I have been reading quite a bit about infrastructure funding.
Putting people to work on the roads and bridges of our nation, and funding it with a tax increase on corporations.
I dug around a little.
It doesn’t take much in the high-tech search engine era.
First thing is that since the passing of the Tax Cuts and Jobs Act (TCJA) of 2017 there is a long list of C Corporations that are paying no tax, many of whom even have negative effective tax rates.
Okay, I invest in the index markets, henceforth I am a stakeholder.
And I like when corporate accountants look out for us.
I also can’t help but think back to before 2018 when the changes were in place.
Over a 10-year period the markets traditionally rise.
There are big, sometimes huge corrections.
But the main thing is, over a 90-year history the markets rise.
What am I saying?
We’re not all going to live in abject squalor with the corporate tax rate increased to 28%.
People and markets tend to adapt.
That troublesome reality that has Congress coughing up trillions of dollars every several months like spoiling your grandkid at Disneyland.
Oh, I absolutely get the necessity.
People are dying.
And the living are hurting.
My thing is looking at numbers, and I dug up a few.
CARES Act = $2.59T
Consolidated Appropriations Act (that created Stimulus Round Two) = $2.3T
These two were passed in an era of conservative leadership, by the way.
ARP Act 21 = $1.9T
That’s a total of $6,790,000,000,000.
Does anybody understand where this money comes from?
Is it a combination of Central Bank funding (read: creating new money) and debt spending?
To what proportion?
I wonder if Congress even knows.
I know this – the answer is quite possibly out there, but I can’t take the kind of time to research this during tax season.
In other words, I’m admitting that, as we speak, I don’t know the exact answer.
If yes, please, do share with the class!
But when the government proposes a $2T plan to put people to work and fund renewable energy?
And comes up with an actual plan to pay for at least part of it, more over time?
Can we afford to be cavalier in our opinion, and just assume it’s wrong because a talking head says it is?
The plan calls for a 28% corporate tax, up from 21%.
How many people remember that’s only half of the original cut though?
It was 35% on December 19, 2017.
There’s also the part that upsets non-corporate hard-working American taxpayers.
Some sort of increase in taxes for those making over $400,000.
It is remarkable how many people this enrages that don’t, and will never, make that much in one year.
My theory? The Concept of the American Dream.
Everybody sees themselves making that big money someday.
In fact, I have many friends and clients that are already there.
I wonder how many of them have retirement funds with after-tax savings in whole life policies and Roth 401Ks?
Late in life, I have become enamored of the idea of tax-free retirement funds.
Hence, the after-tax contributions. Ya gots ta pay it, one way or the other.
Senator William Victor Roth, Jr. was a genius.
I would load up Roth 401K and Roth IRA to the maximum I could afford, every year.
A couple of key takeaways I hope to leave you with.
Do NOT count on taxes staying low for the rest of your life.
Look up the tax rate in the Eisenhower era sometime, for ome interesting information.
I know – we want things NOW, and are willing to leverage debt to the eyeballs to have it.
Set up your nest egg with after-tax, not before-tax contributions.
The other one?
Realize that there really is no limit, or lack.
Our government found $6.79T when they had to.
In the 21st century especially, but really for the history of money…
...it has always been a form of energy.
And it is the tangible way we express our gratitude to others.
I remain firmly convinced this is going to be an incredible year.
Things are improving already, albeit slowly.
Do something randomly kind for someone today, and know that YOU are enough.
Happy Easter, everyone!