JoeTaxpayer

That QE3 will succeed……

I know who many of your are. I wrote about you in an article titled Who Pays No Tax at All? The math was easy. You’re a couple making just under $60,000 per year, maybe split 50/50, maybe one spouse working full time and the other, shorter hours to be home for when the two kids get home from school. You’re trying to save a bit in your 401(k), 6% to get your company match. Of course we’re talking about federal tax, you still pay into Social Security, just over 6% of your income in normal years. I’ve been thinking about you. You work in an industry where your company is profitable, so by definition, you contribute to society by getting paid less than you produce and help a company grow and provide a good or service to others. Your taxes are simple enough you use a free online version of TurboTax, and you were a bit surprised after having kids that the child tax credit along with their exemptions wiped out the last bit of tax you would have paid. You have no loopholes, just a tax return that showed zero. You’re like many others in a similar situation, looking to get a raise or promotion and when the kids head off to college, you’ll be seeing an annual tax bill, not huge, but still, a few thousand.

Some of you are Veterans returning home, struggling to get back into the work force. I don’t think we do enough for those returning from the multiple wars I’ve seen in my lifetime. One of the charities I donate to on a regular basis is the New England Center For Homeless Veterans. I appreciate the work they do, and that they are more than a shelter, they provide job training and counseling to get returning Vets back on their feet. You risked your life serving your country and I certainly don’t begrudge you a time when you’re not paying into the system.

Perhaps you’re a soldier still in a combat zone, I’ll let POTUS’ tweet speak to you –

Others are disabled, collecting SSI, the disability insurance that’s part of the Social Security system. Maybe also withdrawing a bit each year from your retirement accounts but not enough to pay federal tax. You know what? You’re no more dependent on the government that the guy who is getting major surgery courtesy of his health insurer. You paid into the system, this is the nature of insurance, when you are injured, you might need to be on the other side, collecting vs paying in. No issue here.

Grandma and Grandpa – you manage to live off of your Social Security check and a bit of your savings. Like the family of four we started with, your Standard Deduction and Exemptions manage to keep that extra money from getting taxed. You both worked for over 40 years, raised three kids, A Doctor, a Lawyer, and a Graphic Artist, and while you spared them the big student loan bills, You really don’t have much left for the two of you. You paid taxes for 40 years, and you’ve earned a break.

Last, but not least, is the guy with an account that, let’s just say, has a lot of zeros after the one. He’s full up in tax free munis, and laughing all the way to the bank. I suppose the municipal bonds are for a good cause, but with that many zeroes, you’d think that Uncle Sam would get his slice of the pie. I think this guy wants to keep things just the way they are.

Wow, the summer is ending already? Time sure does fly. But not so fast that I didn’t have time to gather up my best reading this week from fellow financial bloggers.

Let’s start with The Joneses Are Buying an iPhone5. What Should I Do? The Enemy of debt, Brad Chaffeelooks like he’ll pass ans he’s happy to tell you why.

Amanda LaConte guest posted at Girls Just Wanna Have Funds, Lose It Or File It: An Easy System To Keep You Organized During Tax Season. Sometimes the best plans are the simplest, and getting organized is the first step towards an easy time as April 15th draws near.

At CBS Money Watch, The recent Plutus Awards winners were recognized by Allan Roth in his Top financial blogs for building wealth. Thank you Allan, I am one of the older attendees as well, and I’m glad to see the next generation so interested in finance. Side note – I’ve been a fan of Allan’s writing for some time and his 10 lessons from the great stock crash and recovery should be required reading.

Towers Watson’s Kathleen Rosenow gave an excellent overview of the changes in medicare taxation, High-Income Individuals to Pay Higher Medicare Taxes Starting in 2013. As the article title suggests, this will only impact higher income earners, so if this includes you, congrats.

The Wisdom Journal offered 25 Shocking Statistics About Personal Finance in the US, and I’m not just shocked, I’m a bit appalled, “Two thirds will retire with less than $25,000” was enough to give me pause. I don’t have any answers, I’m just passing along the fact, the one I found most alarming. Check out the full article and let Ron know Joe sent you.

A few weeks ago, I wrote an article Cash Hoarders QE3 Won’t Help, and sure enough, the Bernanke wasn’t listening, and has turned on the presses. The problem is not a lack of liquidity, it’s the lack of velocity, no one is spending.