest transfers of your money that you will ever make. The size and amount of future taxes has not yet been determined but we do know that government debt will be a large determining factor.
You must not only understand this Defining Moment that this may be the lowest tax bracket you will ever be in but you also need to act upon that knowledge.
What if you in fact could be insulated against future tax increases and use your money tax free when you need it? Would it make sense for you to do a little homework for yourself? Truly, how much is that worth to you? Look, you’re more than welcome, and of course encouraged, to let it all play out naturally and see just how much the IRS gets…but personally, that’s not a strategy…it’s stupidity.
If you don’t have a plan to counter this Defining Moment then please understand, THE GOVERNMENT DOES!
We’ll continue to do our part in providing you as much free information and analysis as you need. But, you need to step up to the plate and ask some questions.
We call it Financial Caffeine. You’ll see why if you simply do your part and educate yourself.
Kelly O’Connor – firstname.lastname@example.org