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The 2008 election is drawing closer. There appears to be two choices, one letting the economy run by market forces or two, controlling the economy from Washington by government edict.

The tax cut of 2001:

1. Made research and development tax credits permanent. 2. Eliminated the federal death tax. 3. Doubled the child credit from $500 to $1000. 4. Replace 15%,28%,31%,36%,and 39.6% tax rates and changed to 10%,15%,25%,and 33%. 5. Charitable contributions made deductible for non-itemized tax payers. 6. Reducing the marriage penalty by adding a 10% deduction for two income households.

In 2010 these tax will expire. If Congress does not take any action, these cuts will become a tax increase.

The current federal tax law collects about 20% of the Gross Domestic Product. This is highest tax revenue ever with the tax cut. By raising tax rates the collection will decline and the economy will slow down or go into recession. The cost to the average family will be $1,600.

If the check for $600 to each taxpayer was supposed to stimulate the economy in 2008, this will have the opposite effect. The taxpayer is borrowing money to make ends meet and average consumer debt has increased from $ 778 in 1992 to $1523 in 2001.

The federal government spends too much money and is telling the individual taxpayer to reduce spend able income to fund these expenditures.

As a taxpayer or citizens, how can you influence government at the local. state, and federal levels? The business model now in use is to add an estimated rate of inflation to last years budget and increase taxes to pay the bill. The only way to streamline government is to reduce the revenue available. As the funds shrink, downsizing will occur. The tax payers and voters have to decide how much government we can afford.

This November when you mark you ballot and vote for market forces (demand created by the consumer) or governmental edict (legislation dictating the outcome at consumer’s expense)., remember past successes of the federal government. The choice between market forces and governmental edict must also be made for Congressman/women, and the Senate. Market forces work, government edict does not. Example: current oil shortage.

The money that is collected by the federal government say $100.00 is then used to pay a benefit such as roads, bridges, grants, etc. The actual money paid in benefits is 33 cents on the dollar. The bureaucracy takes 67 cents of the dollar for overhead.

More to come in the next http://www.makemoneywork.info newsletter.

To your financial success,

Martin Braddock

Martin Braddock with 23 years of financial planning experience can give you expert advice and the best plans for your financial future in one shot. With the commission selling removed, you get honesty advice and the best financial care that you can possibly have.

Martin_Braddock

Tags: tax

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Tags: tax