Any decision to cut the government’s credit rating would likely increase Treasury rates by 60 to 70 basis points over the “medium term,” raising the nation’s borrowing costs by $100 billion a year.

However, realistically, any investor in the US TREASURY securities is crazy to take to heart that the US debt is TRIPLE AAA rated. Based on the obvious information that has to be taken into account that is the component of those final ratings, the US securities do not deserve any such ratings.

In fact, the longer the terms of the issued securities, the worse that rating should be due to the fact that there is no sustainable way to even consider the country's ability to ever pay off the accumulated debt!

In the "real" world of corporate finance, no company, no matter how well known or how big, could any rating agency issue a TRIPLE AAA rating if that company was forecasting a cash shortfall ( loss) of trillions of dollars for the next 10 years!

That is a why would the stupid 10 year projections coming out of Washington that show endless deficits and ever rising debt deserve a Tripe AAA rating?

This is just more of the fraudulent rating game. Anyone buying long term government bonds, 10 year to 30 year is buying a "junk" rated security and will have nobody to blame when they lose money or are part of a default in the future.

S&P, Moody’s Investors Service and Fitch Ratings have said they may cut the nation’s top-level sovereign ranking if officials fail to resolve the stalemate. But the stalemate needs to rsile the deficits, and to get rid of them.

An April report by Senator Carl Levin, left, a Michigan Democrat, and Senator Tom Coburn, right, an Oklahoma Republican, concluded the credit agencies “weakened their standards as each competed to provide the most favorable rating to win business and greater market share.

NO kidding, that also holds true for the USA.

As the London-based managing director of sovereign credit ratings at Standard & Poor’s, Beers will help determine whether the U.S. government’s credit rating will be downgraded as a result of the battle over raising the debt limit.

His company has gone beyond competing credit rating agencies to say that it isn’t enough for lawmakers to agree to lift the government’s $14.3 trillion debt ceiling. Congress and the White House also must agree to a deficit-reduction package to avoid a downgrade in the government’s AAA credit rating.

In an interview this week at Union Station, just blocks from the U.S. Capitol, Beers said he views the debt limit fight as a test of lawmakers’ willingness to tackle the deficit.

“For us, the issue is not the debt limit -- it’s the underlying fiscal dynamics,” said Beers, who has been rating governments for the company for 20 years. “It’s not obvious to us that this political divide that is proving so difficult to bridge is going to be any more bridgeable three months from now or six months from now or a year from now.”

He said he didn’t know when an S&P committee would decide whether to cut the credit rating. “Depends on events,” he said.

A decision to cut the government’s credit rating would likely increase Treasury rates by 60 to 70 basis points over the “medium term,” raising the nation’s borrowing costs by $100 billion a year, JPMorgan Chase & Co.’s Terry Belton said. It could also hurt the rest of the economy by increasing the cost of mortgages, auto loans and other types of lending tied to the interest rates paid on treasuries.

Yesterday, the markets showed little debt ceiling concerns, as seen in 10-year Treasury note yields hovering around 3 percent, below the average of 4.05 percent over the last decade, and the average of 5.48 percent when the country was running budget surpluses between 1998 and 2001.

On Capitol Hill, House and Senate leaders were trying to advance deficit reduction packages that would clear the way for a vote on the debt ceiling increase that the Treasury Department says must come by Aug 2.

The threat of a downgrade has made Standard & Poor’s a target for critics chafing at demands from a company that blessed the mortgage-backed securities that led to the financial crisis.

An April report by Senator Carl Levin, a Michigan Democrat, and Senator Tom Coburn, an Oklahoma Republican, concluded the credit agencies “weakened their standards as each competed to provide the most favorable rating to win business and greater market share. The result was a race to the bottom.”

In an interview, Levin said he views those faults as conflicts of interest issues that are separate from the S&P’s sovereign ratings work, which he declined to criticize. “My gut tells me that they’re calling it as they see it and, hopefully, they’re not impacted by their previous failures to call them as they should have seen it,” Levin said.

Senate Majority Leader Harry Reid, a Nevada Democrat, took a different view. “I wish they had made a few demands when Wall Street was collapsing,” said Reid. “They were silent then. Maybe they’re trying to get more energized.”

At issue is a warning the company issued July 14 that there is a 50 percent chance S&P would downgrade the government’s credit rating within three months if lawmakers didn’t approve a “credible” deficit reduction package as part of a plan to raise the debt cap.

It was the latest in a series of demands from the company over the past year. In April, S&P said there was a one-in-three chance it would downgrade the government within two years; in October, it said lawmakers had as many as five years to address long-term deficits.

In its July report, the company said, “We believe that an inability to reach an agreement now could indicate that an agreement will not be reached for several more years.”

Critics say the company is misreading the political dynamics in Washington and that it shouldn’t engage in political prognosticating at all.

“If we fail to increase the debt ceiling, they have every right to take the U.S. down as many notches as they want,” said Jared Bernstein, former economic advisor to Vice President Joe Biden. “I don’t look to S&P for political analysis” and “their job is not to try to do political crystal-ball gazing. Their job is to assess the reliability of U.S. debt.”

Bernstein said, “Nothing fundamental has changed in the ability of the U.S. government to fully meet its debt obligations.” But let's face it, how can it do that 10 or 30 years out...IT CANNOT based on simple arithmetic. There is not enough money in the economy, if everyone was taxed at 100% to pay this future accumulating debt!

IHS Global Insight Chief Economist Nariman Behravesh said S&P has unrealistic demands because lawmakers are unlikely to agree to a major deficit reduction package until after next year’s elections. “If they really think there is going to be a comprehensive solution before 2012, they are grossly mistaken,” he said.

Where Beers sees ominous gridlock over the debt, Behravesh sees progress. “Think about where we were six months ago: We were talking about stimulus,” he said. “The good news is U.S. politicians are talking” about trillion-dollar budget cuts.

He said S&P is “itching to pull the trigger” on a credit downgrade, saying “it’s almost like they’re overreacting in the other direction” in order “to make up for past errors.”

Former Congressional Budget Office Director Doug Holtz- Eakin, who advised the 2010 Republican presidential campaign of John McCain, said S&P is right to question the political will in Congress to address the deficit because it’s the central question surrounding the debt.

“There is no question that the U.S. economy remains the largest, strongest on the globe and it has the financial wherewithal to pay its debts,” he said. “The question is, is that financial wherewithal matched by political wherewithal? And that’s what they’re trying to find out.”

Beers said critics of the company’s record during the housing crisis “know nothing about our sovereign ratings, which have an excellent track record.” He said it’s impossible to assess a government’s credit rating without making judgments about its politics.

“Economic policy is part of a political process,” he said. “Every government has to make choices, and it has to do it in some political context, and we have to look at that and decide how plausible that is.”
‘Sheer Difficulty’

The gridlock over the debt limit “highlights the sheer difficulty” lawmakers are having coming to agreement, he said, which has prompted S&P to shorten the timeframe over which it wants to see major cuts. He is skeptical that next year’s election will be “that decisive on this issue.”

U.S. lawmakers are lagging behind other similarly rated governments that have also faced debt challenges, he said, pointing to countries such as Britain that are implementing plans to tighten budgets.

“This whole issue of finding common ground has been on the table since March and it’s not as if people aren’t trying,” he said. “You have to make judgments about these sorts of things.”

Make that judgement now....nothing will be solved by the politicians!


Due to the urging of fitness guru and "do as I say not as I do dietician" Michelle Obama, the popular chain of restaurants ( who also opted out of OBOMACARE) McDonald's, the RESTAURANT CHAIN THAT YOUR KIDS INSIST THAT YOU TAKE THEM TO, said that it would add apple slices and reduce the portion of French fries in its children's meal boxes beginning this fall, effectively taking away consumers' current choice between either having apples with caramel dip or fries as a Happy Meal side.

The move by McDonald's, which has become a leader in moving from just burgers and fries to more nutritious fare like oatmeal and salads, comes as fast food chains face intense scrutiny from health officials and others who blame the industry for childhood obesity and other health-related problems. Some municipalities, including San Francisco, have even banned fast food restaurants from selling kids' meals with toys.


Critics wasted no time complaining that McDonald's changes don't go far enough. Kelle Louaillier, executive director of a group called Corporate Accountability International, said McDonald's is just trying to get ahead of impending regulations that will restrict the marketing of junk food to children and require restaurants to post nutrition information on menus, among other changes.

"McDonald's is taking steps in the right direction," says Louaillier, whose group has pushed for McDonald's to retire Ronald McDonald. "But we should be careful in heaping praise on corporations for simply reducing the scope of the problem they continue to create."

Cindy Goody, McDonald's senior director of nutrition, said that the new directives are "absolutely not" related to new regulations. Rather, she said, they're a response to customers asking for healthier choices.

But apparently, customers aren't making those choices in practice. Indeed, only about 11 percent of customers were ordering apples with their Happy Meals, even though 88 percent were aware they had the option, the restaurant said.

McDonald's says the change will reduce calories in its "most popular" Happy Meals by as much as 20 percent. The new apple slices will not be served with caramel dipping sauce ( but that is the whole point to make them taste better!).

Currently, the lightest Happy Meal is the four-piece chicken nugget meal served with apples and apple juice. It has 380 calories and 12 grams of fat. The Happy Meal with the most fat and calories is a cheeseburger served with fries and 1 percent chocolate milk. It weighs in at 700 calories and 27 grams of fat.

Just a note anyone twisting anyone's arm to buy this meal?

Are home cooked meals more healthy when cooked at home using lard and ham hocks and cheetos for a dip? Come on, we all know how mom would say you have to finish your plate, right? What was that calorie count???

Are mom's now going to be monitired too?

Have you noticed the photos of American "poor" people shown standing in some line for some type of free handouts? They all pretty much look like contestants of the BIGGEST LOSER, instead of starving decimated people.

"McDonald's agrees with leading food and nutrition experts that making incremental lifestyle modifications with food consumption may lead to improvements in an individual's well-being," Goody said, adding that McDonald's didn't eliminate fries from Happy Meals because "all foods fit when consumed in moderation."

Adding a half portion of apples and fries is more likely to change customers' eating habits than simply offering apples as an alternative, said Jonathan Marek, a senior vice president at Applied Predictive Technologies. It should also be a good public relations move, he said, and more importantly, could help drive sales.

"The key is, will this get parents to go to McDonald's one more time each month than they would have otherwise?" said Marek, whose company helps restaurants forecast whether new programs will drive sales. He was not involved in the McDonald's program.

LaMonte Riker, a New York carpenter eating a chicken salad at a McDonald's on Tuesday, doesn't have kids but thinks the Happy Meal changes can't hurt. He also said he doesn't think it's fair for people to blame McDonald's for their health problems.

"It's not McDonald's that's making your kids fat; you're making your kids fat by taking them to McDonald's," said Riker, 44. "And I don't think McDonald's is that fattening if you don't eat it on a daily basis."

This isn't the first time the world's largest burger chain has tried to paint itself as an emissary of nutrition.

In the `80s, it created a fitness program for middle school children featuring gymnast Mary Lou Retton. A decade ago, McDonald's used Ronald McDonald to encourage parents to get their children immunized and to tell kids to drink milk. In 2003, it added salad entrees to the menu. And around 2004, McDonald's christened Ronald a "balanced, active lifestyles ambassador."

More recently, McDonald's has worked to portray itself as a healthy, hip place to eat, offering wireless access in restaurants and introducing smoothies, oatmeal and yogurt parfaits, moves that other fast-food companies are now trying to replicate.

"We've been in the nutrition game for over 30 years in providing nutrition information to our customers," said Goody, the McDonald's nutrition director. "Now what we're doing is we're adding more food groups and ... creating nutritional awareness."

McDonald's ability to adjust to customers' demands has helped bring already-loyal customers through the doors more often, but it's also attracting "people who hadn't traditionally visited us in the past," said spokeswoman Danya Proud.

In 2010, McDonald's accounted for 9 percent of U.S. restaurant sales, according to Technomic. Last year, its U.S. revenue rose 4.4 percent, while U.S. revenue fell at Burger King, Wendy's, Kentucky Fried Chicken, Arby's, Sonic and Jack in the Box, Technomic said.

In the restaurant business, like any other business, YOU HAVE TO MAKE WHAT PEOPLE WANT!!!! HELLO ANYONE LISTENING IN WASHINGTON...that is how a business operates.

Take a look at who is buying anything that the government mandates...electric cars, ethanol, and Michelle Obama's garden vegetables???? No more needs to be said, does it?


This is the 10th Commandment: "Thou shalt not covet thy neighbor's house; neither shalt thou desire... his servant, nor his handmaiden, nor his ox, nor his ass, nor anything that is his."

The tenth commandment forbids coveting the goods of another; so what are the ever increasing taxes on those who have "goods" in line with those commandments?

Our politicians, most of whom claim to be church going, apparently have not taken notice that their constant harping on having those who have some extra funds, (maybe because they work 3 jobs and take no vacations) therefore they need to pay more, and more in taxes fees or assessments of every kind.

At this time the top 10% of earners already pay in excess of 70% of all taxes, and about 50% pay no federal income what is now expected? Are the politicians demanding that they pay 90% of their income?

The confiscatory rates that are mandated to be paid by those actually working hard and getting paid well, not only are counterproductive to human desire to improve oneself, but also clearly violate the 10th Commandment!

What else do the politician expect next? maybe that extra pint of blood we can is not really needed, right?


California is at it again...helping illegal aliens.

Following through on a campaign promise, Gov. Jerry Brown signed a law Monday easing access to privately funded financial aid for undocumented college students. He also signaled that he was likely to back a more controversial measure allowing those students to seek state-funded tuition aid in the future.

Assemblyman Gil Cedillo (D-Los Angeles), author of the private financial aid measure, described it as an important but incremental step toward expanding opportunities for deserving students who were brought to the U.S. illegally through no choice of their own ( let's all weep together here). Cedillo is pressing ahead with a more expansive measure that would make certain undocumented students eligible for the state's Cal Grants and other forms of state tuition aid.

Brown said he was "positively inclined" to back that bill but would not make a decision until it crosses his desk.

"I'm committed to expanding opportunity wherever I can find it, and certainly these kinds of bills promote a goal of a more inclusive California and a more educated California," Brown told reporters after the bill-signing ceremony Monday.

For Brown, signing Cedillo's bill was a gesture of goodwill toward Latino voters, who helped elect him in large numbers last fall. Legislation providing education funding to undocumented students has been a top priority for many Latino groups, which have found many of their efforts thwarted so far at the federal level. Last year proponents failed to marshal enough votes in the U.S. Senate to ensure passage of the federal DREAM Act, which would have created a path to citizenship for illegal immigrants brought to the U.S. before age 16 if they attended a college or served in the military.

Brown's position on the California Dream Act was being closely monitored after he angered some prominent Latino leaders by vetoing a bill last month that would have made it easier for farmworkers to organize. Though Brown noted in his veto message that he signed legislation helping farm workers unionize during his first stint as governor in the mid-1970s, his veto was sharply criticized by the United Farm Workers, which counted the bill among their top priorities.

But several analysts who study Latino politics said the California Dream Act was far more important symbolically to many in the Latino community. Fernando Guerra, director of the Center for the Study of Los Angeles at Loyola Marymount University, said the bill was viewed by many as a measure of social acceptance of Latinos because it would increase opportunity for the best and brightest among the undocumented.

The California Dream Act has drawn strong support across the Latino community, said Jaime A. Regalado, director of the Pat Brown Institute of Public Affairs.

"If [Brown] was looking at the balance sheet, understanding politically that he needed to sign one of these measures, it was not going to be competitive," Regalado said. "It's seen as a civil rights issue in the Latino community, especially for youth. The farmworkers' struggle is not necessarily seen as what it once was. This is an issue of the now, an issue of the moment, part of the Latino agenda and part of the future."

But opponents of the legislation say it will diminish opportunities for U.S. students ( no kidding).

"Obviously it falls into a different realm when the money is coming out of private pockets than it does when it's coming out of taxpayers' pockets," said Ira Mehlman, a spokesman for the Federation for American Immigration Reform, a group that advocates halting illegal immigration, "but nevertheless, foundations and other institutions that get tax exemptions should not be promoting policies that encourage people to remain illegally in the United States."

During a signing ceremony at Los Angeles City College, Brown largely brushed over the thorny politics of illegal immigration and sought to frame the legislation as part of the struggle to maintain education funding during California's budget crisis.

"The debate is very clear: shrivel public service, shrink back, retrench, retreat from higher education, from schools, from the investment in people; or make the investment," Brown said. "This is one piece of a very important mosaic, which is a California that works for everyone."

Brown used the issue last year against his Republican opponent, Meg Whitman, during a Fresno debate.

After an undocumented student had asked the candidates to explain their position on such legislation, Brown said that he backed the proposal and that Whitman wanted to kick undocumented students out of college, adding "that is wrong morally and humanly." I guess he forgot that it is illegal to be in the country illegally.


In the weird world that is Washington, men and women say things daily, hourly, even minutely, that they know deep down are simply not true. Inside the Beltway, we all call those utterances “rhetoric.”

But across the rest of the country, plain ol’ folk call ‘em lies. Bald-faced (even bold-faced) lies. Those folks have a tried-and-true way of determining a lie: If you know what you’re saying is patently false, then it’s a lie. Simple.

And lately, the president has been lying so much that his pants could burst into flames at any moment.

His late-evening news conference Friday was a tour de force of flat-out, unadulterated mendacity — and we’ve gotten a first-hand insider’s view of the president’s long list of lies.

“I wanted to give you an update on the current situation around the debt ceiling,” Mr. Obama said at 6:06 p.m. OK, that wasn’t a lie — but just about everything he said after it was, and he knows it.

“I just got a call about a half-hour ago from Speaker [John A.] Boehner, who indicated that he was going to be walking away from the negotiations,” he said.

Not so: “The White House made offers during the negotiations,” said our insider, a person intimately involved in the negotiations, “and then backtracked on those offers after they got heat from Democrats on Capitol Hill. The White House, and its steadfast refusal to follow through on its rhetoric in terms of cutting spending and addressing entitlements, is the real reason that debt talks broke down.”

Mr. Boehner was more blunt in his own news conference: “The discussions we’ve had with the White House have broken down for two reasons. First, they insisted on raising taxes. … Secondly, they refused to get serious about cutting spending and making the tough choices that are facing our country on entitlement reform.”

But back to the lying liar and the lies he told Friday. “You had a bipartisan group of senators, including Republicans who are in leadership in the Senate, calling for what effectively was about $2 trillion above the Republican baseline that theyve been working off of. What we said was give us $1.2 trillion in additional revenues,” Mr. Obama said.

That, too, was a lie. “The White House had already agreed to a lower revenue number — to be generated through economic growth and a more efficient tax code — and then it tried to change the terms of the deal after taking heat from Democrats on Capitol Hill,” our insider said.

The negotiations just before breakdown called for $800 billion in new “revenues” (henceforth, we’ll call those “taxes”), but after the supposedly bipartisan plan came out — and bowing to the powerful liberal bloc on Capitol Hill — Mr. Obama demanded another $400 billion in new taxes: a 50 percent increase.

Mr. Boehner was blunt: “The White House moved the goalpost. There was an agreement, some additional revenues, until yesterday, when the president demanded $400 billion more, which was going to be nothing more than a tax increase on the American people.”

But Mr. Obama, with a straight face, continued. “We then offered an additional $650 billion in cuts to entitlement programs — Medicare, Medicaid, Social Security.”

The truth: “Actually, the White House was walking back its commitments on entitlement reforms, too. They kept saying they wanted to ‘go big.’ But their actions never matched their rhetoric,” the insider said.

Now, Mr. Boehner and the real leaders in Congress have taken back the process. He’ll write the bill and pass it along to the president, with this directive, which he reportedly said to Mr. Obama’s face in a short White House meeting Saturday: “Congress writes the laws and you get to decide what you want to sign.”

Watching the one-third-of-a-term-senator-turned-president negotiate brings to mind a child spinning yarns about just how the living room lamp got broken. Now, though, the grown-ups are in charge; the kids have been put to bed. Ten days ago, the president warned the speaker: “Dont call my bluff.”

Well, Mr. Boehner has. He’s holding all the cards — and he’s not bluffing.

By: Joseph Curl who covered the White House and politics for a decade for The Washington Times.


Paul Joseph Watson

A new promotional video released by the Department of Homeland Security characterizes white middle class Americans as the most likely terrorists, as Big Sis continues its relentless drive to cement the myth that mad bombers are hiding around every corner, when in reality Americans are just as likely to be killed by lightning strikes or peanut allergies.

The video is part of Homeland Security’s $10 million dollar “See Something, Say Something” program that encourages Americans to report “suspicious activity,” which in every case throughout history has been a trait of oppressive, dictatorial regimes.

In the course of the 10 minute clip, a myriad of different behaviors are characterized as terrorism, including opposing surveillance, using a video camera, talking to police officers, wearing hoodies, driving vans, writing on a piece of paper, and using a cell phone recording application.

Despite encouraging viewers not to pay attention to a person’s race in determining whether or not they may be a terrorist, almost all of the scenarios in the clip proceed to portray white people as the most likely terrorists. Bizarrely, nearly every single one of the “patriotic” Americans who reports on their fellow citizen is either black, Asian or Arab. Imagine if the video had portrayed every terrorist as an Arab and every patriotic snoop as white, there’d be an outcry and rightly so, but this strange reversal must have been deliberate on the part of the DHS, but why? Is this merely political correctness taken to the extreme or is something deeper at work?

Perhaps it has something to do with the fact that the DHS’ own internal documents list predominantly white conservative groups as the most likely terrorists, such as Ron Paul supporters, gun owners, gold bullion enthusiasts, and a myriad of other comparatively banal political interests that are largely the domain of white middle class Americans.

This has little to do with the color of a person’s skin, and everything to do with the fact that white, middle class Americans are the biggest roadblock when it comes to Big Sis expanding its control over every facet of American society.

It’s plain to see that very little of the budget for this video went towards paying for decent actors, but perhaps it’s fitting that the participants were about as believable as Santa and his elves, because the notion that terrorists are hovering around every underground parking lot waiting to blow up federal buildings is demonstrably false.

As Ohio University’s John Mueller has documented, the likelihood of actually being a victim of terrorism is infinitesimally small, and only highlights how such threats are hyperbolically exaggerated for political purposes.

Figures collected by Mueller clearly show that Americans are just as likely to be killed by lightning strikes, accident-causing deer, or severe allergic reactions to peanuts.

But the facts don’t matter for a federal agency whose primary function is to manufacture fear to keep Americans under control and submissive to the fact that their economic futures and their constitutional rights are being torn to shreds by their own government while it points to a contrived outside threat as a convenient distraction.

“At its core, the video is filled with scenes of ordinary citizens spying on each other and alerting the authorities to their compatriots’ suspicious deeds,” writes Simon Black. In my favorite scene, a woman calls the police after snooping over the shoulder of a young man typing away on his smartphone.”

Black notes that such videos are solely aimed at reinforcing ignorance, hate and fear for those who still live in darkness and are completely unaware of the real agenda behind Homeland Security’s “see something, say something” charade.

But what is that agenda?

No matter where you look, from East Germany, to Communist Russia, to Nazi Germany, historically governments who encourage their own citizens to report on each other do so not for any genuine safety concerns or presumed benefits to security, but in order to create an authoritarian police state that coerces the people into policing each other’s behavior and thoughts.

As Robert Gellately of Florida State University has highlighted, Germans under Hitler denounced their neighbors and friends not because they genuinely believed them to be a security threat, but because they expected to selfishly benefit from doing so, both financially, socially and psychologically via a pavlovian need to be rewarded by their masters for their obedience.

At the height of its influence around one in seven of the East German population was an informant for the Stasi. As in Nazi Germany, the creation of an informant system was wholly centered around identifying political dissidents and those with grievances against the state, and had little or nothing to do with genuine security concerns.

This is the kind of society the Department of Homeland Security is, whether deliberately or inadvertently, recreating in 21st century America. It is about as far removed as you can possibly get from the vision the founders of the nation had in mind when they created the Bill of Rights and the Declaration of Independence.

Comment by Alex Jones: This DHS video is purposefully designed to transmit fear and hatred of Muslims over to white Americans. Look at the part of the clip where an image of “Jihad Jane” is displayed, the blue eyes are artificially intensified in order to get the message across.

This is about playing minorities off against whites, creating further resentment and suspicion, getting us at each other’s throats just as how different racial groups were set upon each other in Hitler’s Germany to create an environment of fear and distrust, motivating people to inform on each other for the state.


We keep hearing about the endless meetings by politicians of the two parties and the White House relating to how many trillions they are going to either cut from the budgets over the next 10 years.


Are we now on some type of old Soviet 10 year plan being put forward by a congress that has failed to even supply and pass a budget for the country the last two years?

Our elected representatives, especially those elected in the "sweep" of 2010, already forgot what they got elected to do in Washington! Repeat and reminder....STOP SPENDING, STOP SPENDING, STOP SPENDING!!!!!!

The rest of them failed to take notice that this was the reason for the "sweep".

Instead of taking heed of the reason for the election sweep, now there are discussions to continue to spend approximately $1.5/$1.8 TRILLION more than is taken in by the federal government each year for the next 10 years!!!!

As unbelievable and unsustainable as that is, this is the discussion in Washington reduced by amounts that have now dwindled to $3.5 TRILLION as the proposed "reduction" in spending over the next 10 years.

So let's see, even my mediocre American school system arithmetic tells me that if the government operated at an unprecedented deficit spending binge, and generated $15-$18 TRILLION in excess spending over 10 years, but reduced this by $3.5 trillion, there would still be the unprecedented increase in the debt by another $15 trillion, bringing it to 200% of the GROSS DOMESTIC PRODUCT OF THE UNITED STATES!!!!

No country on earth could support such a staggering national debt, as can be seen now with Greece and the other European countries starting to default.


It seems that the Democrats are voting to keep up the spending with no abatement, and the Republicans are allowing it to continue at such unprecedented rates.

This will create a devaluation of the dollar, our savings will buy less and less and our mortgages will be worth less and less...EVERYTHING WILL BE WORTH LESS AND LESS.

The worst suffering will be by those people living on a fixed income such as Social Security payments which will buy less and less!

call your representative and tell him/her that they are out in the next election if this continues and you will tell everyone you know to vote them out too....let's start with a fresh slate that listens to the election outcome!


Taxation in the United States is a complicated and unbelievably burdensome task, and consumes about 40% of GDP at all levels possibly more as many taxes are taxes that are hard to calculate. These are just some of the big taxes:

Income tax · Payroll tax
Alternative Minimum Tax
Estate tax · Excise tax
Gift tax · Corporate tax
Capital gains tax
State and local taxation
State income tax
State tax levels
Sales tax · Use tax
Property tax
Land value tax

The United States is a federal republic with autonomous state and local governments. Taxes are imposed in the United States at each of these levels. These include taxes on income, property, sales, imports, payroll, estates and gifts, as well as various fees.

Taxes are imposed on net income of individuals and corporations by the federal, most state, and some local governments. Residents are taxed on worldwide income and allowed a credit for foreign taxes. Income subject to tax is determined under tax rules, not accounting principles, and includes almost all income from whatever source. Most business expenses reduce taxable income, though limits apply to a few expenses. Individuals are permitted to reduce taxable income by personal allowances and certain nonbusiness expenses, including home mortgage interest, state and local taxes, charitable contributions, and medical and certain other expenses incurred above certain percentages of income. State rules for determining taxable income often differ from federal rules. Federal tax rates vary from 15% to 35% of taxable income. State and local tax rates vary by jurisdiction, and many are graduated. State taxes are generally treated as a deductible expense for federal tax computation. Certain alternative taxes may apply.

Payroll taxes are imposed by the federal and all state governments. These include Social Security and Medicare taxes imposed on both employers and employees, at a combined rate of 15.3% (13.3% for 2011). Social Security tax applies only to the first $106,800 of wages in 2009 through 2011. Employers also must withhold income taxes on wages. An unemployment tax and certain other levies apply.

Property taxes are imposed by most local governments and many special purpose authorities based on the fair market value of property. School and other authorities are often separately governed, and impose separate taxes. Property tax is generally imposed only on realty, though some jurisdictions tax some forms of business property. Property tax rules and rates vary widely.

Sales taxes are imposed on the price at retail sale of many goods and some services by most states and some localities. Sales tax rates vary widely among jurisdictions, from 0% to 16%, and may vary within a jurisdiction based on the particular goods or services taxed. Sales tax is collected by the seller at the time of sale, or remitted as use tax by buyers of taxable items who did not pay sales tax.

The United States imposes tariffs or customs duties on the import of many types of goods from many jurisdictions. This tax must be paid before the goods can be legally imported. Rates of duty vary from 0% to more than 20%, based on the particular goods and country of origin.

The United States has an assortment of federal, state, local, and special purpose governmental jurisdictions. Each imposes taxes to fully or partly fund its operations. These taxes may be imposed on the same income, property or activity, often without offset of one tax against another.

The types of tax imposed at each level of government vary, in part due to constitutional restrictions. Income taxes are imposed at the federal and most state levels. Taxes on property are typically imposed only at the local level, though there may be multiple local jurisdictions that tax the same property. Excise taxes are imposed by the federal and some state governments. Sales taxes are imposed by most states and many local governments. Customs duties or tariffs are only imposed by the federal government. A wide variety of other taxes, some called user or license fees, are imposed.
[edit] Types of taxpayers

Taxes may be imposed on individuals (natural persons), business entities, estates, trusts, or other forms of organization. In addition, certain taxes, particularly income taxes, may be imposed on the members of organizations for the organization's activities. Thus, partners are taxed on the income of their partnership.

With few exceptions, one level of government does not impose tax on another level of government or its instrumentalities.
Income tax
Taxes based on income are imposed at the federal, most state, and some local levels within the United States. The tax systems within each jurisdiction may define taxable income separately. Many states refer to some extent to federal concepts for determining taxable income.

The U.S. income tax system imposes a tax based on income on individuals, corporations, estates, and trusts. [1] The tax is taxable income, as defined, times a specified tax rate. This tax may be reduced by credits, some of which may be refunded if they exceed the tax calculated. Taxable income may differ from income for other purposes (such as for financial reporting). The definition of taxable income for federal purposes is used by many, but far from all states. Income and deductions are recognized under tax rules, and there are variations within the rules among the states. Book and tax income may differ.

Under the U.S. system, individuals, corporations, estates, and trusts are subject to income tax. Partnerships are not taxed; rather, their partners are subject to income tax on their shares of income and deductions, and take their shares of credits. Some types of business entities may elect to be treated as corporations or as partnerships.

Taxpayers are required to file tax returns and self assess tax. Tax may be withheld from payments of income (e.g., withholding of tax from wages). To the extent taxes are not covered by withholdings, taxpayers must make estimated tax payments, generally quarterly. Tax returns are subject to review and adjustment by taxing authorities, though far less than all returns are reviewed.

Taxable income is gross income less exemptions, deductions, and personal exemptions. Gross income includes "all income from whatever source". Certain income, however, is subject to tax exemption at the federal and/or state levels. This income is reduced by tax deductions including most business and some nonbusiness expenses. Individuals are also allowed a deduction for personal exemptions, a fixed dollar allowance. The allowance of some nonbusiness deductions is phased out at higher income levels.

The U.S. federal and most state income tax systems tax the worldwide income of residents.[2] A federal foreign tax credit is granted for foreign income taxes. Individuals may also claim the foreign earned income exclusion. Individuals may be a citizen or resident of the United States but not a resident of a state. Many states grant a similar credit for taxes paid to other states. These credits are generally limited to the amount of tax on income from foreign (or other state) sources.

Federal and state income tax is calculated, and returns filed, for each taxpayer. Two married individuals may calculate tax and file returns jointly or separately. In addition, unmarried individuals supporting children or certain other relatives may file a return as a head of household. Parent-subsidiary groups of companies may elect to file a consolidated return.

Income tax rates differ at the federal and state levels for corporations and individuals. Federal and many state income tax rates are higher (graduated) at higher levels of income. The income level at which various tax rates apply for individuals varies by filing status. The income level at which each rate starts generally is higher (i.e., tax is lower) for married couples filing a joint return or single individuals filing as head of household.

Individuals are subject to federal graduated tax rates from 10% to 35%.[3] Corporations are subject to federal graduated rates of tax from 15% to 35%; a rate of 34% applies to income from $335,000 to $15,000,000. [4] State income tax rates vary from 1% to 16%, including local income tax where applicable. State and local taxes are generally deductible in computing federal taxable income. Federal and many state individual income tax rate schedules differ based on the individual's filing status.

Taxable income is gross income [5] less adjustments and allowable tax deductions. [6] Gross income for federal and most states is receipts and gains from all sources less cost of goods sold. Gross income includes "all income from whatever source," and is not limited to cash received.

The amount of income recognized is generally the value received or which the taxpayer has a right to receive. Certain types of income are specifically excluded from gross income. The time at which gross income becomes taxable is determined under federal tax rules. This may differ in some cases from accounting rules. [7]

Certain types of income are excluded from gross income (and therefore subject to tax exemption). The exclusions differ at federal and state levels. For federal income tax, interest income on state and local bonds is exempt, while few states exempt any interest income except from municipalities within that state. In addition, certain types of receipts, such as gifts and inheritances, and certain types of benefits, such as employer provided health insurance, are excluded from income.

Foreign persons are taxed only on income from U.S. sources or from a U.S. business. Tax on foreign persons on non-business income is at 30% of the gross income, but reduced under many tax treaties.

The U.S. system allows reduction of taxable income for both business and some nonbusiness expenditures, called deductions. Businesses selling goods reduce gross income directly by the cost of goods sold. In addition, businesses may deduct most types of expenses incurred in the business. Some of these deductions are subject to limitations. For example, only 50% of the amount incurred for any meals or entertainment may be deducted. The amount and timing of deductions for business expenses is determined under the taxpayer's tax accounting method, which may differ from methods used in accounting records.

Some types of business expenses are deductible over a period of years rather than when incurred. These include the cost of long lived assets such as buildings and equipment. The cost of such assets is recovered through deductions for depreciation or amortization.

In addition to business expenses, individuals may reduce income by an allowance for personal exemptions and either a fixed standard deduction or itemized deductions. One personal exemption is allowed per taxpayer, and additional such deductions are allowed for each child or certain other individuals supported by the taxpayer. The standard deduction amount varies by taxpayer filing status. Itemized deductions by individuals include home mortgage interest, property taxes, certain other taxes, contributions to recognized charities, medical expenses in excess of 7.5% of adjusted gross income, and certain other amounts.

Personal exemptions, the standard deduction, and itemized deductions are limited above certain income levels.

Corporations must pay tax on their taxable income independently of their shareholders. Shareholders are also subject to tax on dividends received from corporations. By contrast, partnerships are not subject to income tax, but their partners calculate their taxes by including their shares of partnership items. Corporations owned entirely by U.S. citizens or residents (S corporations) may elect to be treated similarly to partnerships. A Limited Liability Company and certain other business entities may elect to be treated as corporations or as partnerships. States generally follow such characterization. Many states also allow corporations to elect S corporation status. Charitable organizations are subject to tax on business income.

Certain transactions of business entities are not subject to tax. These include many types of formation or reorganization.

A wide variety of tax credits may reduce income tax at the Federal and state levels. Some credits are available only to individuals, such as the child tax credit for each dependent child or the Earned Income Tax Credit for low income wage earners. Some credits, such as the Work Opportunity Tax Credit, are available to businesses, including various special industry incentives. A few credits, such as the foreign tax credit, are available to all types of taxpayers.

The United States Federal and state income tax systems are self assessment systems. Taxpayers must declare and pay tax without assessment by the taxing authority. Quarterly payments of tax estimated to be due are required to the extent taxes are not paid through withholdings. Employers must withhold income tax, as well as Social Security and Medicare taxes, from wages. Amounts to be withheld are computed by employers based on representations of tax status by employees on Form W-4, with limited government review.

43 states and many localities in the United States impose an income tax on individuals. 47 states and many localities impose a tax on the income of corporations. Tax rates vary by state and locality, and may be fixed or graduated. Most rates are the same for all types of income. State and local income taxes are imposed in addition to Federal income tax. State income tax is allowed as a deduction in computing Federal income tax, subject to limitations for individuals.

State and local taxable income is determined under state law, and often is based on Federal taxable income. Most states conform to many Federal concepts and definitions, including defining income and business deductions and timing thereof.[26] State rules vary widely with regard to individual itemized deductions. Most states do not allow a deduction for state income taxes for individuals or corporations, and impose tax on certain types of income exempt at the Federal level.

Some states have alternative measures of taxable income, or alternative taxes, especially for corporations.

States imposing an income tax generally tax all income of corporations organized in the state and individuals residing in the state. Taxpayers from another state are subject to tax only on income earned in the state or apportioned to the state. Businesses are subject to income tax in a state only if they have sufficient nexus in (connection to) the state.

Individuals and corporations not resident in the United States are subject to Federal income tax only on income from a U.S. business and certain types of income from U.S. sources. States tax individuals resident outside the state and corporations organized outside the state only on wages or business income within the state. Payers of some types of income to nonresidents must withhold Federal or state income tax on the payment. Federal withholding of 30% on such income may be reduced under a tax treaty. Such treaties do not apply to state taxes.

An Alternative Minimum Tax (AMT) is imposed at the Federal level on a somewhat modified version of taxable income. The tax applies to individuals and corporations. The tax base is adjusted gross income reduced by a fixed deduction that varies by taxpayer filing status. Itemized deductions of individuals are limited to home mortgage interest, charitable contributions, and a portion of medical expenses. AMT is imposed at a rate of 26% or 28% for individuals and 20% for corporations, less the amount of regular tax. A credit against future regular income tax is allowed for such excess, with certain restrictions.

Many states impose minimum income taxes on corporations and/or a tax computed on an alternative tax base. These include taxes based on capital of corporations and alternative measures of income for individuals. Details vary widely by state.
[edit] Differences between book and taxable income for businesses

In the United States, taxable income is computed under rules that differ materially from U.S. generally accepted accounting principles. Since only publicly traded companies are required to prepare financial statements, many non-public companies opt to keep their financial records under tax rules. Corporations that present financial statements using other than tax rules must include a detailed reconciliation of their financial statement income to their taxable income as part of their tax returns. Key areas of difference include depreciation and amortization, timing of recognition of income or deductions, assumptions for cost of goods sold, and certain items (such as meals and entertainment) the tax deduction for which is limited.
Income taxes in the United States are self assessed by taxpayers by filing required tax returns. Taxpayers, as well as certain non taxpaying entities like partnerships, must file annual tax returns at the Federal and applicable state levels. These returns disclose a complete computation of taxable income under tax principles. Taxpayers compute all income, deductions, and credits themselves, and determine the amount of tax due after applying required prepayments and taxes withheld. Federal and state tax authorities provide preprinted forms that must be used to file tax returns. IRS Form 1040 series of forms is required for individuals, and Form 1120 series of forms for corporations, and Form 1065 for partnerships. The state forms vary widely, and rarely correspond to Federal forms. Tax returns vary from the two page (Form 1040EZ]) used by nearly 70% of individual filers to thousands of pages of forms and attachments for large entities. Groups of corporations may elect to file consolidated returns at the Federal level and with a few states. Electronic filing of Federal and many state returns is widely encouraged and in some cases required, and many vendors offer computer software for use by taxpayers and paid return preparers to prepare and electronically file returns.

In the United States, payroll taxes are assessed by the federal government, all fifty states, the District of Columbia, and numerous cities. These taxes are imposed on employers and employees and on various compensation bases. They are collected and paid to the taxing jurisdiction by the employers. Most jurisdictions imposing payroll taxes require reporting quarterly and annually in most cases, and electronic reporting is generally required for all but small employers.

Federal, state, and local withholding taxes are required in those jurisdictions imposing an income tax. Employers having contact with the jurisdiction must withhold the tax from wages paid to their employees in those jurisdictions. Computation of the amount of tax to withhold is performed by the employer based on representations by the employee regarding his/her tax status on IRS Form W-4. Amounts of income tax so withheld must be paid to the taxing jurisdiction, and are available as refundable tax credits to the employees. Income taxes withheld from payroll are not final taxes, merely prepayments. Employees must still file income tax returns and self assess tax, claiming amounts withheld as payments.

Federal social insurance taxes are imposed equally on employers and employees, consisting of a tax of 6.2% of wages up to an annual wage maximum ($106,800 in 2010) plus a tax of 1.45% of total wages. For 2011, the employee's contribution was reduced to 4.2%, while the employer's portion remained at 6.2%. To the extent an employee's portion of the 6.2% tax exceeds the maximum by reason of multiple employers, the employee is entitled to a refundable tax credit upon filing an income tax return for the year.

Employers are subject to unemployment taxes by the federal and all state governments. The tax is a percentage of taxable wages with a cap. The tax rate and cap vary by jurisdiction and by employer's industry and experience rating. For 2009, the typical maximum tax per employee was under $1,000. Some states also impose unemployment, disability insurance, or similar taxes on employees.

Employers must report payroll taxes to the appropriate taxing jurisdiction in the manner each jurisdiction provides. Quarterly reporting of aggregate income tax withholding and Social Security taxes is required in most jurisdictions. Employers must file reports of aggregate unemployment tax quarterly and annually with each applicable state, and annually at the Federal level.Each employer is required to provide each employee an annual report on IRS Form W-2 of wages paid and Federal, state and local taxes withheld, with a copy must to the IRS and many states. These are due by January 31 and February 28 (March 31 if filed electronically), respectively, following the calendar year in which wages are paid.

Employers are required to pay payroll taxes to the taxing jurisdiction under varying rules, in many cases within 1 banking day. Payment of Federal and many state payroll taxes is required to be made by electronic funds transfer if certain dollar thresholds are met, or by deposit with a bank for the benefit of the taxing jurisdiction.

Failure to timely and properly pay federal payroll taxes results in an automatic penalty of 2% to 10%. Similar state and local penalties apply. Failure to properly file monthly or quarterly returns may result in additional penalties. Failure to file Forms W-2 results in an automatic penalty of up to $50 per form not timely filed. State and local penalties vary by jurisdiction.

A particularly severe penalty applies where federal income tax withholding and Social Security taxes are not paid to the IRS. The penalty of up to 100% of the amount not paid can be assessed against the employer entity as well as any person (such as a corporate officer) having control or custody of the funds from which payment should have been made.

There is no Federal sales or use tax in the United States. All but five states impose sales and use taxes on retail sale, lease and rental of many goods, as well as some services. Many cities, counties, transit authorities and special purpose districts impose an additional local sales or use tax. Sales and use tax is calculated as the purchase price times the appropriate tax rate. Tax rates vary widely by jurisdiction from less than 1% to over 10%. Sales tax is collected by the seller at the time of sale. Use tax is self assessed by a buyer who has not paid sales tax on a taxable purchase.

Unlike value added tax, sales tax is imposed only once, at the retail level, on any particular goods. Nearly all jurisdictions provide numerous categories of goods and services that are exempt from sales tax, or taxed at a reduced rate. Purchase of goods for further manufacture or for resale is uniformly exempt from sales tax. Most jurisdictions exempt food sold in grocery stores, prescription medications, and many agricultural supplies. Generally cash discounts, including coupons, are not included in the price used in computing tax.

Sales taxes, including those imposed by local governments, are generally administered at the state level. States imposing sales tax require retail sellers to register with the state, collect tax from customers, file returns, and remit the tax to the state. Procedural rules vary widely. Sellers generally must collect tax from in-state purchasers unless the purchaser provides an exemption certificate. Most states allow or require electronic remittance of tax to the state. States are prohibited from requiring out of state sellers to collect tax unless the seller has some minimal connection with the state.

Excise taxes may be imposed on the sales price of goods or on a per unit or other basis. Excise tax may be required to be paid by the manufacturer at wholesale sale, or may be collected from the customer at retail sale. Excise taxes are imposed at the Federal and state levels on a variety of goods, including alcohol, tobacco, tires, gasoline, diesel fuel, coal, firearms, telephone service, air transportation, unregistered bonds, and many other goods and services. Some jurisdictions require that tax stamps be affixed to goods to demonstrate payment of the tax.

Most jurisdictions below the state level in the United States impose a tax on interests in real property (land, buildings, and permanent improvements). Some jurisdictions also tax some types of business personal property. Rules vary widely by jurisdiction. Many overlapping jurisdictions (counties, cities, school districts) may have authority to tax the same property. Few states impose a tax on the value of property.

Property tax is based on fair market value of the subject property. The amount of tax is determined annually based on the market value of each property on a particular date, and most jurisdictions require re-determinations of value periodically. The tax is computed as the determined market value times an assessment ratio times the tax rate. Assessment ratios and tax rates vary widely among jurisdictions, and may vary by type of property within a jurisdiction. Where a property has recently been sold between unrelated sellers, such sale establishes fair market value. In other (i.e., most) cases, the value must be estimated. Common estimation techniques include comparable sales, depreciated cost, and an income approach. Property owners may also declare a value, which is subject to change by the tax assessor.

Property taxes are most commonly applied to real estate and business property. Real property generally includes all interests considered under that state's law to be ownership interests in land, buildings, and improvements. Ownership interests include ownership of title as well as certain other rights to property. Automobile and boat registration fees are a subset of this tax. Usually, other non-business goods are not subject to property tax.

The assessment process varies by state, and sometimes within a state. Each taxing jurisdiction determines values of property within the jurisdiction and then determines the amount of tax to assess based on the value of the property. Tax assessors for taxing jurisdictions are generally responsible for determining property values. The determination of values and calculation of tax is generally performed by an official referred to as a tax assessor. Property owners have rights in each jurisdiction to declare or contest the value so determined. Property values generally must be coordinated among jurisdictions, and such coordination is often performed by a board of equalization.

Once value is determined, the assessor typically notifies the last known property owner of the value determination. After values are settled, property tax bills or notices are sent to property owners.[59] Payment times and terms vary widely. If a property owner fails to pay the tax, the taxing jurisdiction has various remedies for collection, in many cases including seizure and sale of the property. Property taxes constitute a lien on the property to which transferees are also subject. Mortgage companies often collect taxes from property owners and remit them on behalf of the owner.

The United States imposes tariffs or customs duties on imports of goods. The duty is levied at the time of import and is paid by the importer of record. Customs duties vary by country of origin and product. Goods from many countries are exempt from duty under various trade agreements. Certain types of goods are exempt from duty regardless of source. Customs rules differ from other import restrictions. Failure to properly comply with customs rules can result in seizure of goods and criminal penalties against involved parties. United States Customs and Border Protection (“CBP”) enforces customs rules.

Goods may be imported to the United States subject to import restrictions. Importers of goods may be subject to tax (“customs duty” or “tariff”) on the imported value of the goods. “Imported goods are not legally entered until after the shipment has arrived within the port of entry, delivery of the merchandise has been authorized by CBP, and estimated duties have been paid.” Importation and declaration and payment of customs duties is done by the importer of record, which may be the owner of the goods, the purchaser, or a licensed customs broker. Goods may be stored in a bonded warehouse or a Foreign-Trade Zone in the United States for up to five years without payment of duties. Goods must be declared for entry into the U.S. within 15 days of arrival or prior to leaving a bonded warehouse or foreign trade zone. Many importers participate in a voluntary self assessment program with CBP. Special rules apply to goods imported by mail.

All goods imported into the United States are subject to inspection by CBP.

Some goods may be temporarily imported to the United States under a system similar to the ATA Carnet system. Examples include laptop computers used by persons traveling in the U.S. and samples used by salesmen.

Rates of tax on transaction values vary by country of origin. Goods must be individually labeled to indicate country of origin, with exceptions for specific types of goods. Goods are considered to originate in the country with the highest rate of duties for the particular goods unless the goods meet certain minimum content requirements. Extensive modifications to normal duties and classifications apply to goods originating in Canada or Mexico under the North American Free Trade Agreement.

All goods that are not exempt are subject to duty computed according to the Harmonized Tariff Schedule published by CBP and the U.S. International Trade Commission. This lengthy schedule[61] provides rates of duty for each class of goods. Most goods are classified based on the nature of the goods, though some classifications are based on use.

Customs duty rates may be expressed as a percentage of value or dollars and cents per unit. Rates based on value vary from zero to 20% in the 2011 schedule.[62] Rates may be based on relevant units for the particular type of goods (per ton, per kilogram, per square meter, etc.). Some duties are based in part on value and in part on quantity.

Where goods subject to different rates of duty are commingled, the entire shipment may be taxed at the highest applicable duty rate.

Imported goods are generally accompanied by a bill of lading or air waybill describing the goods. For purposes of customs duty assessment, they must also be accompanied by an invoice documenting the transaction value. The goods on the bill of lading and invoice are classified and duty is computed by the importer or CBP. The amount of this duty is payable immediately, and must be paid before the goods can be imported. Most assessments of goods are now done by the importer and documentation filed with CBP electronically.

After duties have been paid, CBP approves the goods for import. They can then be removed from the port of entry, bonded warehouse, or Free-Trade Zone.

After duty has been paid on particular goods, the importer can seek a refund of duties if the goods are exported without substantial modification. The process of claiming a refund is known as duty drawback.

Certain civil penalties apply for failures to follow CBP rules and pay duty. Goods of persons subject to such penalties may be seized and sold by CBP. In addition, criminal penalties may apply for certain offenses. Criminal penalties may be as high as twice the value of the goods plus twenty years in jail.

Foreign-trade Zones are secure areas physically in the United States but legally outside the customs territory of the United States. Such zones are generally near ports of entry. They may be within the warehouse of an importer. Such zones are limited in scope and operation based on approval of the Foreign-Trade Zones Board. Goods in a Foreign-Trade Zone are not considered imported to the United States until they leave the Zone. Foreign goods may be used to manufacture other goods within the zone for export without payment of customs duties.

Estate and gift taxes in the United States are imposed by the Federal and most state governments.[65] The estate tax is an excise tax levied on the right to pass property at death. It is imposed on the estate, not the beneficiary. Some states impose an inheritance tax on recipients of bequests. Gift taxes are levied on the giver (donor) of property where the property is transferred for less than adequate consideration. An additional generation-skipping transfer (GST) tax is imposed by the Federal and some state governments on transfers to grandchildren (or their descendants).

The Federal gift tax is computed based on cumulative taxable gifts, and is reduced by prior gift taxes paid. The Federal estate tax is computed on the sum of taxable estate and taxable gifts, and is reduced by prior gift taxes paid. These taxes are computed as the taxable amount times a graduated tax rate (up to 35% in 2011). The estate and gift taxes are also reduced by a "unified credit" equivalent to an exclusion ($5 million in 2011). Rates and exclusions have varied, and the benefits of lower rates and the credit have been phased out during some years.

Taxable gifts are certain gifts of U.S. property by nonresidents, most gifts of any property by residents, in excess of an annual exclusion ($13,000 for gifts made in 2011) per donor per donee. Taxable estates are certain U.S. property of nonresident decedents, and most property of residents. Residence for estate tax purposes is primarily based on domicile. U.S. real estate and most tangible property in the U.S. are subject to estate and gift tax whether the decedent or donor is resident or nonresident.

The taxable amount of a gift is the fair market value of the property in excess of consideration received at the date of gift. The taxable amount of an estate is the gross fair market value of all rights considered property at the date of death (or an alternative valuation date) ("gross estate"), less liabilities of the decedent, costs of administration (including funeral expenses) and certain other deductions. State estate taxes are deductible, with limitations, in computing the Federal taxable estate. Bequests to charities reduce the taxable estate.

Gift tax applies to all irrevocable transfers of interests in tangible or intangible property. Estate tax applies to all property owned in whole or in part by a citizen or resident at the time of his or her death, to the extent of the interest in the property. Generally, all types of property are subject to estate tax.[66] Whether a decedent has sufficient interest in property for the property to be subject to gift or estate tax is determined under applicable state property laws. Certain interests in property that lapse at death (such as life insurance) are included in the taxable estate.

Taxable values of estates and gifts are the fair market value. For some assets, such as widely traded stocks and bonds, the value may be determined by market listings. The value of other property may be determined by appraisals, which are subject to potential contest by the taxing authority. Special use valuation applies to farms and closely held businesses, subject to limited dollar amount and other conditions. Monetary assets, such as cash, mortgages, and notes, are valued at the face amount, unless another value is clearly established.

Life insurance proceeds are included in the gross estate. The value of a right of a beneficiary of an estate to receive an annuity is included in the gross estate. Certain transfers during lifetime may be included in the gross estate. Certain powers of a decedent to control the disposition of property by another are included in the gross estate.

The taxable estate of a married decedent is reduced by a deduction for all property passing to the decedent's spouse. Certain terminable interests are included. Other conditions may apply.

Donors of gifts in excess of the annual exclusion must file gift tax returns on IRS Form 709 and pay the tax. Executors of estates with a gross value in excess of the unified credit must file an estate tax return on IRS Form 706 and pay the tax from the estate. Returns are required if the gifts or gross estate exceed the exclusions. Each state has its own forms and filing requirements. Tax authorities may examine and adjust gift and estate tax returns.

Many jurisdictions within the United States impose taxes or fees on the privilege of carrying on a particular business or maintaining a particular professional certification. These licensing or occupational taxes may be a fixed dollar amount per year for the licensee, an amount based on the number of practitioners in the firm, a percentage of revenue, or any of several other bases. Persons providing professional or personal services are often subject to such fees. Common examples include accountants, attorneys, barbers, casinos, dentists, doctors, auto mechanics, plumbers, and stock brokers. In addition to the tax, other requirements may be imposed for licensure.

All 50 states impose vehicle license fee. Generally, the fees are based on type and size of vehicle and are imposed annually or biannually. All states and the District of Columbia also impose a fee for a driver's license, which generally must be renewed with payment of fee every few years.

Fees are often imposed by governments for use of certain facilities or services. Such fees are generally imposed at the time of use. Multi-use permits may be available. For example, fees are imposed for use of national or state parks, rulings from the Internal Revenue Service, use of certain highways (called "tolls"), parking on public streets, and use of public transit.
[edit] Tax administration

Taxes in the United States are administered by literally hundreds of tax authorities. At the Federal level there are three tax administrations. Alcohol, tobacco, and firearms taxes are administered by the Alcohol and Tobacco Tax and Trade Bureau (TTB). All other taxes on domestic activities are administered by the Internal Revenue Service (IRS). Taxes on imports (customs duties) are administered by U.S. Customs and Border Patrol. TTB is part of the Department of Justice and CBP belongs to the Department of Homeland Security[67] . The IRS is a division within the U.S. Department of Treasury. Organization of state and local tax administrations varies widely. Every state maintains a tax administration. A few states administer some local taxes in whole or part. Most localities also maintain a tax administration or share one with neighboring localities.

The IRS administers all U.S. Federal taxation on domestic activities, except those taxes administered by TTB. IRS functions include:

Processing Federal tax returns (except TTB returns), including those for Social Security and other Federal payroll taxes
Providing assistance to taxpayers in completing tax returns
Collecting all taxes due related to such returns
Enforcement of tax laws through examination of returns and assessment of penalties
Providing an appeals mechanism for Federal tax disputes
Referring matters to the Justice Department for prosecution
Publishing information about U.S. Federal taxes, including forms, publications, and other materials
Providing written guidance in the form of rulings binding on the IRS for the public and for particular taxpayers

The IRS maintains several Service Centers at which tax returns are processed. Taxpayers generally file most types of tax returns by mail with these Service Centers or file electronically. The IRS also maintains a National Office in Washington, DC, and numerous local offices providing taxpayer services and administering tax examinations.
[edit] Examination

Tax returns filed with the IRS are subject to examination and adjustment, commonly called an IRS audit. Only a small percentage of returns (about 1% of individual returns in IRS FY 2008) are examined each year. The selection of returns uses a variety of methods based on IRS experiences. On examination, the IRS may request additional information from the taxpayer by mail, in person at IRS local offices, or at the business location of the taxpayer. The taxpayer is entitled to representation by an attorney, CPA, or enrolled agent, at the expense of the taxpayer, who may make representations to the IRS on behalf of the taxpayer. Taxpayers have certain rights in an audit. Upon conclusion of the audit, the IRS may accept the tax return as filed or propose adjustments to the return. The IRS may also assess penalties and interest. Generally, adjustments must be proposed within three years of the due date of the tax return. Certain circumstances extend this time limit, including substantial understatement of income and fraud. The taxpayer and the IRS may agree to allow the IRS additional time to conclude an audit. If the IRS proposes adjustments, the taxpayer may agree to the adjustment, appeal within the IRS, or seek judicial determination of the tax.

In addition to enforcing tax laws, the IRS provides formal and informal guidance to taxpayers. While often referred to as IRS Regulations, the regulations under the Internal Revenue Code are issued by the Department of Treasury. IRS guidance consists of:

Revenue Rulings and Revenue Procedures, applicable to all taxpayers and published in the Internal Revenue Bulletin, which are binding on the IRS,
Private letter rulings on specific issues, applicable only to the taxpayer who applied for the ruling,
IRS Publications providing informal instruction to the public on tax matters,
IRS forms and instructions,
A comprehensive web site, and
Informal (nonbinding) advice by telephone.

The Alcohol and Tobacco Tax Trade Bureau (TTB), a division of the Department of the Treasury, enforces Federal excise tax laws related to alcohol, tobacco, and firearms. TTB is organized as six divisions, each with discrete functions:

Revenue Center: processes tax returns and issues permits, and related activities;
Risk Management: internally develops guidelines and monitors programs;
Tax Audit: verifies filing and payment of taxes;
Trade Investigations: investigating arm for non-tobacco items; and
Tobacco Enforcement Division: enforcement actions for tobacco; and
Advertising, Labeling and Formulation Division: implements various labeling and ingredient monitoring.

Criminal enforcement related to TTB is done by the Bureau of Alcohol, Tobacco, Firearms, and Explosives, a division of the Justice Department.
[edit] Customs and Border Protection
Main article: U.S. Customs and Border Protection

U.S. Customs and Border Protection (CBP), an agency of the United States Department of Homeland Security, collects customs duties and regulates international trade. It has a workforce of over 58,000 employees covering over 300 official ports of entry to the United States. CBP has authority to seize and dispose of cargo in the case of certain violations of customs rules.
[edit] State administrations

Every state in the United States has its own tax administration, subject to the rules of that state's law and regulations. These are referred to in most states as the Department of Revenue or Department of Taxation. The powers of the state taxing authorities vary widely. Most enforce all state level taxes but not most local taxes. However, many states have unified state-level sales tax administration, including for local sales taxes.

State tax returns are filed with separately with those tax administrations, not with the Federal tax administrations. Each state has its own procedural rules, which vary widely.

Most localities within the United States administer most of their own taxes. In many cases, there are multiple local taxing jurisdictions with respect to a particular taxpayer or property. For property taxes, the taxing jurisdiction is typically represented by a tax assessor/collector whose offices are located at the taxing jurisdiction's facilities.

The United States Constitution provides that Congress "shall have the power to lay and collect Taxes, Duties, Imposts, and Excises ... but all Duties, Imposts, and Excises shall be uniform throughout the United States."[68] Prior to amendment, it provided that "No Capitation, or other direct, Tax shall be Laid unless in proportion to the Census ..." The 16th Amendment provided that "Congress shall have the power to lay and collect taxes on incomes, from whatever source derived, without apportionment among the several States, and without regard to any census or enumeration." The 10th Amendment provided that "powers not delegated to the United States by this Constitution, nor prohibited to the States, are reserved to the States respectively, or to the people."

Congress has enacted numerous laws dealing with taxes since adoption of the Constitution. Those laws are now codified as Title 19, Customs Duties, Title 26, Internal Revenue Code, and various other provisions. These laws specifically authorize the United States Secretary of the Treasury to delegate various powers related to levy, assessment and collection of taxes.

State constitutions uniformly grant the state government the right to levy and collect taxes. Limitations under state constitutions vary widely.

Each major type of tax in the United States has been used by some jurisdiction at some time as a tool of social policy. Each has been criticized as too regressive and as too progressive. Proposals have been made to replace each major type of tax with another type of tax.

Before 1776, the American Colonies were subject to taxation by the United Kingdom, and also imposed local taxes. Property taxes were imposed in the Colonies as early as 1634. In 1673, the UK Parliament imposed a tax on exports from the American Colonies, and with it created the first tax administration in what would become the United States. Other tariffs and taxes were imposed by Parliament. Most of the colonies and many localities adopted property taxes.

Under Article VIII of the Articles of Confederation, the United States Federal government did not have the power to tax. All such power lay with the states. The United States Constitution, adopted in 1787, authorized the Federal government to lay and collect taxes, but required that some types of tax revenues be given to the states in proportion to population. Tariffs were the principal Federal tax through the 1800s.

By 1796, state and local governments in fourteen of the 15 states taxed land. Delaware taxed the income from property. By the American Civil War, the principal of taxation of property at a uniform rate had developed, and many of the states relied on property taxes as a major source of revenue. However, the increasing importance of intangible property, such as corporate stock, caused the states to shift to other forms of taxation in the 1900s.

Income taxes in the form of "faculty" taxes were imposed by the colonies. These combined income and property tax characteristics, and the income element persisted after 1776 in a few states. Several states adopted income taxes in 1837. [74] Wisconsin adopted a corporate and individual income tax in 1911,[75] and was the first to administer the tax with a state tax administration. The first Federal income tax was adopted as part of the Revenue Act of 1861.[76] The tax lapsed after the American Civil War. Subsequently enacted income taxes were held to be unconstitutional by the Supreme Court because they were not given to the states. In 1913, the Sixteenth Amendment was ratified, permitting the Federal government to levy an income tax without giving all of it to the states.

The Federal income tax enacted in 1913 included corporate and individual income taxes. It defined income using language from prior laws, incorporated in the Sixteenth Amendment, as “all income from whatever source derived.” The tax allowed deductions for business expenses, but few non-business deductions. In 1918 the income tax law was expanded to include a foreign tax credit and more comprehensive definitions of income and deduction items. Various aspects of the present system of definitions were expanded through 1926, when U.S. law was organized as the United States Code. Income, estate, gift, and excise tax provisions, plus provisions relating to tax returns and enforcement, were codified as Title 26, also known as the Internal Revenue Code. This was reorganized and somewhat expanded in 1954, and remains in the same general form.

Federal taxes were expanded greatly during World War I. In 1921, wealthy industrialist and then Treasury Secretary Andrew Mellon engineered a series of significant income tax cuts under three presidents. Mellon argued that tax cuts would spur growth. The last such cut in 1928 was followed by the Great Depression in 1929. Taxes were raised again in the latter part of the Depression, and during World War II. Income tax rates were reduced significantly during the Johnson, Nixon, and Reagan Presidencies. Significant tax cuts for corporations and upper income individuals were enacted during the second Bush Presidency.

In 1986, Congress adopted, with little modification, a major expansion of the income tax portion of the Internal Revenue Code proposed in 1985 by the U.S. Treasury Department under President Reagan. The thousand page Tax Reform Act of 1986 significantly lowered tax rates, adopted sweeping expansions of international rules, eliminated the lower individual tax rate for capital gains, added significant inventory accounting rules, and made substantial other expansions of the law.

Federal income tax rates have been modified frequently. Tax rates were changed in 34 of the 97 years between 1913 and 2010. The rate structure has been graduated since the 1913 act.

The first individual income tax return Form 1040 under the 1913 law was four pages long. In 1915, some Congressmen complained about the complexity of the form. In 1921, Congress considered but did not enact replacement of the income tax with a national sales tax.

By the 1920s, many states had adopted income taxes on individuals and corporations. Many of the state taxes were simply based on the Federal definitions. The states generally taxed residents on all of their income, including income earned in other states, as well as income of nonresidents earned in the state. This led to a long line of Supreme Court cases limiting the ability of states to tax income of nonresidents.

The states had also come to rely heavily on retail sales taxes. However, as of the beginning of World War II, only two cities (New York and New Orleans) had local sales taxes.

The Federal Estate Tax was introduced in 1916, and Gift Tax in 1924. Unlike many inheritance taxes, the Gift and Estate taxes were imposed on the transferor rather than the recipient. Many states adopted either inheritance taxes or estate and gift taxes, often computed as the amount allowed as a deduction for Federal purposes. These taxes remained under 1% of government revenues through the 1990s.



Get Ready for a 70% Marginal Tax Rate
Some argue the U.S. economy can bear higher pre-Reagan tax rates. But those rates applied to a much smaller fraction of taxpayers than what we're headed for without spending cuts.


President Obama has been using the debt-ceiling debate and bipartisan calls for deficit reduction to demand higher taxes. With unemployment stuck at 9.2% and a vigorous economic "recovery" appearing more and more elusive, his timing couldn't be worse.

Two problems arise when marginal tax rates are raised. First, as college students learn in Econ 101, higher marginal rates cause real economic harm. The combined marginal rate from all taxes is a vital metric, since it heavily influences incentives in the economy—workers and employers, savers and investors base decisions on after-tax returns. Thus tax rates need to be kept as low as possible, on the broadest possible base, consistent with financing necessary government spending.

Second, as tax rates rise, the tax base shrinks and ultimately, as Art Laffer has long argued, tax rates can become so prohibitive that raising them further reduces revenue—not to mention damaging the economy. That is where U.S. tax rates are headed if we do not control spending soon.

The current top federal rate of 35% is scheduled to rise to 39.6% in 2013 (plus one-to-two points from the phase-out of itemized deductions for singles making above $200,000 and couples earning above $250,000). The payroll tax is 12.4% for Social Security (capped at $106,000), and 2.9% for Medicare (no income cap). While the payroll tax is theoretically split between employers and employees, the employers' share is ultimately shifted to workers in the form of lower wages.

But there are also state income taxes that need to be kept in mind. They contribute to the burden. The top state personal rate in California, for example, is now about 10.5%. Thus the marginal tax rate paid on wages combining all these taxes is 44.1%. (This is a net figure because state income taxes paid are deducted from federal income.)

So, for a family in high-cost California taxed at the top federal rate, the expiration of the Bush tax cuts in 2013, the 0.9% increase in payroll taxes to fund ObamaCare, and the president's proposal to eventually uncap Social Security payroll taxes would lift its combined marginal tax rate to a stunning 58.4%.

But wait, things get worse. As Milton Friedman taught decades ago, the true burden on taxpayers today is government spending; government borrowing requires future interest payments out of future taxes. To cover the Congressional Budget Office projection of Mr. Obama's $841 billion deficit in 2016 requires a 31.7% increase in all income tax rates (and that's assuming the Social Security income cap is removed). This raises the top rate to 52.2% and brings the total combined marginal tax rate to 68.8%. Government, in short, would take over two-thirds of any incremental earnings.

Many Democrats demand no changes to Social Security and Medicare spending. But these programs are projected to run ever-growing deficits totaling tens of trillions of dollars in coming decades, primarily from rising real benefits per beneficiary. To cover these projected deficits would require continually higher income and payroll taxes for Social Security and Medicare on all taxpayers that would drive the combined marginal tax rate on labor income to more than 70% by 2035 and 80% by 2050. And that's before accounting for the Laffer effect, likely future interest costs, state deficits and the rising ratio of voters receiving government payments to those paying income taxes.

It would be a huge mistake to imagine that the cumulative, cascading burden of many tax rates on the same income will leave the middle class untouched. Take a teacher in California earning $60,000. A current federal rate of 25%, a 9.5% California rate, and 15.3% payroll tax yield a combined income tax rate of 45%. The income tax increases to cover the CBO's projected federal deficit in 2016 raises that to 52%. Covering future Social Security and Medicare deficits brings the combined marginal tax rate on that middle-income taxpayer to an astounding 71%. That teacher working a summer job would keep just 29% of her wages. At the margin, virtually everyone would be working primarily for the government, reduced to a minority partner in their own labor.

Nobody—rich, middle-income or poor—can afford to have the economy so burdened. Higher tax rates are the major reason why European per-capita income, according to the Organization for Economic Cooperation and Development, is about 30% lower than in the United States—a permanent difference many times the temporary decline in the recent recession and anemic recovery.

Some argue the U.S. economy can easily bear higher pre-Reagan tax rates. They point to the 1930s-1950s, when top marginal rates were between 79% and 94%, or the Carter-era 1970s, when the top rate was about 70%. But those rates applied to a much smaller fraction of taxpayers and kicked in at much higher income levels relative to today.

There were also greater opportunities for sheltering income from the income tax. The lower marginal tax rates in the 1980s led to the best quarter-century of economic performance in American history. Large increases in tax rates are a recipe for economic stagnation, socioeconomic ossification, and the loss of American global competitiveness and leadership.

There is only one solution to this growth-destroying, confiscatory tax-rate future: Control spending growth, especially of entitlements. Meaningful tax reform—not with higher rates as Mr. Obama proposes, but with lower rates on a broader base of economic activity and people—can be an especially effective complement to spending control. But without increased spending discipline, even the best tax reforms are doomed to be undone.

Mr. Boskin is a professor of economics at Stanford University and a senior fellow at the Hoover Institution. He chaired the Council of Economic Advisers under President George H.W. Bush.


Social Security payments are made from the trust fund that is solvent, and so stated by Mr. Obama and Joe Biden recently.

yet the big lie was exposed when the president let out a statement that checks may not be going out unless the debt ceiling is raised!

OOPS!!!! Cat is out of the bag...there appears to be no trust fund as repeatedly lied about!

The president in effect said that if he could not borrow the money, the checks were not going to go out! hey what happened to the TRUST FUND????? Who robbed that fund?

Did anyone out there catch that slip up???


Barack Obama tells CBS: I cannot guarantee Social Security checks will go out
CBS, CBS Evening News, Scott Pelley,

In an interview with CBS’ Scott Pelley, President Barack Obama explains the possible fallout if a decision isn’t reached to raise the debt ceiling by Aug. 3.

Anchor Pelley asks: “Can you tell the folks at home that the Social Security checks are going to go out on August the 3rd? There are about $20 billion worth of Social Security checks that have to go out the day after the government is supposedly going to go into default.”

Obama responds: “Well this is not just a matter of Social Security checks. These are veterans’ checks. These are folks on disability and their checks. There are about 70 million checks that go out.”

Pelley asks: “Can you guarantee as president those checks will go out on August the 3rd?”

Obama says: “I cannot guarantee that those checks go out on August 3rd, if we haven’t resolved this issue. Because there may simply not be the money in the coffers to do it.”

This is either the dumbest person on earth or just a liar, you decide!

Additionally, can anyone make a short list of what has improved while this hope and change president has been in office???? race relations improved? housing improved?
jobs improved? dollar stronger? USA status in the world better? deficit smaller?
oil prices lower? cars cheaper? alternative fuels cheaper? taxes lower? your job more secure? world safer? crime lower? electricity lower prices? has anything improved for you?????