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There is no doubt that our government has placed a heavy burden on us, and on future generations to come. It continues to overspend, while printing paper dollars that only serve to devalue our currency. Our tax system is backwards. It is a system that punishes success and rewards failure. It is a system that encourages us to consume ourselves in debt, save very little, if any, and even when it provides for a current tax deduction for putting money away for retirement, when looked closely, punishes you.

Let’s take a closer look at each of these, because I’ve said quite a mouthful in the previous paragraph. If you haven’t had a chance to read my article on Brainwashed, please take a minute to learn where we are. Our beloved country is a totally different country than it was 100 years ago. Primarily because we enjoyed the freedom of earning a living and taking home what we worked for – every last dime. Gross Pay and Net Pay were one and the same – the government wasn’t stealing your money before you got your hands on it – the terms Gross and Net didn’t exist, it was just Pay. Only a crooked government like ours, can take our money before we can get it and have us think that’s normal. Imagine if someone – anyone (say your neighbor next door) – took a single dollar out of your pay every time you got paid. How long do you think this would go on before you got him/her arrested? Meanwhile, the government does this to us every single day and we have come to accept it as normal. If miraculously some employees from 100 years ago were to resurrect and saw this, they’d think we’ve all gone insane. So besides having our hard earn income being stolen at an increasingly alarming rate, our wonderful government now continues to print more dollars to pay for out-of-control spending, which will only serve to put us more in debt while devaluing our dollar. It is obvious that if there is more of something, that something is less valuable – period. How much more before the collapse of our currency?

I said in the opening paragraph that our tax system is backwards. This is because the more money you make, the more tax you pay. The more you save, the more tax you pay. The more successful your investments, the more tax you pay. The more your retirement investments grow, the more tax you pay. When do you pay less tax? When you don’t succeed. When you make less money, or no money – you pay little or no tax. When you save nothing, you pay no tax. If fact our system is built so that when you are poor, you are compensated. The government pays you. When you get yourself in debt, you then pay less in tax. The greater your debt, the less tax you pay. Although you can take a deduction for saving for retirement, the government will make you pay so much more in the end. Let’s say you are very successful and are in the (highest) 35% tax bracket. You put, say $10,000 in retirement and you save $3,500 in taxes. Because you continue to be successful, you continue to be in that higher tax bracket. When you retire and say, your $10,000 has grown to $100,000, you now pay the government $35,000 in taxes because you were successful in growing your money. The government got tenfold what they would have gotten. When you look at whatever retirement monies you have (other than Roths), remember, it’s not all yours, the government still has to get its cut. And you thought you had a lot saved up for retirement!

So, now that I have depressed you on our system of government, what’s the solution? I wish I could say that we could look forward, in the near future, to a government that rewards success, but I’d be lying. It would probably take a revolution to get this changed. Without real change, and given our current national debt, I believe we will continue to see this oppressive system. Only through the ballot box can we hope to get real representation and much needed profound change. In the meantime, we have to turn to professionals who specialize in tax law to help us navigate the maze of complexity that has come to define our current tax code. Find someone that specializes in your industry and latch on to them. Educate yourself, learn, plan and secure a financial relationship with a competent and experienced financial planner who is an investment advisor. It is truly complex and you can’t go at it alone. Don’t. Whatever the cost – the cost of foregoing the help of a professional in this field, is far costlier and, sadly, you’ll never know how much more you paid in taxes.

Get out of debt. Resist the temptation of spending. Only buy what you must have to survive. Live frugally and you’ll live free. Sure, you will pay more in taxes, but you will keep more in your pocket (since you’re not paying all that interest on borrowed money), and you will experience a freedom you hadn’t felt since you were young with no responsibilities of your own and no debt.   These are tough times, but never forget, “when the going gets tough, the tough get going”. Never give up. Never quit. Be confident. You, and you alone, are the master of your destiny. Raise your head up high to the rising sun for another day is dawning ……. Until next time, dream big, stay safe, and always, be kind …….

Please forward any questions or comments to: Edwin@ntccpa.com 

Tags: Brainwashed, Edwin Natic CPA, Internal Revenue Service, IRS, Natic Taylor & Company LLC, Roth IRA