According to the Office of Management and Budget, in the first 186 years of this country where records were kept, the total amount of money spent by the federal government was $3.8 trillion.
Over 186 years, that doesn’t seem like a lot, but still it is trillions of dollars.
What’s the projected spending for the current fiscal year? $3.7 trillion dollars with a projected deficit of $1.4 trillion.
That means in one year we will spend almost as much money as the first 186 years in total!
Even worse, according to the Tax Policy Center, a non partisan research group, simply raising taxes on the rich won’t help close that gap. Doing so may be popular politically, but won’t bring in as much money as people think.
The cure, unfortunately, is higher taxes since Congress doesn’t want to cut spending. The TPC report published in January calls for a number of items, including letting the Bush tax cuts expire and not patching the alternative minimum tax each year.
Tax laws are about as exciting as watching paint dry so what does that mean? Higher taxes all around for regular folks like you and me.
What can regular people do about this?
Well, for starters, are you taking advantage of every tax break available to you? No I don’t mean maxing out your 401(k) contributions – that’s just trading one problem for another.
Are you saving in the most tax efficient way while earning a competitive return?
And while we’re at it, is your money working hard for you? I hope you don’t expect a refund this year (I hope you don’t have to pay either!). All that means is that you gave the government an interest free loan and cost yourself some money.
Tax decisions shouldn’t be the only factor in making choices with your money. But with tax rates expected to rise, it does play a big part.
After all, do you really want to pay more in taxes than you have to?
Answer to last week’s trivia question: C – 2001. At the end of Clinton’s presidency and the start of George W’s, and helped by the economy, the government posted a small surplus.
This week’s trivia question: According to the Federal Reserve, at the end of 2009, what was the average amount of credit card debt help by people? And how much did credit card issuers make in penalty fees during the year?
A - $7,800; $20.5 billion
B - $11,600, $31.9 billion
C – $24, 100; $40 billion
D - $30,900; $51.2 billion
