Think about the current state of banking. If I went to a bank and started borrowing money on a deal where I offered to pay interest only, how many banks would run my way? Take this story deeper. Assume I already had a ton of debt out there, but I wanted more. In this age where credit card companies are raising rates and cutting credit limits -- I want more credit and a lower rate. While I am doing all of this, I also lend out massive amounts of cash to businesses that have crappy financial health themselves.
Some might think this scenario is either crazy, a scam, or comes from the psycholgically unstable.
Actually, it comes from the US Government. Check out how much the government owes.
Lot's of details in the links if you are curious about who the Government owes. Maybe we'll get into that another day.
For now, I'd like to link this big debt deal back to your taxes.
We hear a lot of comments about taxes. The rich should pay more. The rich pay too much. Too many don't really pay at all. The poor make money off the progressive tax system; they don't pay their fair share...and so on.
Here are some tax facts.
If we look at the term, middle class, to represent the middle 20% of taxpayers, we can generally describe the middle class as those making $37,771 - $60,000 in 2006 tax year. If you want to break that out with more details or you prefere a braoder range for middle class, check the source link.
Average household income for these levels in (parentheses)
In 2006, the top 20% of individual income tax payers ($248,400) were responsible for 86.3% of the individual income taxes paid. In 1986, that top 20% ($167,800) was responsible for 68.9% of the individual income taxes paid.
The middle 20% of individual income tax payers ($60,700) were responsible for 4.4% of the individual income taxes paid. In 1986, that middle 20% ($52,500) was responsible for 9.2% of the individual income taxes paid.
The bottom 20% of individual income tax payers ($17,200) were responsible for -2.8% of the individual income taxes paid. In 1986, that bottom 20% ($14,800) was responsible for 0.2% of the individual income taxes paid. This means there was a very small tax liability in 1986 which became a rebate in 2006.
Let's loop that back to the whole deficit thing. As a country, we do not collect enough taxes and fees to cover our expenses on a national federal government level. As the deficits continue to grow this is an issue for all of us regardless of political affiliation. The US has had deficits for most of the last 50 years, but they usually just grow.
Good thing that Riley's beef is with Santa instead of the people that back the savings bond in his drawer. (Clip has foul language.) Is this a future step for those modern day tea parties? I hope not.
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