The Founding Fathers prohibited a direct tax on incomes. This was changed by a constitutional amendment 100 years ago. It is lauded in news articles today as a wonderous thing.
If workers didn’t have to pay this tax to the government and instead paid themselves, what kind of future would those individuals have? Let’s consider this question in light of the fact that a huge percentage of workers have little or nothing put aside for their retirement. Afterall, Uncle Sam was going to ‘lookout’ for them. The trouble is, the social security system is all but insolvent. The funds have long ago been borrowed out with the government leaving IOU’s in the form of U.S. Treasury bonds. The same bonds that the Federal Reserve System buys as there are almost no other investors that want them. If interest rates rise, which seems to be the logical thing to happen before long, those bonds will lose value and have little worth. What does that mean for retirees?? Scary thought.
But, back to the original question; what if the workers had paid themselves instead of paying the Federal Government a direct tax on their income? Consider this calculation:
Making an initial payment into an investment/savings of $2000.00 and a weekly additional payment/deposit of $50.00 with an average annaul rate of return of 6% over 50 years of work , the return would be: $1,044,000.00 at retirement. If large numbers confuse you, that’s ONE MILLION, FORTY-FOUR THOUSAND DOLLARS.
Instead, the social security system is going cash negative, meaning they pay out more than they take in and will be out of money by 2027 according to their own calculations.
The million plus dollars each worker owned as their personal property would continue to grow if they only removed what they needed for their lifestyle and could have been passed on to their offspring making their lives easier.
Instead, the government, our ‘friends’ that were looking out for us, have retirees worrying about how to make ends meet, buy medications, pay rent or mortgages, and get by. As a teenager, I remember watching retirees buying cans of chicken flavor cat food. Apparently, it was used as an extender as a hamburger helper. The chicken flavor was superior to other flavors such as fish or liver.
How would the government get the funds it needs to conduct foreign wars? They would have to ask the people to buy war bonds as they did in WWI and again in WWII. Paying for the building of roads would necessitate a user fee such as a toll. For all additional expenses of the government it would be required that they ASK US for permission, as it should be. We should be asked to contribute or invest, not dictated to, by elected officials that put their own interests ahead of ours. Our federal government doesn’t even have a budget and hasn’t had one for the last three years. They raise the debt ceiling at their whim. Who pays for all of this? The worker who one hundred years ago, were hoodwinked into giving up the protection our Founding Fathers provided for us. It was written into the constitution to protect us against ‘government’. It was written as a protection because the Founding Fathers were educated in history and what other earlier forms of government had done to their citizens.
Just consider where you are now financially and where you could be if the govenment didn’t reach both of their hands into your pockets and pocketbooks.
The only thing you can be assured of is that the government will be seeking to ‘help’ you again in the future, probably with taking your 401(k) account and replacing it with “Bonds for America” to lessen your risk to market losses. Publius