The United States of America is bankrupt beyond our ability to grasp the enormity of the debt. To put it in perspective, as I mentioned in “A Freight Train is Coming Your Way” post, our current national debt is over 100 trillion dollars.
If you use the 100 trillion dollar number, which is probably on the low side, and divide it by the population of the United States, which is 329.5 million you get an outstanding debt per US citizen of $303,490.
That is an insanely large number. So, other than raising tax rates, which we all know is going to happen, the other alternative to raising more money is to collect more of what is already “owed” by more aggressive enforcement of the current tax laws.
We already knew of the beginnings of a tax enforcement crackdown when news came out that Venmo, PayPal and Cash App would be “required to report all commercial transactions totaling more than $600 per year to the Internal Revenue Service”. No longer could small businesses make a few thousand dollars on the side without having to report it. “Previously, these mobile payment apps only had to tell the tax authorities when a person had over 200 commercial transactions per year that exceeded $20,000 in total value, the IRS said.”
The latest news is that the IRS is planning to add 87,000 new agents. Now we know that those 87,000 new agents (In all fairness all of the new employees won’t be agents, but a lot of them will be.) are not being hired to audit the 614 billionaires in the United States. No, they are going to go where the money is, and that, despite public perception, are not the rich. The vast majority of the money available to the government is from the middle and lower income tax brackets.
As a matter of fact, the IRS audits the poor at 5 times the rate of everyone else, analysis finds. Why is this. Well, there are a lot more of them and they are far, far less likely able to afford representation to mount a reasonable defense.
To make things worse, there are now even discussions of a Central Bank Unites States digital currency. Now, were the US government to issue a digital currency, that would mean that they would know of every single transaction with the commensurate ability to make sure that any and all taxes due are paid. They could even automatically withdraw any funds they wanted to by a simple ledger transaction.
With the coming higher tax rates, more aggressive enforcement, and even the possibility (however remote) of a digital currency, it makes more sense now than ever to get out of business with the US government and have all of your assets in the tax-free bucket where you will owe zero income taxes for the rest of your life.
By having the vast majority of your post-retirement income coming from truly tax-free sources you will not have to worry about how much higher income tax rates go or how much more aggressively the government pursues its money.
For more information on how you can get into the Zero Percent Tax bracket, click here to make an appointment where we can discuss your options.