Obama is having great political success by opposing wealth accumulation.
He’s doing it by attacking the rich. You might be a victim yourself!
According to the president, it’s unfair that some Americans have been able to stash away more money than others.
His fiscal year 2014 budget – to be released this week – will target tax deductions associated with popular Individual Retirement Accounts, or IRAs.
These accounts are used by millions of Americans to reduce current taxes and augment retirement savings.
Under Obama’s proposed changes, a tax-preferred retirement account shouldn’t produce more than $205,000 per year.
Obama also wants to heap other major tax increases on the wealthy. (To him, the significant tax increases that were passed as part of the Fiscal Cliff deal in January weren’t steep enough.)
He’s demanding that Congress raise additional taxes and stop people from stashing away (what he considers to be) too much money.
Of course, this is just the beginning of the government’s latest actions to swipe money out from under us…
They’re Robbing Grandma, Too
The budget also includes significant cuts in Social Security benefits.
The cuts to Social Security include a sly reform called a “chained CPI.” This would change the numbers used to calculate the annual cost-of-living adjustment.
You see, the government currently uses the Consumer Price Index (CPI) to measure inflation. According to the Department of Labor, the CPI measures how much the cost of a “market basket of consumer goods” changes over time. That basket includes things like food, clothing, computers, and other consumer goods.
The new chained CPI adjusts the traditional CPI for potential changes in goods purchased as a result of price increases.
For example, with a chained CPI, the Labor Department would suppose that – if the cost of fish increases – you’ll likely choose to eat chicken instead. And when chicken prices go up, these all-knowing federal employees speculate that you might (again) choose a less expensive alternative.
As a result, they’re constantly changing the basket of goods to minimize the appearance and effects of inflation on government finances.
Yet this same deceitful move proliferates the impact of price increases on grandma’s social security check.
It Gets Worse: The Buried Taxes of Inflation
If you use U.S. dollars, then your money is taxed by inflation.
If inflation is running at 3% – and you don’t get a 3% raise – you’re making less money in real terms by the end of the year.
Your money buys you less food, less gas, less real estate, and less anything than it did at the start of the year.
Translation? You’re literally poorer.
And not only are you paying more in prices, but you’re paying higher taxes on these goods, too…
That’s because inflation relentlessly pushes taxes up. When prices increase, the sales tax on all goods sold goes up as well.
When real estate prices rise, real estate taxes go up. When prices on imported goods increase, the duties and fees on these goods grow, too.
Makes sense, right? Well, it gets more complicated than that…
What most Americans don’t realize is that when you purchase many goods, you’re paying an entire string of hidden taxes.
Merchandise has embedded energy taxes, corporate taxes, and numerous other fees and costs associated with government regulations.
And if you think inflation kills your wages, wait until you hear what it does to investments.
More specifically, anyone who saves in inflating dollars gets slaughtered. Savings in a bank serve as a good illustration to understand inflation as a tax. For example, the bank today might pay you 1.5% in interest on a CD. If inflation rises 3%, then you actually have less money a year later – even if your balance grew.
The Thievery is Relentless
The government’s official word is that inflation is low – between 2% and 3%.
And by cooking the books, they can keep this number low.
All they do is adjust the way they calculate the rate of inflation. If they calculated it the same way it was done in 1990, it would show that inflation is truly much higher than the number that the Bureau of Labor Statistics now releases.
Indeed, what the government is doing with our money is atrocious.
They’re sneaky and manipulative. And let me assure you, they know exactly what they’re doing and have no intention of stopping any time soon.
This article originally appeared at CapitolHillDaily.com and is reprinted here with permission.
Photo credit: Dan Jacobs (Creative Commons)