Taxes Don’t Make People Poor

Kinda laxed off the past few days. Oops.

Everywhere you turn, you hear about the “Fiscal Cliff this” the “Fiscal Cliff That”. America is going to end if the Fiscal cliff isn’t avoided. On and on and on it goes…

I’m going to dip into a little economic rhetoric tonight, because I believe so many people have lost focus in how free market economies work. As much as media wants you to believe, the government does not (yet) control the American Economy.

The consumer’s confidence does.

Let me say that again.

The American Consumer. You and I control the economy in America. What we spend ultimately determines the demand, which in turns affects production, which in turn affects business, which in turn employs us… Because we spend money.

Now, I know that is really dumbed down. I realize there are tons of factors which affect overall economic success and failure. I know regulations of government affect businesses. Interest rates, lending powers, and more. But the core concept is the fact the consumer invests his money into the economy, not withhold it based on fear. I believe we are seeing this today, specifically the Fiscal cliff. People say taxes will go up. And yes, they will. The Bush tax cuts will go away and we will have to pay a greater percentage to the government.

The solution however is not to spend less so we pay less taxes, but the opposite. We need to make and spend more money, and not be concerned about the percentage the government will get. We set that amount aside, and use what remains. That is the solution to a booming and growing economy. Making less so the government gets less hurts yourself, not the government.

So that’s why I say taxes don’t make you poor. You will be taxed regardless of the amount of income you have, so why not try and make as much income as possible instead of trying to stay below a certain line to avoid other taxes. That is not making money work for you, that is you working for money.

What makes people poor is spending money they don’t have, not saving, and trying to avoid extra income so they don’t have to pay more taxes. Taxes will always be around. Unlike england, America is a capitalistic society, we have the ability to make money. Yes right now it is difficult because of the lack of confidence. But there are jobs out there and sole proprietorships are incredibly easy to start.

It starts with a desire to work and make money. Then a desire to spend that money, simply keeping in mind the tax rate, and setting aside funds as needed for that rate.

My thoughts on the matter… How about yours?

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