Tag Archives: government

Tax Freedom Day: You are Now Free to Earn Income

Congrats! You have now paid the government your taxes for the year, and are now able to earn income.

What??? Didn’t you spend the last three months earning income this year?

Well, yes and no. Today is National Tax Freedom Day. On average, it takes us 102 days to pay for the taxes we owe the government, and it’s coming three years later this year than last.

For some states, actual tax freedom day comes much later. In Connecticut, their Tax Freedom Day falls on May 2 – nearly halfway into the year! California, where I live, won’t reach Tax Freedom Day until April 16 this year. Those in Mississippi get to celebrate Tax Freedom Day the earliest – March 26, followed by Tennessee, South Carolina, Louisiana and South Dakota.

Want to know when Tax Freedom Day is where you live? Check out the official map below…

The Housing Bailout: It’s unfair, it’s necessary, it’s ridiculous

They say a housing bailout is necessary. For all the people who purchased homes they couldn’t afford at to-good-to-be-true rates, here’s your bailout. I’m generally a liberal but this is going too far.

The problem stems from how the American dream is so closely linked to owning a house. If you can’t afford a house – don’t buy one. Renting is not the end of the world. It’s a lot cheaper. Wait until you can afford a reasonable 30-year fixed mortgage to buy a house. That’s what I plan to do.

Of course, given that the government is going to bail everyone out who can’t afford their poor choices, it seems I may have been better off buying a condo years ago. I could be facing foreclosure now, with my home underwater. I could be begging the government to bail me out.

I understand that when you have children the situation changes a bit. You want stability, a house that you’ll own, and not have to worry about moving if your landlord decides to kick you out. Ok, I get it. I feel for you if that’s the situation you’re in. But I still think that when it comes down to it, Americans need to be responsible for their own actions.

God, I sound like a Republican.

What Recession?

Every other day the media is telling us that we’re either in a recession or the government has miraculously saved us from entering one. I’ve even heard talk about an upcoming depression, despite plenty of safety nets in line to prevent another 1929.

These are the times when I really wish I knew more about the economy and what it all meant. I watch my stocks go up and down… and down again, but understanding why is a whole other matter.

The latest AP article I read on the subject explained that Federal Reserve Chairman Ben Bernanke just said that a recession is possible.

Seems like he’s late to the game, doesn’t it?

Ok, so he’s in charge of the Federal Reserve, which must have some significance, economically speaking. He said that policymakers are “fighting against the wind” in trying to steady the economy.

I guess earlier this year he tried to give a pep talk on how great the economic future was looking for this country and now he’s going for the surefire glass is half-empty approach in case of a meltdown. Better to say I told you so late then I never told you so at all.

This is where the tricky economic babblygook comes in and I get lost. The GDP (or gross domestic product) will not grow much over the first half of 2008 – and could contract slightly.

Sounds like a bad situation. Growth is good. Shrinkage is bad.(Just ask a porn star.)

Apparently under a rule someone wrote somewhere, six straight months of declining GDP means we’re in a recession.

So Bernanke thinks that the stimulus package will help economic growth in the second half of this year and into 2009.

Uhm, I’m still under the impression that a $600 tax “gift” is not enough to encourage most folks to run out and spend. Or maybe I’m just so caught up in this personal finance world that I forget how most people spend their money.

If I were the government, I’d give out larger chunks of money to random people, with a weighting on lower income families. $600 is not enough to encourage spending, but maybe $3000 is. So don’t give it to everyone or just limit to really specific demographics and viola, you have more consumer spending. $600 is usually just enough to pay off credit card bills, if you’re frugal with your credit.

Maybe what the government is doing for businesses will help more, as well as those interest rate cuts that I’m still unclear on. One of the key interest rates was cut to 2.25 percent to “spur buying and investing by individuals and businesses.”

I’m not sure how that spurs buying and investing. All I know is that my ING Direct account savings interest % is lower than it’s been in a long time and that makes me less likely to spend any of my money.

I guess homeowners and people who have larger loans benefit from this. I certainly don’t.

Will the Fed drop its interest rate again when it meets at the end of April? There’s plenty of speculation, but no one knows for sure. It seems that stocks will certainly be following the news closely.

Still – most of the trouble seems to stem from banks loaning out these unfixed interest loans to people who wanted to buy houses who just couldn’t afford them. Now those people, and those banks, are figuring out their screwed. I didn’t go to Harvard or anything, but does it really take a calculus scholar to figure out that equation doesn’t work?

State Income Taxes: Why California Sucks

When I headed west and moved to California a little over two years ago, I was fresh out of college and not at all worried about taxes. All I wanted was to move away from Chicago’s bitter cold and into the Cali sun. At that point in my life I figured I’d be lucky to ever make $20k a year, and being in such a low income bracket, the income tax amount from state to state didn’t make much difference.

Actually, at the time I didn’t even realize that there was a difference per state in terms of income tax levels. I just thought that everyone in any state paid the same amount for state and federal taxes, just that the state taxes went to the state you lived in and federal went to Bush and his war.

Apparently – that’s not correct at all. (Duh, me.) Each state has its own state income tax. Just my luck, California is the worst for income tax rates at my level of earnings.

Even New York and my home state of New Jersey would be cheaper when it comes to state taxes (although they’re both ranked highly in the list of “expensive income taxes.”)

For a yearly income of $50k – $60k (which is about what I expect to bring in over 2008)…

My state income tax rate & fee,
assuming an annual income of $55k:

California — 9.3% or $5115
New York — 6.85% or $3767.50
New Jersey — 5.525% or $3038.75

I’m surprised at how expensive it is to live in Maine. 8.5% for anyone making $17k or more. Yikes. Who really wants to live in Maine anyway?