How to Never Need to Keep Tax Records Again


So today is tax day in America yet again.  Sometime in the last few months you probably had to gather your receipts, W-2 forms, and 1099’s.  You had to buy some tax software or set up a meeting with an accountant.  Either way, you were out at least $100 because the forms are too complicated to someone to just fill out.  You then spent several hours away from your family filling in information.  You probably also had to call various places for receipts, send money or letters of authorization to transfer money into IRAs and HSAs before the deadline.  You then needed to go to the post office and stand in line to send in your forms, or sent them in electronically despite warnings from the IRS that many tax returns are being stolen each year when filed electronically and the information used for identity theft.  You do all this because the law says you need to in order to pay your taxes.

If you’re like most people, you probably also got a big refund check back.  You may look forward to receiving that check, and maybe you use it to pay down a credit card bill or just blow it on something, but realize that is your money that the government had all year-long without paying you a dime of interest.  Maybe you paid credit card interest all year because Uncle Sam was holding onto that money.  At 15% per year, that’s $600 per year you are losing if your refund is $4,000.  Even at $2000 per year, that’s $300 you are losing.


Hot DVDs from Amazon

There is a better way and it’s called the Fair Tax.    With the Fair Tax you would receive your entire paycheck each month with no deductions taken out so your paycheck would be at least 20% bigger.  You wouldn’t pay a dime in taxes until you bought a new item, at which point you would pay a sales tax.  That would be the end of your obligation as far as taxes went.  You wouldn’t need to save any receipts.  You wouldn’t need to file anything.  You would pay at the cash register and then go on with your life.

One argument against a sales tax is that it is regressive since people who make less spend a higher percentage of their income.  This is also addressed in the Fair Tax with a prefund.  Each year (or each month) everyone who works would get a deposit in their accounts from the government to cover a portion of the sales tax they pay.  For example, if the Fair Tax is 20% and you wanted to make sure no one who made less that $30,000 paid anything in taxes, you would issue a prefund of $600 per year to everyone.  Then the prefund would cover the taxes on the first $30,000 you spent.  Only those spending more than $30,000 per year would then be paying taxes.  You could set the prefund as high or as low as you wished depending on how much you needed to collect in taxes and at what income threshold you wished people to start paying taxes.


Best Sellers from Health and Personal Care at Amazon

Another argument is that people don’t want to be paying a 20% sales tax (an estimate for the sales tax that would be needed to raise the same amount of money as is currently raised through the payroll taxes and income tax).  Realize first of all that you are already paying 12% or more of your income out before you get your check.  Including the employer match for Social Security and Medicare, you are paying around 20%.  This is not just on the money you spend, but also on the money you save.  It is also expected that because retailers will no longer need to spend as much money on tax planning, and because they would no longer pay income tax on their earnings, that prices would fall, perhaps by enough to cover most, if not all, of the sales tax.  It is very likely that the government will be raising the same amount in taxes while you are paying a lower percentage of your (increased) income in taxes.

If this sounds great to you, go to www.fairtax.org. learn more, and learn how you can help get the Fair Tax passed.  Let’s have 2016 be the last year you need to spend time away from your family filling out forms.

What do you think?  Don’t like the Fair Tax?  Why not?  What do you think is the best way to collect taxes? Please leave a comment.


Get PlayStation 4 Games at Amazon

 

To ask a question, email vtsioriginal@yahoo.com or leave the question in a comment.

Follow on Twitter to get news about new articles. @SmallIvy_SI

Disclaimer: This blog is not meant to give financial planning advice, it gives information on a specific investment strategy and picking stocks. It is not a solicitation to buy or sell stocks or any security. Financial planning advice should be sought from a certified financial planner, which the author is not. All investments involve risk and the reader as urged to consider risks carefully and seek the advice of experts if needed before investing.

Why Are Republicans Afraid of Free Market Healthcare?


The United States has fantastic healthcare.  We have all of the latest machines and gadgets.  You can get in and see a doctor often the same day, but certainly within a couple of days if needed.  There are also starting to be walk-in clinics at drug stores and other places where you can go without an appointment for simple things like ear infections and poison ivy rashes.  There are readily available hospitals and emergency rooms for more serious events.  Finally, there are all sorts of new drugs coming out all of the time that treat virtually everything that makes ailments that were once considered just part of growing older a thing of the past.  Certainly the care available is among the best in the world.

The issue is not healthcare, but the way in which payment has been made for healthcare for the last 40 years or so that has made the sticker price very high and the amount that people are paying increase faster than inflation.  The issue is that prepaid healthcare, in the form of cover-all health insurance plans, has become a standard benefit at work. It has also become a common benefit provided by the government for those who don’t work or who have jobs that don’t provide health insurance.

Insurance is a good thing to buy and part of a free-enterprise market.  Most people don’t have an extra $50,000 in the bank to pay for their and someone else’s car and injuries should they get into a car accident, so they buy car insurance that covers the costs should it happen.  People also don’t have an extra $200,000 to replace their home should a tornado wipe it out, so they have home insurance.  In both cases people don’t pay the full price of a car accident or a home each year when they buy the insurance – they pay a small fraction of the price based on the amount that the insurance would pay should an event occur and the likelihood that it would occur in any given year.  Insurance works well for events that are unlikely to happen, but that would be financially devastating should they occur.  This keeps the cost affordable but makes sure the money is available for the few people who use it each year.

Find a great new cell phone here

Accessorize your cell phone

Free your mind and your surfing – no contract phones and devices

What is called health insurance in the US includes an element of insurance that covers things like liver transplants and hospital stays that are unusual, but it also covers doctor’s visits, prescriptions, and labs that will happen for most people each year.  This means you are paying the full cost of these procedures, plus a bit extra to cover administrative fees and profit for the insurance company.  Plus, since people are paying for everything regardless, and it will cost the same whether you go to the doctor fifty times or three times, and whether you get the name brand drugs that see for $500 per month or the generics that sell for $15 per month, people tend to use healthcare more and not take cost into consideration in their choices.  This then causes the cost of insurance to rise.

Another factor is that health insurance makes pricing very opaque.  The sticker price for a doctor’s visit might be $150, but the doctor might have an arrangement with the insurance company that they’ll take $40.  An x-ray might have a sticker price of $500, but the insurance pays $75.  If you ask the doctor, you might get similar prices, or pay just a little more or a little less, if you’re paying cash.   If you’re dealing with a hospital it is more difficult to negotiate since they’re trying to get as much as they can to of each patient, so their willingness to cut a deal will be based in part on their expectations of whether you’d be able to pay the full amount.     Because a lot of people pay nothing at the hospital, or the hospital gets less than the cost of care from the government Medicaid or Medicare programs, they charge others more to make up the difference.  They then claim that the ones who don’t pay are getting “charity care” from the hospital, when really the patients who pay out-of-pocket or use insurance are paying the their bills, and they don’t even get to deduct the gifts from their taxes.

                 

Get pet supplies for less on Amazon


Baby supplies – just sayin’

Free-markets, where there are many consumers and many providers trading with each other, would work with health care just as it works with everything else.  If everyone just paid out-of-pocket and didn’t use insurance except for major events, the costs would immediately drop to be in line with what the insurance companies pay or even less since the doctor’s would no longer need to spend time and money sending in insurance claims.  If everyone were paying for themselves, costs would decline since you wouldn’t be paying the costs that others didn’t pay, just as it would be a lot more expensive to go out to eat if you were paying for the tables around you rather than just the cost of your food.  Prices would also start to be more transparent,  as medical centers started to advertise their prices and specials to attract customers.  Those that didn’t provide their real pricing would lose customers since people wouldn’t put up with not knowing the price before they bought things and being surprised at the end just as they wouldn’t shop in stores that had no prices until they got to the register.  Prices would drop as providers looked for ways to be more efficient and cut their costs to avoid being undercut by other providers.  Manufacturers of medical devices and drugs would also look for ways to cut costs if they were competing for consumer dollars rather being able to bill insurance companies since they would not be able to sell drugs that cost $100 per pill.


Get a new outdoor living room for spring

Despite the vast evidence that free-enterprise makes markets more efficient, lowers prices, and improves customer satisfaction, Republicans are scared to go to a free-market system.  Rather than simply repealing Obamacare and shifting to a market system over a reasonable transition period as they’ve said they wanted to do for the last six years, they want to go to some sort of Obamacare 2.0 that still has all of the collective payment for care but without the things that sort of make Obamacare work like the requirement that everyone get insurance.  We could be on the road to a great system where anyone who works a regular job would worry about getting healthcare no more than they worry about getting food.  Why the fear?

The answer is simple:

  1. Eliminate the tax break for providing insurance through work to encourage employers to simply pay their employees money and separate healthcare from work.
  2. Require everyone to put away money into a health savings account so that they have the money needed for healthcare so that others don’t get stuck with their bill.
  3. Make the health insurance market free, allowing insurers to sell anywhere they wish rather than being confined to certain states.

Do these things and watch healthcare costs drop as the free-enterprise system does its magic.  There is no reason to fear.

So what do you think?   Please join the conversation and leave a comment.  Contact me at VTSIoriginal@yahoo.com.

Disclaimer: This blog is not meant to give financial planning advice, it gives information on a specific investment strategy and picking stocks. It is not a solicitation to buy or sell stocks or any security. Financial planning advice should be sought from a certified financial planner, which the author is not. All investments involve risk and the reader as urged to consider risks carefully and seek the advice of experts if needed before investing.

A Failure of Government and the United Airlines Passenger Debacle


There is probably few people who haven’t seen the absurd video of the passenger being forcibly dragged off of a United Airlines flight.  Obviously this was a grave public relations error by United Airlines, and I hope the man in the video gets a lot of money from them.  In business, you put the customer first.  Bumping passengers from the plane so that four employees could take the flight was, in a word, stupid.  United could have:

  1.  Not overbooked the flight.
  2. Offered more money for people to volunteer to wait for the next one. (Someone would have volunteered if enough money were offered.)
  3. In the worst case, rent a car and have your employees drive the four hours to Louisville for the flight the next day.  As it was, they probably took longer to get there than they would have driving.

Hot DVDs from Amazon

The truth is, however, that scene could have been any of the major airlines.  They all overbook, and they all force people to miss their flight if they cannot get volunteers.  United was just the lucky ones who had the right combination of a clueless flight crew, a frustrated passenger, and an over-the-top group of security guards.

         

The real issue isn’t the airlines (or it isn’t just the airlines).  The issue is that the airlines have an effective monopoly on air travel, or at least there is little enough competition that an airline can say, “Gee, I should charge $50 to check a bag,” and there aren’t isn’t enough choice for passengers to tell them where they can stick their baggage fees.  This is one instance where government regulation is needed since there is not enough room for enough competitors to make free enterprise work.  There are only so many spots at the airports, and the air traffic control systems can only handle so many planes, and it is so expensive to start an airline that few people can do so.  This means there is not enough competition, so the airlines can basically abuse customers all they want, because “Where you gonna go?”

Here is where government should be stepping in to protect the consumers.   You would think that the government would be making sure the paying customers, many of whom have very little choice but to fly occasionally, were protected from price gouging and abuse.  They are falling down on their duty, and in many cases making things worse.   Why are airlines able to charge big fees for bags, or food on the plane, or even the ability to have enough leg room to avoid dying of a blood clot?  And why are they allowed to put so many seats on the planes and make it so uncomfortable?  Why are airport food prices so high, and why are they able to charge so much for things like water when every passenger is forced to buy water and drinks since they cannot bring them through security?  Given the monopoly airlines and vendors at the airports have, where is the government regulation protecting the citizens – the ones who elected them?  Instead, governments are conspiring with the airlines and vendors to get more money from the passengers in the form of taxes and fees.

Think of what had happened to that man before the video you saw, as happens to everyone foolish enough to take a flight:

  1.  He left home early, worried that he might hit traffic and be late to check in.  If he was late, he would miss his flight and lose his money.
  2. Once he got to the parking lot, he needed to wind all around to get into the lot, then drag his bags to a shuttle.  Hopefully the shuttle wasn’t full when it got to his stop.  No one helped him drag his bags up the stairs onto the bus, and everyone was impatient with him.
  3. When he got to the terminal, he had to drag his bags down, walk who knows how far into the building, and then drag his bags all along the concourse to the line for his airline.
  4. He had to wait, perhaps a half hour, for a kiosk to open up.  He then had to drag out his itinerary, figure out where the confirmation number was, pull out a credit card to verify his identity, and check himself in.  If he forgot something of had to wait in line too long, he might miss his flight.

                            

5.  After checking in, he had to wait for the airline attendant to print his luggage tags and give them to him.  He probably received no greeting.  He had to worry that his bags weighed too much, or he’d pay a $100 fee, plus he had to pay $50 per bag regardless.  When the airline rep was done, if he was lucky, she dropped the bags, face down so that things in the pouches got smashed, on a conveyor behind her.  If not, he had to drag his bags to another line and wait for them to be inspected by TSA.  He had to wonder as he left them if they would actually make it on the plane.

6.  After checking in the bags, he had to find the security lines for his gate.  He probably got no directions to the gate from the check-in counter and had to look all over his boarding pass to figure out which gate was his.  If he messed up, he would miss his flight.

7.  Once in the security lines, he probably had to wait 20 minutes to reach the first TSA agent, who probably gruffly asked for his ID and looked at him like he was a serial killer.  He may have gotten a nice greeting (the first ones are usually the most professional), but he would be made to feel that if he was lucky and did everything right, he would be allowed to proceed.  Otherwise, he would miss his flight.

8.  After getting his ID checked, he would then wait in an even longer line, wondering if he was going to make it to the gate on time or miss his flight.  Finally he would be told by an agent yelling to the crown that he needed to take off his shoes, belt, hats, coats, and empty his pockets entirely.  He would then need to put his wallet, passport, and everything else of value into the x-ray machine , wondering if someone would steal it on the other side before he got a chance to get to it since his stuff might get through before he cleared the scanners.  He probably hoped that he had not lost his ID in the rush and confusion.

Best Sellers from Health and Personal Care at Amazon

9.  After waiting for the people in front of him, and having to walk where lots of people who didn’t think to wear socks had trod just before him, an agent would then motion for him to enter the scanner where he would be forced to assume the surrender position – hands up, palms out — while his naked body was revealed to a total stranger in the other room.

10.  If anything was detected in his pockets, or if he was just lucky number 22, he would be made to go to a little cubicle, where he would be patted down all over his body, including his private parts.  Through the whole, humiliating experience, he would be wondering if he would miss his flight.

11.  After finally getting through security and struggling to get dressed again, he would need to stop by a shop to get some water since he couldn’t carry any through.  Rather than paying the $1 or so as he would have seen outside of the airport, the price would be $4 per bottle.  The government has done nothing to protect him from this price gouging.  Instead, the city and state government have probably set the rents really high, basically making the vendor charge a huge price for water.  He is captive in the airport, so he has no choice but to pay the price or go thirsty.

12.  At the gate, he would be required to wait for the flight to board, probably not told that there was a delay until the time at which he was to board had long passed.  If he were late, he’d miss the flight and lose his money.  If the plane was late, too bad.

13.  During boarding, he would need to wait while all of the more important people boarded the plane.  He would finally have his section called, need to wait in a long line to get through the doors, then wait in an even longer line as people slowly pushed their way past the folks in 1st class who were getting their first drinks, and make his way slowly back into the cattle section as people fought to get their bags stowed.  He probably didn’t have any room over his seat for his bag by the time he got there since someone sitting behind him took the space for one of her large bags.

14.  Finally, after all of this, he made his way into his tiny seat with no leg room that was just big enough to wedge himself into.

Get PlayStation 4 Games at Amazon

Then, he is told he would need to leave so that the airline could have some of their employees fly.  Where is the government to:

  1.   Make parking rates reasonable.
  2.  Prevent baggage fees and other price-gouging fees.
  3.  Provide a smooth, friendly, courteous screening process.
  4. Ensure prices for concessions are reasonable, given the monopoly they have created (or maybe require the airlines give you a $0.25 bottle of water after you’ve paid $400 for a flight).
  5.  Prevent airlines from kicking you off of the plane after you have paid for your ticket and shown up on time.

Where government regulation is needed, they have failed miserably.

What do you think?  Please leave a comment.

Disclaimer: This blog is not meant to give financial planning advice, it gives information on a specific investment strategy and picking stocks. It is not a solicitation to buy or sell stocks or any security. Financial planning advice should be sought from a certified financial planner, which the author is not. All investments involve risk and the reader as urged to consider risks carefully and seek the advice of experts if needed before investing.