Next Meeting Sept 14th 7:00PM

Join us at our next business meeting meeting September 14th at the Lake County Federation HQ. (322 Peterson Rd Libertyville)

Social Security: A New Direction

By David Schaffrath

While the topics discussed at the panel this past week are fresh in my mind, I would like to offer a few thoughts of my own on the topic of Social Security.

The problems facing the long term sustainability of Social Security have been presented over and over again and most conservatives are steadfast in the belief that we need to privatize a majority of the program. Although I agree with this, there are the enormous problems of selling the public on this and the reality of what to do with those in our society who will fall through the cracks or will not assume responsibility of their financial futures. One need not look far to see evidence of this in our present societal mindset.

In order to fix the problems and gather widespread support we need to acknowledge that there is a certain framework that we must navigate and work within. Due to the insidious way FDR implemented the system, a majority of Americans see Social Security as entitlement. This view will most likely not be changed in our lifetimes nor do most wish to overhaul the entire system. We all saw what a disaster healthcare “reform” turned out to be. With this in mind it seems like the best choice for us is to expand our private savings (401k & IRA) systems while taking a play out of FDR’s playbook and intertwining it with the current system.

One of the main problems with social security is the indexing of the expenditures to the consumer price index (CPI) to offset the effects of inflation. In essence this creates a cost that grows parallel to the economy. If we can limit the expansion of the system the economy will outgrow the burden imposed by the program.  To accomplish this we need to use one of freedom’s greatest assets, choice. The choice to partially opt out is key to revamping the system.

The private part of retirement savings being 401Ks and IRAs have been wildly popular in part because of the tax saving opportunities they provide. We need to expand on this without compromising the current system. We can accomplish this with an opt out type tax credit. All persons would still be required to contribute to the current system at the current rates to ensure the solvency of Social Security in the long term but based on economic criteria they could choose to receive a tax credit. They would receive this credit in lieu of the cost of living increases. (COLA) Given how well tax credits are received within the voting public, and the volunteer nature of the program it would be difficult to politicize the issue. The program could also be structured on a progressive scale so that largest recipients of Social Security (the middle class) would receive the greatest incentives to participate. With each person that agrees to the volunteer program there is a increase in the ability of the economy to outgrow the program and that  participants  and future participants will become more self-reliant; a welcome “change” in America today.

The program I have suggested tries to leave a system in place that still takes care of the needy but adds sustainability that is currently lacking.  Although this program may not entirely fix all the problems that plague our current Social Security system I believe it is a step in the right direction and will help reduce the future burden that we ask our children and grandchildren to bear.

Payroll Taxes: What are These and Why Do We Pay Them?

Payroll Taxes: What are These and Why Do We Pay Them?

By,

Jeri Atleson

Payroll taxes are taxes assessed on both the employee and the employer on each employee.  They may be a federal payroll tax or a state and/or local payroll tax.

Why do we pay payroll taxes?  Payroll taxes are a way for the various governments: federal, state, and even some localities or municipalities, to assess and collect tax dollars from their residents.

Remember:  government is not in the money making business, they are in the money taking business.

As an employee, what do I pay in payroll taxes?   Let’s start with the basics.  If you are not a teacher or do not belong to other unions that have their own retirement plans (including some governmental workers), then you pay the following: federal withholding tax, state withholding tax if your state assesses a state income tax, local or municipal tax if your city or village assesses a tax (think NYC), social security tax and medicare tax.

All of these taxes, in addition to any optional withholdings you may elect to have taken from your paycheck (retirement plan, additional tax withholdings), are taken from your gross salary and leave you with your take home pay.

Your federal, state and local withholdings are your responsibility to pay.  Your employer only withholds them on your behalf and remits the payments on your behalf.  You are the person truly responsible to make sure that you have paid in your taxes to the government.  If the government finds out you never remitted any tax payments and you claim your employer did it for you but they never got it, you are still responsible for paying those tax burdens.

Employers withhold and remit tax payments as a courtesy to their employees, not because they are mandated to do it.  They file the forms on your behalf, they remit the payments on your behalf, but they do not bear the responsibility for paying the taxes in your name at the end of the day.  Your employer is not obligated to do this for you, although almost all do.

Social security and medicare taxes are a different thing altogether.  Social security was enacted as a retirement plan for the elderly.  When social security was enacted by FDR in 1935, life expectancy was approximately age 65, assuming you survived childhood.  It was therefore projected that most people would not live long enough to draw social security past their own contributions.

By 1939 (still FDR), social security had become a retirement plan, survivor benefits and benefits to the retiree’s spouse and children.  Disability benefits were added in 1956.

To figure out how much you pay in social security tax, you first must find the current annual salary limit that is taxed.  For 2010, the first $106,800 of income you earn is taxable at 6.2% to pay into social security.  That translates to $6,621.60 that one pays in on $106,800 of gross salary.

Now let’s take medicare taxes. Medicare was signed into law in 1965 by LBJ. Medicare’s purpose was to be a health insurance program (an entitlement program) for the elderly population, ages 65 and older, and for people with disabilities.

Medicare taxes are assessed on your entire gross earnings. Unlike social security, there are no income limitations for medicare taxes.   If you earn $20,000 or $2,000,000, you pay 1.45% of your gross salary in medicare taxes.  For someone earning the same $106,800 from above, you would pay $1,548.60 in medicare taxes.

Employers withhold both social security and medicare taxes on your behalf and remit them on your behalf.  This works the same way as your federal, state and local income tax withholdings do.

The difference with social security and medicare taxes are that employers are obligated to match your withholdings with their money.  They owe payroll taxes just for employing someone.

The social security and medicare payments you would make on $106,800 would be $6,621,60 and $1,548.60, respectively.  Your employer would then owe $6,621.60 and $1,548.60 for employing you, whether the business is profitable or not.  As long as they employ you and pay your salary, they owe those taxes.

However, in addition to the employer’s portion of social security and medicare taxes they pay, they also have to pay federal and state unemployment taxes.  Those rates have too many variables to get into in this article, but what is important to understand that these are additional payroll taxes the employer must pay which have no immediate effect on their employees.

These unemployment taxes are what is paid out in unemployment benefits when someone is laid off from a job.  In the current economic and job climate, you can imagine that these taxes must be quite high and costly to the employer.

Federal unemployment taxes (FUTA) has a current tax rate of 6.2% with an offsetting credit of up to 5.4% for paying into a state unemployment plan (SUTA).  The end result for FUTA is .8% of up to the first $7,000 of wages earned on each employee.   For our $106,800 employee, that amounts to $56 at .8%, assuming the credit.  That is another $56 for each employee, just for the federal unemployment tax.

The state unemployment rates vary so much and have so many factors.   Rest assured, however, that employers are also paying into a state unemployment plan at various tax rates on various levels for each employee they have.

To review, we did not cover federal, state, or local income tax withholdings in this article because we covered income tax withholdings in previous articles.  We have covered both employee and employer payroll taxes in this article, the impact those tax dollars have on your take home pay, as well as on the employer’s bottom line just for employing people.

Why is all of this important?

What is important to understand is that we are happy to take home a paycheck and pay our bills in this environment.  But most of us just go through the motions.   We don’t truly understand how and why we are paying these taxes, how those taxes impact our paychecks or our employer’s bottom line and ability to hire and retain employees.

This year we are projected to pass a big milestone.  This will be the first time the government will be paying out more in social security benefits than what they take in.

The social security system was set up to fail.  It was never going to be able to maintain population growth, or politicians that “borrow” from the social security fund to pay for their other projects or entitlements.

Why would someone want to hire more people in this economic climate?  It only means higher taxes for them.  Social security, in addition to whatever else may be coming down from Congress and the President, will continue to remain insolvent, broke, bankrupt.  Call it what you may.

The bottom line is that rather than addressing the looming financial crisis of social security all of these years, the politicians have been scared away because the solutions to fix it, truly fix it, are not good and comforting to their constituents.  It could mean they wouldn’t be reelected.  It could mean unpopularity. To a politician, most of whom care primarily about being reelected, it’s a no-win situation so they just don’t talk about it.

What they have done is to gamble that they can borrow from somewhere else to “fix” social security before the American people noticed.  The problem with that gambling is that ALL of the federal government is broke, bankrupt, insolvent.  There is nowhere left to “borrow” the money from without the American people noticing.

The American people are starting to notice everything.  Becoming educated about the basics is the first step.  Only then can we formulate real, practical solutions to the problems rather than putting a band aid on it and hoping to just move forward.

Only then can we hold our Congressmen and the President accountable for fixing what needs fixing, not putting a band aid on it or deepening the wound.

Income Taxes: Where Did They Come From?

Income Taxes: Where Did They Come From?

By Jeri Atleson

When I say income taxes, what happens to you? Do you break out in a sweat? Do you get a headache? Do you stress over getting your tax returns done? For me, it’s yes, yes, and yes!!!! I’m guessing that I’m not too different than most people.
Have you ever given thought to why we pay income taxes in the first place? Or why the Internal Revenue Code is so complicated?
With this current economic and fiscal crisis gripping and crippling a lot of Americans, more and more people are starting to wonder these same questions. So let’s tackle the basics.
Have we always paid income taxes as Americans? No. The truth is that we did not start paying income taxes, on a Federal level, until 1913. The Sixteenth Amendment to the Constitution was proposed on July 12, 1909 and ratified on February 3, 1913. Until then, the law pertaining to taxation, including several decisions by the U.S. Supreme Court, had been in conflict since the Civil War.
With the passage and ratification of the Sixteenth Amendment, it became clear that Congress was (and is) to have power to assess and collect taxes on whatever income sources it chooses, without consideration to apportionment or population. What that means is that Congress made it legal and the states agreed through ratification (the only way to create an Amendment to the Constitution). This granted Congress the power to assess taxes in any way they see fit.
The portion of the amendment relating to apportionment and population is not so much an issue today, as it was when the Amendment passed. It pertained to direct taxes, of which there are none today.
However, what has resulted from the ratification of the Sixteenth Amendment is the Internal Revenue Code. The Internal Revenue Code is the accumulation of the laws on which we pay our taxes. Congress writes, debates, and passes legislation pertaining to the tax code. The President of the United States may choose to sign the legislation or veto it. If he signs it, that legislation is now law and part of the Internal Revenue Code.
OK. So now we know how and when it became legal for the Congress to pass legislation allowing them to tax and collect from us. The big question: why?
The answer is not about tax policy or financial policy. If it was as simple as common sense fiscal policy, there would be no personal income taxes assessed. There would be budgets that would not end in deficit year after year. That’s not how we run our households and that is not how government should run their house.
The truth of the matter is that the Progressive Income Tax is about income redistribution.
It is a mindset, a philosophy, an outlook on how life should be. Congress had to go through the amendment process in order to make taxing the citizens of the United States legal and constitutional. The states had to agree to granting Congress this power, through ratification. Have you ever thought why government – Federal or State – may want this power?
Remember what I said in the first article of this series. Government is not in the money making business. They are in the money taking business. With money taking comes serious responsibilities to the people they take money from.
There are some valid reasons for government to use taxpayer money. Government does serve a purpose in some instances. For example, government provides for the national defense. Who then should pay for the national defense? It’s only common sense that American citizens should pay for the privilege of a national defense.
Should you pay for your neighbor’s mortgage? Should you pay for bailouts of companies? The truth of the matter is that our taxpayer dollars are appropriated (designated) for these purposes. The TARP bill and the most recent stimulus bills are examples of this.
If you choose to help your neighbor stay in their home, that is quite noble and your choice. If it is decided for me to help someone in another state stay in their home, is that government’s place to decide that on my behalf?
This is the responsibility that comes with spending other people’s money. There is a role for government in the American people’s life. But understanding how federal personal income taxes came to be, how they work, and why they came to be is the first step in understanding how government works and in assessing whether government is taking our money and spending it wisely.

Taxes: What are they and Where did they Come From?

Taxes: What are They and Where Did They Come From?

By

Jeri Atleson

I don’t know about you, but I ask myself “Why do I pay so much in taxes?” all of the time. Think about it. Depending on where you live, you could potentially be paying tax on your income to the federal government (IRS), the state government for the state in which you live (there are some states that don’t assess income taxes), and a local tax if the city or township you live in assesses a tax for living there (not just New York City).

Now add in payroll taxes. In addition to your federal and state (and sometimes local) withholdings, most of you pay into Social Security (teachers usually have their own retirement plans they pay into) and Medicare. If you’re lucky enough to own your own business, you pay in the employees’ portion of Social Security and Medicare, as well as the employer’s matching portion,
If you don’t own a business, most of us don’t even realize our employers are taxed on their employees. Basically, those entrepreneurs and business owners are taxed just for having employees. We just accept what our paycheck says and we bring home whatever we can from our jobs. We usually don’t think about the impact on our employers.

What about sales tax? Most of us (again, not all) pay sales tax on goods and some services that we purchase. Do you eat out at a restaurant? Have you ever noticed the tax on the bottom of bill? Or what about buying a new pair of shoes? Again, usually you pay sales tax on those shoes. I could go on and on for quite some time. I’ve only listed the bigger tax items that most people are aware they pay.

The truth of the matter is, however, most of us don’t really know why or how these taxes work.I suggest that if we, as a society, started educating ourselves on how and why taxes exist, we could empower ourselves to educate our children and families on the role taxes play in our life today. Not only the role taxes play in your annual or monthly income and our monthly budgets, but how those taxes translate to how our government works.
Once we educate ourselves, we can then demand changes to the status quo. We could start making changes to school curriculum, so our children have a fighting chance of avoiding what we have gotten ourselves into as a society. We can and should hold our Congresspeople accountable for our tax money. The bottom line is that government, whether it is federal, state, or local, is not in the business of generating revenue.

Think about it. What product or service do they produce? They are not a money making business. They are a money taking business. So if they are taking your money, and boy are the ever, don’t you want to know why they assess taxes, how they assess taxes, and what they spend your tax money on?
This series of articles will focus on income taxes. When did we start to pay income taxes (not as early as you think)? Why did we start to pay income taxes? How does Congress come up with the tax law? How does Congress spend our tax money? Why do we have annual deficits and aggregate debt as a country when the government is collecting our tax dollars throughout the year?

The sooner we begin to educate ourselves about how our taxes work, the sooner we can empower ourselves and our children to take control of our own financial reality and our financial future. Financial freedom truly is the key to most other freedoms we hold so dearly, and we hold the key to that freedom.

Disclaimer: These are not official statements of the LYCRs

Young People: Grab your seat at the table

Young People: Grab your seat at the table

By,
Lauren Fleming

In the aftermath of a bloody health care battle, America has awoken to the realization that we no longer have control over the direction of our country. The most stunned of all are the masses of Gen-Xers and Millennials who sacrificed blood, sweat, and tears to help Obama ascend to President. To these it has become glaringly apparent the stimulus package did not create jobs for those entry-level experts fresh out of the collegiate bubble, nor did the bailouts of Wall Street or the banking and auto industries soften the financial blow to our meager checkbooks. We now see partisanship and bullying have not created sufficient health care reform; but only alienated those with alternative ideas and dismissed a generation of taxpayers who will carry the burden of socialized medicine into the foreseeable future, perhaps indefinitely.
Reagan said that “freedom is never more than one generation away from extinction.” The current political climate, with its back room deals, pulpit bullying techniques, and hyper-partisanship, is enough to disenfranchise an entire generation of youth who are only learning how fragile freedom is. Our liberty has never been challenged; we did not live through the Red Scare, the Civil Rights Movement or Vietnam. Our only concept of defiance to American principles comes from memories of ash-covered victims fleeing tumbling buildings one September day nearly 10 years ago. And, we have never taken on a challenge so domestic as our very own President and his allies. This concept is, well, foreign to us.
Pew Research Center, a non-partisan organization, recently released a poll indicating that 75 percent of Americans are “angry” with the government, and one-third feel their personal liberties are threatened. Thomas Jefferson said that “every generation needs a revolution.” The time is ripe for this generation of Americans to learn what it means to take ownership in our country and to impart the nation’s future with our passion, our fortitude and our pride. History has shown that if we don’t take a seat at the table, we’ll most certainly be on the menu.

Lauren Fleming
Chair, Lake County Young Republicans
Lake County, IL

Comments on Nuclear Power

Comments on Nuclear Power,

By Brian Burgess

For those who don’t know, I am a HUGE supporter of Nuclear power.  It’s arguable that nuclear energy the most cost efficient; there are many studies out there that average the cost of production on par with wind, and even lower than all the fossil fuel types.  I’ll link a few here, World Nuclear Association, and here’s an indepent analysis- http://www.eia.doe.gov/cneaf/nuclear/page/analysis/nuclearpower.html. Me, being the skeptic of all things, I’ll conclude that from what i can see, in Nuclear’s current form (being that all of our plants are 20+ years old), we can probably engineer modern nuclear plants to where the cost of electricity can be lower than all the fossil fuels.  Maybe that will change, maybe it wont.

But what about the environment?  Groups like Green Peace are always quick to point out Chernobyl and Three Mile Island.  Even CNN recently did a story about “Where is the waste going?” What the article doesn’t mention is YUCCA mountain, a permanent storage for all nuclear waste.  It will probably be completed by 2020, it costs booku bux, however many groups criticize that it’s not safe.  After doing some extensive research, I’ve found it is 99.99% safe.  The reason Nevada was chosen for the site is because there’s NO ground water, it’s a desert.  Therefore even if all the safety measures failed, we’d still be pretty OK considering the only thing that would be radiated is sand.  The odds of that land becoming a lush jungle in 100 years is zero.  440,00 years ago it probably WAS a jungle, however in 10,000 years, the radiation will be probably less than the average radiation i got when drinking the water in Northern Illinois.   But still, Nevada residents are saying NIMBY (Not in my backyard) and are being fed propaganda.

What about Chernobyl you ask?  Well the famous meltdown wasn’t its first problem.  In fact, that particular reactor had a history of fires and other problems long before the incident, and in a developed nation, like the United States, that plant would have been maintained properly or shut down.  Upon further inspection of 3 Mile island, there were no casualties, very marginal increases in reported cancer (1 specific cancer for males),  and no injuries.  So we could say that, in the United States, there have been no significant deaths or injuries associated with Nuclear Power.  We can’t say that for coal, after all, we have cave collapses every year.

Environmentally, Nuclear is the most “green”.  Since there is a permanent spot to put the waste, there will be no adverse effects on ANY environment (including the desert in Nevada).  That’s the best we can say for pretty much any man made power- Wind power kills birds, Hydroelectric disturbs rivers, coal, oil, and natural gas all give off some atmospheric particles and C02, (no comments on global warming in this article, although we can all agree C02 is probably not a good thing).  So the way I see it, if Nuclear is the greenest, the safest, and the most cost efficient method we have, why aren’t we using it?  If the costs of electricity were lower, it becomes much more practical to start using plug-in cars, plug-in lawn mowers, plug-in everything!

Disclaimer: Blog does not represent the view or opinions of Lake County Young Republicans

Lake County YR Business Meeting

Title: Lake County YR Business Meeting
Location: 322 E Peterson Rd (Republican Federation HQ) Libertyville IL
Description: Our monthly business meeting, guests always encouraged to attend!!! Keynote Speaker Demetra Demonte
Start Time: 19:00
Date: 2010-03-09

Illinois Policy Institute Releases 2010 Piglet Book

Great Read!

http://illinoispolicy.org/uploads/files/2010PigletBook.pdf

Our friends at the Policy Institute released their piglet book which underlines 350 million in outrageous waste spending.  Some of my favorites included

$61,312 to Pheasants Forever, an organization “dedicated to the conservation of pheasants”

$13,775 to the National Wild Turkey Foundation

$1,607,367 to various county fairs (shouldn’t county fairs be paid by… counties?)

$248,094 to the National Museum of Mexican Art in Pilsen

My most surprising revelation after reading the pork report is most waste expenditures are not over 50 thousand dollars.  Most are small, some under one thousand.  It is clear, if Illinois is to come out of its financial crises, it’s going to start with the little fish.

Getting involved with fiscal conservative groups and organizations, like the young republicans and getting involved on a local level, like library board, school board or trustee; can often be the first way to start tightening Illinois’ belt!

-Burgess

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