If it’s legal it gets taxed

If you earn money…….. they tax it
If you save money……. they tax it
If you spend money….. they tax it
If you die…………………..they tax it
Anyone see a trend here?
How long is IRS Tax Code?
The length of the federal income tax code (also known as “Title 26” of the United States Code) has itself been the subject of more than a few political speeches by our own Congressional representatives, theoretically the very people responsible for the illustrious Title 26. They had this to say about the prodigious size of the US Tax Code:

U.S. Representative Rob Portman (R-OH)
"The income tax code and its associated regulations contain almost 5.6 million words — seven times as many words as the Bible. Taxpayers now spend about 5.4 billion hours a year trying to comply with 2,500 pages of tax laws…."

U.S. Representative Jim DeMint (R-SC)
"The federal tax code with its 44,000 pages, 5.5 million words, and 721 different forms is a patchwork maze of complexity and a testament to confusion over common sense."

U.S. Representative Walter Jones (R-NC)
"The IRS tax code is 44,000 pages and growing"

By the way, if you go to the US Government Printing Office ( ), you can order a complete set of Title 26 of the US Code of Federal Regulations (that’s the part written by the IRS), all twenty volumes of it, at the bargain price of $974, shipping included.
This does not include the estimated 100,000 US tax cases.

(Note these quotes were extracted from the representatives’ official press releases and statements as found on


In your everyday existence, you are confronted with transfers of your wealth.

You continuously, unknowingly and unnecessarily, give or transfer money away.
Not only do you give this money away but you also lose the ability to earn money on that money once it is transferred.
This compounds your loss. To eliminate or reduce these transfers, you must first learn to recognize them and
then understand how directly or indirectly they cost you money. You may have to confront conventional financial wisdom.
Remember, the ones giving you these financial programs tend to profit from them. Always ask, who would profit from these transfers?
Here is a list of the transfers of your wealth:

Tax refunds
Qualified Retirement Plan
Owning a home
Financial Planning
Life Insurance
Purchasing Cars
Credit cards

These ten transfers can create financial losses for you. You must study each one and determine how they will affect you.


A common definition of the word “tax” might be: “A contribution for the support of the government required of persons, groups or businesses within the domain of that government.” “A burdensome or excessive demand, a strain.” The only power an elected official has is his ability to spend money, our money. The one thing the government does well is collect taxes. The problem is they spend more than they collect. The government now spends a majority of its time trying to raise revenue through taxes in order to continue their increased spending.
Forty percent of your income now goes to some form of tax, which is more than the average family spends on food, clothing and housing.
According to the Family Research Council in 1996, since 1948 for a family of four with an average income, Federal tax rates are up 1,250%.
Over the past 10 years, state and local government taxes have increased 168% faster than national incomes.
Overall, we are now being taxed at a higher rate than when we threw tea into the harbor, with no end of increases in sight. Now include the understanding of the demographics of our nation, and that light at the end of the tunnel is not a ray of sunshine, but a train coming our way and we’re on the tracks.

Income taxes have been the central focus of many debates. Most financial planners mention only a couple of taxes that may affect a client’s future. These are usually the income tax and the estate tax. These two taxes are formidable foes of wealth, yet they represent only the tip of the iceberg when it comes to the overall taxation that really exists. Here is a list of taxes that you are confronted with on a daily basis:

Federal Income Tax
Social Security Tax
State Tax
City Tax
County Tax
Property Tax
Personal Property Tax
School Tax
Long Capital Gains Tax
Short Capital Gains Tax
Sales Tax
Estate Tax
Gasoline Tax
Water Tax
Sewer Tax
Tax on Gas-Heating Oil
Business Tax
Airport Tax
Telephone Tax
License Plate Tax
Hotel Tax
Cable TV Tax
User Taxes
Unemployment Tax
Workers Comp. Tax
100’s of Regulatory Fees

If instead of taking taxes out of our paychecks and taxing us for our purchases,
they sent everyone a tax bill at the end of each month, there would be a revolution!


If it came to your attention that you were unknowingly and unnecessarily paying a tax you didn’t have to, would you continue to pay it?
If you were told to pay a certain amount of tax, would you purposely over pay that amount due?
If you could legally recapture or keep some of the money you pay in taxes, would you do it?
If no one has taught you techniques of reducing taxation when you can, that is truly unfortunate.
The most common belief is that using qualified plans is the best way to reduce taxation.
This is what you are told to believe. Don’t be surprised to find out that this is not necessarily true. The tax savings we’re talking about here is not about loading up your IRA or 401(k) plans.
Once again it may be quite the opposite.


In 1913, the 16th Amendment of the U.S. Constitution was passed, allowing federal government to impose an income tax on the citizens of the United States. Ironically, 20 years prior to that, as part of a trade bill, the government passed into law an income tax that the Supreme Court struck down as unconstitutional. But persistence paid off, and Congress ratified the 16th Amendment in October, 1913. The tax measure was passed as a temporary measure. The original federal marginal tax was around 6%, and initially only about 5% of the population had to file tax statements.

Clearly, the federal government wasn’t shy about raising income taxes. During World War I and World War II, the marginal tax rates were high and remain at a level of over 50% for almost 50 years.


Recently, I happened to come across my father’s 1960 tax return.

The federal marginal tax rate that year was 87%. I thought how did my parents ever survive with four kids and a dog?
My father worked two jobs and we survived without having to eat the dog.
Back then he was told the same story that we sometimes hear today about retirement income:
That he would probably retire to two-thirds of his income, thus be in the lower tax bracket.
In 1960, although the marginal tax rate was 87%, just about everything my father purchased was deductible on his tax return.
After his deductions, his realized tax bracket was around 12%. Well my father did retire to two-thirds of his income, but retired to a 28% tax bracket. Now, you might say that the difference between a 12% tax bracket and a 28% tax bracket is just 16%. Not quite. It was an increase of almost 140% in his taxation level. Soon after retirement the dog disappeared.

No matter how you look at it, taxes will continue to be the largest transfer of your wealth now and in the future.

If you believe what the government tells you about its retirement plans and deferring taxation to a later date,
I would encourage you once again to study the demographics of the country. I believe the government’s main objective is to thrive and survive. Meanwhile, on the streets of America, we the public struggle to do the same thing.



There are many types of government-sponsored savings plans.

They allow you to save money, if you qualify, in tax-deferred programs.
Some of these plans such as defined benefit, defined contribution, and profit sharing plans to name a few, require the employer to make contributions to these plans on your behalf. The plans are disappearing more and more because it is becoming very costly for companies to maintain them. This first group of plans, although laden with regulation, are a great benefit to the employee. None of the workers’ money goes directly into these plans. These plans are funded by the employer.

The second type of plan enable the employer and the employee both to contribute to the plan with restrictions of course. The employer will match a certain dollar amount or percentage of the employee contribution. Matching contributions by the employer is an option. It is not uncommon for the employer not to contribute anything. One of the most familiar plans that fall into this category is the 401(k). The 401(k) made it easier and less expensive than the old traditional retirement plans for the employer. Why? For the cost of administrating the plan, a company can proclaim that it offers benefits for its employees. Even though the employee is funding most, if not all, of the plan.

The third type of plan that was created is one where the participant funds the entire program. IRAs, 401(k)s, and others are the most widely used plans by most individuals. Since these are the most commonly used I am going to focus on these plans.

When it comes to transfers of your wealth I wanted to simplistically separate these plans by one factor: Who pays for these programs. If you can get someone to help fund your retirement with money, terrific, do it! But as for the money you contribute into these plans without company matches, I want you to start thinking a layer deeper. If you’re funding the full amount for these plans, there are things you need to know in considering whether or not to participate in them.

My intent here was not to explain and describe how these plans work and all their complexities, but simply to examine where is the funding coming from, and to discover who is encouraging the use of these plans and why.

The government creates the plans, the financial professionals deliver them.

With little or no questioning, it is believed that life cannot exist without government savings plans. They are marketed by banks, accountants, brokers, insurance and investment companies.
All of these companies promote these savings programs because they profit from their existence.
It would also be logical that the ones who created them would also profit. The popularity of these plans is based on blind faith. It is assumed, if these government and all these professionals support these programs, they must be good. Even companies offer these programs as a benefit to its employees. All of these seem to be tremendous tools for saving for retirement, HOCUS POCUS, POOF! A whole lot of your money disappears.


We have invested the government of compromise. For the past 100 years or so, the government has passed on compromised solutions to our problems. Years later even the compromises are compromised. This, over a period of time, waters down the original solution, thus creating loopholes in the law that now need new compromises to close up the loopholes. If the Ten Commandments had been compromised over the years in this fashion, you would end up with the rules for time wrestling.


The larges financial transfers of your wealth are created by the government in the form of taxes.

Their actions will affect your money more than anything else in your entire life.
The real bad news is they can make up the rules as they go along.
There is an interesting debate simmering. Is the money we earn ours, or does it belong to the government and we are just using it? Think about it.
The uncertainty of taxation rates in the future continues to be a problem.
The growing aging population problem, over spending, growing debt, increased costs of health care, the never ending war on terror, increased spending on security will all affect the amount of money that you will be able to keep and spend in the future.

Qualified retirement savings plans will become a bigger tax revenue target in the future.

Just understanding that this could happen and searching out alternative savings for retirement could save you thousands of tax dollars in the future. The government has a vested interest in all the money you are saving.

They are taking it seriously. You should too.

Estate Taxes
One of the big issues is the moving target of the estate tax, from now, through 2010 when
it "goes away" to 2011 when it "comes back" worse than before, thanks to a decade of inflation against the "fixed" threshold.
Planning for the worst case is the "safe" approach.

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