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DeTaxUS Newsletter CONTENTS:
INTRODUCTION Our Mission is to Abolish the Federal Income Tax
"Always vote for principle, though you may vote alone, and you may cherish the sweetest reflection that your vote is never lost." A few days ago I voted in the Primary Election for various city officials here in Reno, NV. The usual slate of incumbents was running plus a few new folks who felt the current politicians were not representing the citizens. Most of the candidates had one or two unique differences that identified them as a possible improvement over the existing mayor, city council members, sheriff, et al, but one stood out from all the others. A young lawyer who'd been fighting the city council's policy of approving large so-called urban development projects without allowing the citizens to vote on the expenditure. A very controversial project involving a "train trench" through the center of the city has just been approved by the council in spite of a citizens' petition (sponsored by this attorney) to put it on the ballot. The council refused to allow the citizens an opportunity to vote on the issue even though the staggering cost of $240+ Million will put the taxpayers of Reno in debt for the next 40 years. The attorney decided that if he couldn't sway the city council with 15,000 signatures on a petition, he'd better run for a seat himself so he could protect the citizens on future issues. One of the things he wanted to accomplish as a city council member was to amend the city charter so that projects costing more than $10 or $20 Million would automatically go on a ballot. I voted for this young man, knowing full well his campaign was under-funded, he'd gotten little media attention, and was unknown by the majority of the voters. His chance of winning against a slate of five better known and better financed candidates was probably a thousand to one. Only the top two would go on the November ballot. Some would say he was wasting his time and money even running. His friends who worked on the petition drive and helped with his campaign don't think so. As it was he came in 4th out of 6, ahead of one of the incumbents -- not bad for a first attempt. Some would say I wasted my vote, but I feel I sent a message to the guy or gal who wins the election in November that I am dissatisfied with the current administration and expect much more from my representatives in the future. S/he probably won't get the message, but at least I sent it. Send your comments to mailto:editor@DeTaxUS.com Warmest regards, Cory Layne "A fondness for power is implanted, in most men, and it is natural to abuse it, when acquired." 1. TAX NEWS August 30, 2002 -- CAVIAR CROWD
--Sometimes government bureaucrats do things that just make you ask "What were they thinking?" The Earth Summit going on last week in Johannesburg [South Africa] is the perfect illustration of this. Bigwig politicians gathered in posh accommodations to discuss famine and poverty while they dined on lobster and caviar washed down with expensive champagne and liquor at taxpayers expense. More…. ============== And here at home? NEWS RELEASE For Immediate Release: Wednesday, August 14, 2002 Coalition Asks Senators to Block Congressional Pay Raise Opponents of the proposed $5,000 congressional pay raise sent letters today to all U.S. Senators urging them to reject the raise. The letter follows. Dear Senator: We write to ask you to oppose the proposed $5,000 congressional pay raise, which would boost the congressional compensation package from $150,000 to $155,000, plus generous perks, pension and health benefits. Members of Congress are already overpaid. Including the new proposed raise, Members of Congress will earn nearly four times the median income of full-time, year-round American male workers, excluding benefits and perks. In 1989, Members of Congress earned $89,500 per year. Since then, they have already granted themselves $60,500 in raises. Over the past five years, Members of Congress have given themselves $13,300 per year in raises, which is more than a minimum wage employee would earn during an entire year of full-time work. But this is an especially improper time for yet another congressional pay grab. The federal budget deficit has exploded. The Office of Management and Budget predicts that the federal deficit will be $165 billion this year. Still worse, the federal public debt has ballooned to $6.2 trillion. Our country is so deep in debt that we cannot and should not afford a congressional pay raise. Our economy is sagging. The recent stock market drop has cut the retirement savings of millions of Americans. And the federal government's official unemployment rate has risen from 4.9% a year ago to 5.9% last month. There is no shortage of highly qualified candidates willing to run for Congress at the current salary. If Senators wish to earn more, they may do so in the private sector. At the very least, the Senate should hold hearings on the proposed raise, and permit a roll call vote on an amendment to reject it. But this is no time for another congressional pay grab. We ask you to preserve your moral authority to govern by doing everything in your power to stop it. Sincerely, Ralph Nader 2. JOKE OF THE MONTH How to Beat a Traffic Ticket. A police officer pulls a guy over for speeding and has the following exchange: Officer: May I see your driver's license? Driver: I don't have one. I had it suspended when I got my 5th DUI. Officer: May I see the owner's card for this vehicle? Officer: The car is stolen? Officer: There's a gun in the glove box? Officer: There's a BODY in the TRUNK?!?!? Hearing this, the officer immediately called his captain. The car was quickly surrounded by police, and the captain approached the driver to handle the tense situation: Captain: Sir, can I see your license? Captain: Who's car is this? Captain: Could you slowly open your glove box so I can see if there's a gun in it? Captain: Would you mind opening your trunk? I was told you said there's a body in it. Captain: I don't understand it. The officer who stopped you said you told him you didn't have a license, stole the car, had a gun in the glove box, and that there was a dead body in the trunk. Driver: Yeah, I'll bet he told you I was speeding, too. 3. MONEY SAVING TIPS Make your lunch instead of eating out or going to the cafeteria. Plan your menu for the week to provide variety and count your savings day by day. It'll add up faster than you think. ============== Rent a movie instead of going out. Invite a few friends over and pop your own popcorn. You'll all save money and have more fun besides. ============== Make a list before you buy your groceries. Stick to the list. Cut down on those spur of the moment items that waste money. ============== Stash your change in a piggy bank each day. Keep less total cash but larger bills in your wallet. You're not likely to break a $20 bill to buy a can of soda. ============== In cool weather, turn the heat down and wear a sweater. You'll be more energetic and save money. Turn off the heat in rooms you don't use. In summer, use air conditioning sparingly. Draw the drapes to keep out the heat, open the windows for fresh air. ============== Cancel your daily newspaper. You'll save time and money. In most cities you can get the top news stories and want ads online. You can also get coupons online just like those that come in the paper and print just the ones you want. ============== Speaking of coupons. Use them. You can save up to 10% on your grocery bill. Ten cents here, fifty cents there, and "two-fers" can add up to plenty! ============== Give meaningful, personal gifts rather than expensive ones. A personal note from you may mean far more than a fancy brand-name greeting card, and you save gas, time and money. Inexpensive computer software lets you create your own special greeting cards. ============== Check your mortgage. If you've paid it down to where it is less than 80% of the value of your home, you can cancel your PMI insurance. Most people keep paying that every month for years after it is no longer required. Some mortgage companies require it to be 80% of the original purchase price, others 80% of current market value. You may have to refinance to get rid of it, but with rates as low as they are now that might save you even more. ============== Buy "classic" styles. You can have your own fashion colors or personal style, but buy clothes that will be in fashion year after year. "There are two ways of being happy: We must either diminish our wants or augment our means -- either may do -- the result is the same and it is for each man to decide for himself and to do that which happens to be easier." 4. PLANNING for 2002 IRS has started examining S-Corps with low shareholder wages. The problem is the at risk rules. If you withdraw more cash from an s-corp than you have in accumulated profit and initial capitalization, you may have an at risk limitation and have to recognize income. It may be better to hold real estate in a partnership because you are allowed to include all the debt you are responsible for, whereas, in an s-corp, you are only allowed debt basis for loans you make to the company, not debt the company incurred even if you are guaranteeing the debt. In the case of loans you have to guarantee anyway, why not take the loan out in your own name, then draw up a note to the S-Corp and lend the money to the corp? Make sure the note states that the S-Corp will make payments on the loan directly to the original lender rather than to you. That way the interest is deductible to the S-Corp (as it would be to you personally as an investment loan), but it is not taxable to you as interest income as the IRS might claim if the S-Corp made the payments to you and you in turn paid the original lender. 5. RESOURCES
Free 7 day budgeting course. 6. EDITORIALS and ARTICLES
The Dollar Stretcher by Gary Foreman Nearly Retired Help! I am 50 with no savings!! How can I start? Need any and all advice. Dinah Dinah sure has a lot of company. Recent Congressional research showed that only 40% of workers have a plan in place for retirement. Even among those over age 55, only 47% had retirement accounts. And the median value of the account was less than $25,000. So a lot of people need to begin saving for retirement. The first step for Dinah is to try to get an idea of how much money she'll need. If she's among the two thirds of Americans who expect to continue in her current lifestyle after retirement, she can expect to need about 80% of her preretirement income. That's a surprise to many people. Where will she find that much money? Dinah should begin by finding out about any existing plans she may have through past or present employers. Even if she doesn't have any private company pension, she'll be eligible for social security. To find out how much she'll receive call the Social Security Administration at 800-998-7542. Ask for the Personal Earnings and Benefit Estimate Statement. Once Dinah has some idea of how much income she'll need and what's already available she can calculate how much additional she'll need to provide. For illustration, let's assume that she'll need an extra $10,000 in income each year. How much will she need to save to get that income? We could go through a lot of discussion and complicated formulas. Whole books have been written on just this subject. But for our purposes, I'd assume that Dinah should be able to safely get about 7% in income from her savings each year. That's a realistic, conservative long-term rate. To find out how much savings will be required to generate the income, just divide the income desired ($10,000) by the rate of return (7% or 0.07). In this case Dinah would need about $143,000 to produce $10,000 in income each year after retirement if it earned 7%. So how does Dinah begin to save that much money? Much of what she'll need to do is the same as if she were beginning any saving program. Begin by setting some goals for her savings. Can Dinah manage to save $5 each week? Begin with something simple. She might not know where to find an extra $5. She'll need to take a look at her habits and see what she can change that will make $5 available each week. It will almost certainly require her to change some habits. Start today. Even if she can only save 50 cents this week, that's better than nothing. And if she does the same or better next week a new habit will be starting. Sure, more is better. But actually saving 50 cents is better than complaining that you can't save $5. Once Dinah begins to save some money she'll need to decide where to keep it. Here the goals are safety and growth. Begin with a separate saving account. Once Dinah has put money into the account it should stay there unless she's moving it to an investment account that's earmarked for her retirement. After she has accumulated some money in the savings account she should periodically move some of it to a no-load, growth mutual fund. Historically a fund of this type will earn nearly 10% per year over the long haul. Dinah should contribute to a tax deferred retirement plan. If she is eligible for a 401k plan she should sign up. Also begin contributing to an IRA. Her money will grow much faster if she doesn't have to pay taxes on the earnings each year. Dinah should learn some of the investment basics. Your potential risks and rewards differ with various investment choices. Learn the differences and which would work best for you. It's really not that complicated. The important investment concepts are easy enough to understand. There are local adult ed classes, online courses and even books that can explain the basics. Dinah is smart to get started now. Yes, earlier would have been better. She might have started too late to guarantee a
comfortable retirement. But she can still make a significant difference in her future standard of living. ============== "No one can read our Constitution without concluding that the people who wrote it wanted their government severely limited; the words 'no' and 'not' employed in restraint of government power occur 24 times in the first seven articles of the Constitution and 22 more times in the Bill of Rights." ============== That's it for this month. The battle goes on between over-taxed Americans and the federal government that wants more of everything. More wars, more homeland security, more agencies, more regulations, more control over our finances, more control over the education / indoctrination of our children, more control over businesses, more money and perks for our "lawmakers" and bureaucrats in Washington. That means less of everything for us. Less peace, less mobility, less responsibility for ourselves, less choice in our financial affairs, less of the basics in schools and more mandated "programs" to dumb down the next generation of slaves, less free enterprise which is the basis of the American dream, less available cash for the working stiff. Liberty is on the verge of extinction, and there are very few of us who even care. But those of us who do care had better start making more noise, start getting the word out before it's too late, that Liberty is better than Slavery whether the Master is a plantation owner or the U.S. federal government. You can look up contact information for your Congressman and Senators at: Cory Layne P.S. Your comments and suggestions are welcome. We will try to respond to all of them personally and will include a selection of them in future newsletters and on the DeTaxUS website. Send email to: Editor P.P.S. Let us know how you feel about the income tax. Your opinion is always welcome. You can join our online forum to discuss tax issues by going to: P.P.P.S. You can help by sharing our vision with other over-taxed Americans. DISCLAIMERS: The information contained herein is general in nature and is not intended as legal, accounting or tax advice by DeTaxUS, Inc. The reader should seek professional guidance prior to taking any action based upon this information. DeTaxUS, Inc. shall have no obligation to inform the reader of any changes in tax laws or other which may affect the information provided. Portions of this newsletter may have been extracted from articles received for republication. Credit is given where the author is known. Unsigned articles and information gathered from government publications and websites are accepted as public domain. Copyright© 2002 by DeTaxUS, Inc. Copyright
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