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alstry (35.35)

Who Will Be Paying Taxes????

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November 09, 2009 – Comments (4)

The three primary drivers of tax receipts to government are income tax, social security tax, and property tax.

Property tax is the key driver of revenue to state and local government.  You would be amazed how much revenue is generated from property taxes.  Since 2000 property tax receipts have more than doubled due to massive building and rising property values due to very low interest rates and easy credit.

Barney Frank admitted that this was government policy to drive up real estate values.

As a result, government became dependent on its massive inflow of new income....especially state/local government and borrowed and spent trillions of dollars against this new revenue stream.  The stimulous was incredible.

However, now that the Fed rasied interest rates 17X and banks made it much harder to obtain credit.  Real Estate values have and are plunging....especially commercial real estate and land.  Now many of those properties can simply no longer support the massive tax burden that their local municipalities depend on.....

Hotels are shutting down, restaurants are shutting down, retailers and shopping centers are closing.

As a result, not only is tax revenues plunging from massive unemployment.....now tax receipts are imploding due to declining property tax revenues.......the life blood of local government...especially for schools.

LOCAL AND STATE GOVERNMENT EMPLOY MILLIONS OF PEOPLE ACROSS THE NATION.

Many of you get sick and tired of my posting strings of layoffs and businesses shutting down.  What many fail to realize is that each one of those is a tax payer not paying taxes anymore.

The reason that it is so significant is because our govenrments have become the largest consumer in the world.....and if government is not consuming our economy will crash.

With income and property tax receipts imploding...government has few choices....cut spending/raise taxes or both.  Either action will cause sales and sales taxes to decrease.

No matter how wealthy you are, or think you are....there is simply not enough cashflow in America to support governments' current appetite for money.  As more and more businesses shut down and individuals lose their jobs....just to make up for declining property taxes and income taxes....government may soon have to tax almost everything we have simply to sustain itself.

I know what I blog about is not much fun.....but it is what we confront.....and if we don't deal with it, who will?

What makes this time so different is government has grown to become a huge percentage of our GDP over the past 20 years....especially with its impact on health care and employment.  Now that revenues to government are evaporating...what will be the consequences to the nation?

4 Comments – Post Your Own

#1) On November 09, 2009 at 9:16 AM, alstry (35.35) wrote:

Small Business Is the Driver of Employment In America!!!!!!

And a key component of those that pay property taxes.....

Small Businesses Struggle as Unemployment Goes Higher 

Joblessness Expected to get Worse

Finnair ( International ) - Cuts Capacity 12% = Layoffs Possible

City of Grand Rapids - up to 150 Layoffs, Jan. 1

Creekside Mushrooms - 260

Update: Cooley Dickinson Hospital - Layoffs Today

Houston "Big Oil" -  Creating Job Layoff Fears

National City closing 15 Branches

Simple Elegance Bridal and Formal Wear

Country's Life in Warwick

United Postal Service Possibly Closing Office in South Syracuse 

IF BUFFETT IS SO BETTING ON AMERICA...WHY IS HE FIRING SO MANY AMERICANS?????????????????????

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#2) On November 09, 2009 at 9:32 AM, dickseacup (67.00) wrote:

When you say "the Fed raised interest rates 17X" it implies that there was a1700% increase in interest rates during that period. I believe that you are using it as short hand for "17 times" which, I also believe, is correct. Using "17X" for "17 times" is misleading.

Other than that, I concur with the assessment that tax revenues are drying up at a time when certain government functions are being expanded. These are definitely "interesting times."

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#3) On November 09, 2009 at 9:57 AM, lquadland10 (< 20) wrote:

Ah welcome to the new world currency. This is how they will do it. Tank Amercia and then say the g 20 is not gooe enough. Presto chango. A new world currency.

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#4) On November 09, 2009 at 12:25 PM, barich1 (69.62) wrote:

My significant other is a nurse. Luckily this is a recession proof job so she is still working. She (and everyone else in the hospital) just got a letter stating that the state of California has decided to increase the amount of taxes witheld from every paycheck! Whether this will result in a larger IOU tax return next year remains to be seen. This is for real, it is starting.

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