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A New Retirement Terror

March 25, 2010 By E.J. Smith - Your Survival Guy

Misery. That’s one word that describes Obamacare. And I’m sure there’s a number of other words that you and the two thirds of the country who are against it would use too. Obama administration deficits as far as the eye can see will guarantee at least two things: higher unemployment and inflation. Or, in other words a higher Misery Index, which doesn’t even include Obamacare’s higher taxes.

Of course, according to backwards Obama-math, more taxes must mean more jobs. Thanks in great part to Obamacare, the IRS is increasing its ranks by 16,500. That is the greatest expansion of the agency since WWII. And what does the government create? Nothing. Just more policing of those trying to create something of value for their customers.

Small businesses make up over 95% of the businesses in America. They will be hit the hardest by trying to comply with the new tax rules. In fact, it costs small business owners 45% more per employee to comply than their larger counterparts. Of course, big government pays nothing. It just makes the rules. Our forefathers never had this type of America in mind.

Remember when Obama told us that there would be no tax increases for any individual making less than $200,000 or any couple making less than $250,000? Well, that promise has been broken with Obamacare. We now live in a country where you try not to make more than a certain amount of money. httpv://www.youtube.com/watch?v=mqojWrtnieI

Taxes are going up for the successful. I’m not talking about the super-rich, either. Believe me, the George Soroses of the world will be just fine. In reality the new taxes are going to hit the 75 million baby boomers the hardest, just as they get ready to retire. If you’re one of them, do you really feel this is a time for you to give more of your savings and income to the government? And imagine the size of the net this will cast once inflation kicks in and captures more and more Americans?

If your family includes some of the successful baby boomers that just happen to surpass $250,000 in income after 30 years of work, by example, is it fair that your investment income will be faced with a 3.8% Medicare payroll tax thanks to Obamacare? If you make $251,000, all of your investment income will be hit with the 3.8% tax. Obama calls this “unearned income.” Specifically, it’s investment income including interest, dividends, capital gains, annuities, royalties, and rents.

I talk to a lot of investors who plan, in retirement, to live off a combination of portfolio income and real-estate rents. Get ready for tax increases. Rents will be hit by the 3.8% Obamacare tax, and with the Bush tax cuts set to expire at the end of this year, not only will the capital gains tax rate jump from 15% to 20%, it will be 23.8% with the Medicare payroll tax. Dividends for the top bracket will be taxed at 39.6% plus the new 3.8%, or 43.4%.

Do you think the beneficiaries of the Obama tax grab saved a penny in their lives and endured all the sacrifices that come with deferring gratification by saving? Not likely. As they cry for more Obama money, they are the beneficiaries of the redistribution of your wealth. And I don’t think you and I would categorize a lot of the beneficiaries as poor, either.

There’s another tax increase that will also affect the successful group I’m writing to. That is the increase in Medicare payroll taxes on ordinary income of 3.8%. Your employer pays 1.45%, and you pay 1.45% plus an increase of 0.9%, or 2.35%. And a new army of IRS agents is now going to make sure you’re withholding the right amount of taxes for your employees. You need to comply, or else. By the way, how experienced do you think this crew will be?

Never before have we as a country seen the economy hijacked by $500 billion in tax increases in the midst of a recession with double-digit unemployment. There will be much more misery ahead. And unfortunately, the hope of stopping Obamacare with a mid-term election is no longer a viable solution. Politicians are clearly out of touch with the economic realities of how business works. The very essence of making a profit is avoiding deficits, something the Obama administration and friends like tax-fraud Al Sharpton will fight no matter what. Scary.

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E.J. Smith - Your Survival Guy
E.J. Smith is Founder of YourSurvivalGuy.com, Managing Director at Richard C. Young & Co., Ltd., a Managing Editor of Richardcyoung.com, and Editor-in-Chief of Youngresearch.com. His focus at all times is on preparing clients and readers for “Times Like These.” E.J. graduated from Babson College in Wellesley, Massachusetts, with a B.S. in finance and investments. In 1995, E.J. began his investment career at Fidelity Investments in Boston before joining Richard C. Young & Co., Ltd. in 1998.

E.J. has trained at Sig Sauer Academy in Epping, NH, NH, where he completed course-work in Practical and Defensive Handgun, Conceal Carry Pistol, Shotguns, Precision Scope Rifle and Kidnapping Prevention.

E.J. plays a Yamaha Recording Custom drum set with Zilldjian cymbals. His first drum set was a 5-piece Slingerland with Zildjians. He grew-up worshiping Neil Peart (RIP) of the band Rush, and loves the song Tom Sawyer—the name of his family’s boat, a Grady-White Canyon 306. He grew up in Mattapoisett, MA, an idyllic small town on the water near Cape Cod. He spends time in Newport, RI and Bartlett, NH—both as far away from Wall Street as one could mentally get. The Newport office is on a quiet, tree lined street not far from the harbor and the log cabin in Bartlett, NH, the “Live Free or Die” state, sits on the edge of the White Mountain National Forest. He enjoys spending time in Key West and Paris.

Please get in touch with E.J. at ejsmith@yoursurvivalguy.com

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