Last week in my column, we saw concrete proof that government revenue falls as tax rates are raised past 35 percent.
Why does it fall?
It's real simple. Most self-employed people can choose what their income will end up at. A client of mine has concentrated heavily this year on travel for employees in beautiful cities in lieu of a bonus and he is spending on research and development and capital spending.
Editor's Note: Small-Town Ohio Accountant Uses Simple Forgotten Secret to Help Investors Pocket Millions
He told me that his mission in 2013 is to personally do less and pay himself less and he’s going to travel for business and visit his clients in warm weather climates all year.
He and his company will this year pay much less in taxes even though he will be paying at a higher rate.
Last year, thousands of investors took capital gains at 15 percent instead of 20 percent. I will not personally trade stocks in 2013, but instead focus on buy and hold, which has no income tax due the government until it’s sold.
And I’m not selling. If I "need money," I will borrow it on my home, which is tax deductible, thereby lowering my income tax I will owe the government.
And if I’m not self-employed but work for someone else, I adjust in another way.
When I’m taxed too much I have to buy generic items at the grocery store and delay car and home repairs that are not imperative. I also may have to drive an older car, skip haircuts and cut back on entertainment or other luxuries.
That leaves the grocer, farmer, rancher, car dealer, carmaker and hair stylist with less money for the government to tax. And all the secondary folks who depend on them will also do less business. The private-sector pie gets smaller.
Editor's Note: Small-Town Ohio Accountant Uses Simple Forgotten Secret to Help Investors Pocket Millions
The government doesn’t just tax money once — it taxes money every time it moves. The higher you raise taxes, the less the money moves, which indirectly causes a trickle down effect despite the liberal mantra that it does not.
As you all know, when many sages psychics and doomsayers have been predicting doom the past four years, I have continued to help my Dividend Machine subscribers and my loyal readers of the weekly column an optimistic forecast.
However, I see a slowdown due to the anti-business rhetoric and policies, tax increases and the adoption and implementation of Obamacare. I still buy stocks, but the sectors and types of stocks have changed going forward.
About the Author: Bill Spetrino
Bill Spetrino is a member of the Moneynews Financial Brain Trust. Click Here to read more of his articles. He is also the editor of the Dividend Machine. Discover more by Clicking Here Now.
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