Whose Money is it Anyway? Why You Should Care About the Shutdown

Whose money is it anyway and why does it matter? How the government shut down is all about your money.

In honor of election day, today, I want to ask you a question that we should always ask ourselves when thinking about who we vote for and how those elected officials are doing. That question is, WHOSE MONEY IS IT ANYWAY? How you think about this question is fundamental to your world view.

Several years ago I wrote an article that appeared in several newspapers and other publications. You might even remember it because it was discussed on various media. The article was about another dust-up in Washington when another issue about taxes and federal spending captured our attention for several moments.

In that article, and again here, we discuss the arrogance of politicians when it comes to how easily they forget whose money they are fighting over. This is a non-partisan article, just like the earlier one. Both sides are guilty of this and there doesn't seem to be any ideological side that is worse than the other. Both sides, and seemingly every politician forgets when they are elected two important things:

1. Who elected them and

2. Whose money are they dealing with while they are in office.

I'm going to leave the first issue for another day but you may want to give it some thought anyway.. But the second, well, that's what we are discussing here. So let me pose the question to you, whose money are politicians spending? Some might debate this, and they would be wrong. You see, the only money that politicians ever deal with IS YOUR MONEY!

This is so fundamental to  how the government works that it is surprising that so many people forget. What is even more serious, perhaps even insidious, is that politicians act as if they never were aware of this simple and elementary civics lesson. The money they deal with, the money that they spend, the money that even pays their salaries and perks is your money.

Let's take the latest fracas in Washington, the current showdown over the shutdown at the politicians' corral. While many have forgotten this as they pay attention to only the latest news cycle, here we are on election day and very few are even mentioning the shut down. The issues are numerous and perhaps even complex. But, the argument, the actual bottom line argument is who gets to control and dictate the use of your money. The politicians are playing chicken with your money and pretending that the whole thing is about ideology. It's not and never has been about ideology, it's about power.

So who do you want to be in control of your money? Politicians? Big Banks? Corporate executives? Yourself? Let me know your thoughts and who you think your money belongs to. My answer is that your money belongs to you. Whether you give control over it to someone else is up to you.

I look forward to your comments.

Bernie Greenberg

Tax Law Permanence? No Chance!

Tax Law Permanence is Never Permanent

Recently, well just three months ago, Washington presented us with a brand new tax code called the Taxpayer Relief Act of 2012 or TRA.. This new law changed our income, estate and gift tax systems entirely. One of the features of this new tax law was supposed to be it's permanence. Well, the tax law is permanent no longer.

The TRA of 2012 brought new tax rates and exemptions. It was designed to create permanence and certainty to allow you to plan your financial affairs and estate without having to redo everything from year to year. This is now going up in smoke (the whole tax law looks like smoke and mirrors anyway) with the President's new budget proposal.

The new budget would do many things to our tax code and all of them are bad. Here is a sample list of just a few of the negative and adverse changes proposed:

1. Reduction in exemptions used in estate planning to 2009 levels.
2. Increase in tax rates for estate and gift taxes to the highest levels, 55%.
3. Extreme restrictions on the use of IRA's and similar savings tools.
4. Elimination of the ability to stretch inherited IRA payments over the lifetime of a beneficiary other than the surviving spouse.

While the budget proposal would do many, many more things to our tax code, this short list should be enough to alarm everyone what may be coming. Please remember to not shoot the messenger and consider writing your Congressional representatives to express your feelings about the proposed changes.

Also remember, if the budget proposal passes, it will be time again to review your planning and make appropriate changes. Please let me know if you have questions about these changes and how they impact you.

Also, please join in our conversation and post a comment here or to me via email about this or any of our estate planning topics.

Bernie Greenberg