Archive for the ‘national debt’ Tag

Thanksgiving

Originally published in the Cedar Street Times

November 16, 2012

With less than a week to go before Thanksgiving, I would like to take the opportunity to give some gratitude.  I am of course grateful for my family – my wife of 13 years, Joy, who has been my best friend since we were freshmen in college together.  She is sure and steady, she is efficient, she forgives me for being an accountant and working crazy hours for a third of the year, and she is well…full of joy!  I am grateful for my seven-month old son, Elijah, who brings such happiness, activity, and wonder to our lives.  It’s awesome being a dad!

I am grateful for my in-laws that make us dinner or pick up milk and juice at the store, or help with projects when we need an extra hand.  I am grateful for my brother, Justin, even though he lives in Washington D.C. and hasn’t set up a Skype account yet to visit with his nephew!  He is the most ethical and moral person I know, and he is always there to help me think through issues critically using his attorney mind.  I am grateful for the understanding, qualities, and grounding I received from my parents – there is no greater inheritance than that.

I am also grateful to be living in the beautiful town of Pacific Grove.  Growing up in Atlanta, I never really thought I would live near an ocean – what an opportunity!  We are blessed to have such wonder friends and neighbors, a great church community, and organizations that help us find ways to give back to our community.

I am also grateful to be living in the United States of America.  Although it is easy to point out all the faults we seem to have with politics, race issues, gender issues, health systems, national debt and tax systems, our military presence around the world, or whatever you feel is unfair, this country is still a beacon of light and hope for people all over the world that are struggling with far greater issues.  What other country are people clamoring to get into like the United States?  What country would you rather live in, and why are you here?  We do have some big challenges ahead, and it is going to take right action, as a result of our gratitude to solve these challenges.  If we are truly grateful for what we have, then we will take responsibility for preserving the good for ourselves and others, even when it seems we may have to sacrifice.

I think this passage from President Kennedy’s Inaugural Address from 1961 rings true for us as well: “I do not believe that any of us would exchange places with any other people or any other generation. The energy, the faith, the devotion which we bring to this endeavor will light our country and all who serve it — and the glow from that fire can truly light the world.  And so, my fellow Americans: ask not what your country can do for you — ask what you can do for your country.”

God bless you and your family and God bless America.

Prior articles are republished on my website at www.tlongcpa.com/blog.

IRS Circular 230 Notice: To the extent this article concerns tax matters, it is not intended to be used and cannot be used by a taxpayer for the purpose of avoiding penalties that may be imposed by law.

Travis H. Long, CPA is located at 706-B Forest Avenue, PG, 93950 and focuses on trust, estate, individual, and business taxation. He can be reached at 831-333-1041.

National Debt

Originally published in the Pacific Grove Hometown Bulletin

June 1, 2011

 

Last issue, I concluded that tax rates are likely to rise if you look at the historical relationship between tax brackets and macro-economic events.  Despite an economic climate indicating that higher tax rates are needed, we are pretty much witnessing the lowest tax rates since before World War II or the Great Depression depending on which end of the bracket spectrum you lie.  These two forces have compounded to magnify our national debt to $14 trillion.

You hear a lot about the national debt, but so what?  Have you ever personally felt affected by it? Has the government ever asked you to ante up $165,000 for your share as a family of four (or $800,000 if you include enough to ensure the promises made for future obligations will be met as well)?  I think we as Americans are blasé on the subject because we do not connect the dots back to ourselves.  It often seems distant or a problem for someone else in another time.  This may not be the case.

We have set the stage for doubt.  The strength of our financial system is largely built on the belief that the U.S.will make good on its borrowed money.  If large debt holders begin to doubt this for economic or malign political reasons, the mental atmosphere about the stability of the U.S.could change quickly.  It would likely send us and the rest of the world into a global depression that would be painfully felt by all.  The U.S. would struggle with a collapsing currency, inflation, unemployment, and irate nations from around the world that watched their investments in the U.S. evaporate.

David Walker, the former U.S. Comptroller General feels our biggest threat to national security is not terrorism, but our own fiscal irresponsibility. Walker left the G.A.O. in 2008 to run the newly formed Peter G. Peterson Foundation (www.pgpf.org) because he felt his warnings had little impact in the political arena.  He has since left to start a similar organization – Comeback America Initiative.

Peter G. Peterson, founder of The Blackstone Group – a financial services company, created the Peter G. Peterson Foundation with $1 billion of his profits after the 2007 IPO of The Blackstone Group.  The purpose of the foundation is to educate Americaabout the urgency of the fiscal challenges threatening our future, and working towards solutions.  The foundation funded a critically acclaimed full-feature movie released in theaters across the nation in 2008, I.O.U.S.A., (available on Netflix), and a five-part follow up, I.O.U.S.A.: Solutions in 2010.  A shortened version of the movie and the follow-up can be viewed at www.iousathemovie.com.

I encourage you to watch.  It is fascinating and will leave you with an enlarged perspective.  We can overcome this challenge, but we have to act, and we need to act as soon as possible.

Travis H. Long, CPA is located at 706-B Forest Avenue, Pacific Grove, CA, 93950.  He can be reached at 831-333-1041.

Are Tax Rates on the Rise?

Originally published in the Pacific Grove Hometown Bulletin

May 18, 2011

Earlier this week, I pulled out my crystal ball and posed a few questions about future personal federal income tax rates – strangely, it became suddenly murky.  So I pulled out my history books instead and drew some conclusions.  Let me set the stage and give you some history.  Keep in mind since 2003 our bottom tax bracket has been 10 percent and our top tax bracket has been 35 percent.

Wars have historically been fantastic reasons to raise taxes.  In fact, our first national income tax was created to raise money for the Civil War.  After the Civil War the tax was abolished.  Although income taxes were permanently revived in 1913 (some people still questioning its legitimacy from their prison cells) a logical pattern seemed to develop– when our country needed money, tax rates went up; when it did not need money, tax rates went down.

In 1913 the bottom bracket was at 1 percent and the top bracket was at 7 percent – perhaps a special introductory rate. During World War I the bottom bracket moved as high as 6 percent and the top bracket shot up to 77 percent!  Then brackets fell dramatically until the depression in the 1930s.  The government needed money so brackets shot back up flowing right into World War II where they peaked in 1944 and 1945 with the bottom bracket at 23 percent and the top bracket (income over $200K) at 94 percent!  Rates dropped after World War II, but stayed relatively high with the bottom bracket not dipping below 14 percent and the top bracket not dipping below 70 percent until after 1980.

During the Reagan and H. W. Bush years dramatic changes took place (Reaganomics).  The bottom bracket dropped as low as 11 percent and the top bracket dropped as low as 28 percent.  The brackets rose a little during the Clinton years and then dropped again when W. Bush took the reigns.

Tax brackets are not everything, but to the extent they are an indicator, it is difficult to say we are overtaxed.  With the exception of a three year period in the late 1980s, the tax rates on our bottom and top tax brackets are both at their lowest levels since before World War II.  We have maintained this course during our worst economic decline since the 1930s while simultaneously fighting a war and spending at all-time highs.  Our logical pattern seems to have been broken.  Our national debt has been rising substantially to pay for our record-low tax brackets and our loose wallet.  The longer we as Americans continue to cast our vote beyond our means the more painful it will be.

So from my perspective, tax rates only have one direction to go – up.  Next issue, I will discuss the national debt.

Travis H. Long, CPA is located at 706-B Forest Avenue, Pacific Grove, CA, 93950.  He can be reached at 831-333-1041.