We will do Step 3, “Can You Get There From Here” next week. Today, we are focusing on taxes.
Since today is April 15th, “Tax Day”, I wanted to share some information with our readers. There are 2 main sides to the “tax situation” for the average person…taxes that we pay in, and what the government does with the revenue (taxes) it collects. I will only be focusing on income taxes for today’s discussion, although there are many other ways the government collects revenue (sales tax as an example).
Every year, people pay their income tax out of every paycheck, and look forward to their “big, fat tax refund”, which is one of the worst things a person can do! First, a person elects to pay their income tax throughout the year (and usually claim dependents so that more is taken out) but they do not have to. When you pay all that money to the government throughout the year, you are giving them an INTEREST FREE LOAN! That “big, fat tax refund” is them giving you back YOUR money, that they have used all year, without paying you a dime! You should adjust your taxes accordingly, so that you are not receiving a large refund every year…keep more of your income throughout the year and use it to help you with your monthly bills, or save it, so that you, and not the government, are earning interest on your money!
Now, for the revenue the government collects…what are they spending it on? Are they using it all, or saving some? If they’re using it all, are they spending more than they have? Well, they are all good questions, and I found some interesting information in the article, Uncle Sam won’t make ends meet on CNNMoney.com. Clearly, the government is spending our money, and lots of it. The budget has rarely been balanced in the last 40 years, and this year is no different. The whole country was up in arms over the previous administrations record breaking budget deficit of $455 billion dollars, but the current deficit is on track for 3 times that number, at $1.67 TRILLION dollars. Hold onto your hats, cause this is going to be a bumpy ride! So, what are they spending the money on? Well, as the graph on the page from the link above indicates, the 4 major spending areas are the new T.A.R.P. Program (isn’t that fun) at $290 Billion, Defense at $317 Billion, Social Security at $321 Billion and OTHER at $546 Billion. The other spending areas are Medicare, Medicaid, net interest on public debt and GSE payments…but T.A.R.P., Defense, Social Security and OTHER and the big spenders. Now, the problem with all this spending is that as a nation, we are in a recession. We are paying in less money (as the article indicates) in taxes because a lot of us are out of work…so, they are spending $1.94 TRILLION and only taking in $986 BILLION! That is almost TWICE the money we’re giving them! On top of that, the proposed budget is weighing in at $3.5 TRILLION dollars, and we are still paying the same…and they wonder how we get into trouble. If individuals ran their finances like that, they would ALL be bankrupt.
So, what should you be doing? Don’t look forward to big “refunds” and instead, use this money throughout the year to better YOUR finances. Pay attention to what the government is doing! They are not only spending ALL the money we are giving them, but they are spending double that amount, while we “common folk” are in a recession. Considering that 24% of people think the government has it’s own money (meaning they don’t get it from the taxpayers…ridiculous I know…find this info at Good Government) we have not been as diligent as we should be about where our tax dollars go, and we should, because a government that is ignored by its people can do what it wants without any accountability.
Tags: April 15th, Barack Obama, Government Overspending, President Obama, Tax Day, tax refunds
