We don't know. All of our investments are in annuities and IRA accounts. We have not had a cash dispuresment from any of them. The problem is the IRS letter tells us diddly squat. The next problem is the crazy stupid amount of time it takes to actually get an IRS person on the phone. That is to find information about an issue their letter tells you nothing about except they want theirMDlaxfan76 wrote: ↑Tue Mar 29, 2022 4:42 pmWell, here's hoping your "tax guy" knows what he's doing and you don't end up with both cap gains bill AND a tax guy bill...cradleandshoot wrote: ↑Tue Mar 29, 2022 2:54 pmThank you for cle byaring up my confusion about inflation. My point is there will always be a finite amount of money the government can raise in taxes from individuals and corporations. The government can't borrow and spend forever. It does seem like they are willing to try though. I call it trolling for dollars. My wife and I just received a letter from the IRS yesterday saying we owed 3400 dollars from capital gains on our retirement accounts. Our bank guy doesn't know what this is about and our tax guy doesn't know. He did a quick look at our 2020 returns and said there is nothing wrong. So guess who has the responsibility now of trying to figure out what the IRS wants?MDlaxfan76 wrote: ↑Tue Mar 29, 2022 8:56 amWell, not precisely true, but so overwhelmingly close that its not a nit worth picking.cradleandshoot wrote: ↑Tue Mar 29, 2022 8:49 amNo matter how much the government spends or what they spend it on their is only one source of revenue, the US taxpayer. That income while substantial, does not represent a bottomless pit of money. The US government itself does not create one red cent of income not paid for by tax dollars.MDlaxfan76 wrote: ↑Tue Mar 29, 2022 8:32 amI think you mean, if interest rates grow 1%?...inflation reduces the value of the debt, not increases it. But inflation draws monetary response, so interest rates...cradleandshoot wrote: ↑Tue Mar 29, 2022 8:17 amSo the fact inflation is creeping ever forward makes all that spending even more irresponsible? What will it cost just to pay interest on our debt at 30 trillion if inflation increases 1%? I'm guessing you already know the answer. All the responsible government talk means nothing unless the government stops spendingMDlaxfan76 wrote: ↑Tue Mar 29, 2022 7:57 ammmm, by that I mean making well considered policy choices, not merely campaign slogans. That includes the relative usage of debt capacity or not. Debt in and of itself is not irresponsible, as long as the underlying assets are growing in the long term faster than the relative amount of debt.cradleandshoot wrote: ↑Tue Mar 29, 2022 7:47 am" responsible government" now there is an oxymoron for you. Sort of like jumbo shrimp...MDlaxfan76 wrote: ↑Tue Mar 29, 2022 7:24 am I see campaign slogans but no actual plan.
That may be a way to win elections, but certainly isn't responsible government...of course, the latter may well not be the objective for some.
We are 30 trillion in debt. Responsible government is a ship that sailed decades ago.
Of course, that doesn't mean that some spending relative to taxation isn't irresponsible. It can be.
Being a fiscal conservative means to have a bias to being careful to not excessively spend more than the rate of growth in underlying assets, except in extreme situations, and to generally spend less than the rate of such growth when times are good. Conserve dry powder for those extreme times. They will happen.
But sure, it's darn costly to service debt. One would rather have less. But we have wars, and pandemics, and recessions...and we should build bridges! Indeed whatever undergirds the success of our system.
But the way to think about all this (at least as a fiscal conservative) is whether the spending we do contributes to the social and physical underpinning of an economy, and the underlying "asset value", of that economy faster than its cost, over an extended period of time? And then, sharpening the pencil further, are these the best spending priorities to accomplish that objective?
We spend on many different things, both domestically and internationally, so as to have a functioning civil society and world that supports the ongoing increase in standard of living. Are these the best, most effective ways to spend resources?
Responsible governing weighs thoughtfully among various choices...it's not a red meat campaign slogan.
Of course the "American taxpayer" is who pays taxes in America...by definition...people and corporations...
And their capacity to do so is based upon the economic vitality of the system, which is the "American system", paid for by their predecessor taxpayers...
If people and corporations aren't making money, aren't transacting business, taxes can theoretically shrink to near nuth'in. Debt balloons...or spending on anything ends...
Fortunately, however, many generations of taxpayers and workers and businesses have invested in their future and in the economic and rule of law based system which is inarguably the strongest in the world...
We need to continue to invest in that system for future generations...but doing so wisely, please.our tax guy now has to call the IRS on our dime with the meter running to try and figure this out. The IRS was kind enough to give us to April 18 to pony up the money before they start charging interest and penalty. It may take until April 18 to talk to someone at the IRS. You could say that is one way to raise money for the government...
The IRS does make mistakes, but I'd be willing to bet a nickel that there were some underreported stock trades that the IRS picked up on through other means. Hope they simply made a mistake!
now or they will charge us interest and penalty. I have all the confidence in the world in our tax guy. I have ZERO confidence in the morons at the IRS. Tell me why I should. This is not the first time the IRS has effed up our tax return. It begining to come a new yearly tradition. The funnest part about the IRS letter.. they are telling us they are making the corrections to our 1040 form that WE requested....... What the heck are they talking about? The motto for the IRS should be guilty until proven innocent and even then they won't believe you ..
. They got you two hook, line and sinker with that. Amazing what two or three extra seconds means.