Here's One Of The Clever Financial Tricks Mitt Used To Become Dynastically Rich

Here's One Of The Clever Financial Tricks Mitt Romney Used To Become Dynastically Rich

Henry Blodget | Jul. 13, 2012 | Business Insider

While the world waits for Mitt Romney to stop being the only Presidential candidate in several decades to keep his tax returns secret, we're left to try to solve the Romney money mysteries with the information we have.

One of those mysteries is how Romney accumulated $21-$102 million in his Individual Retirement Account.
Yesterday, we speculated that part of the reason might be that Romney remained the "sole shareholder" of Bain Capital more than 15 years after the firm was founded--an ownership stake that would presumably have been worth a boatload of dough.

Importantly, if this stake did contribute to Romney's wealth explosion, he would have made the money in a way that most people will quickly understand and respect: Specifically, by founding and building a company that ended up being worth a lot.

That's the American dream, and you would have to be bitter and petty to take issue with it.
But our readers pointed out that the entities Romney was "sole shareholder" of might just have been some of Bain's individual investment funds, not the firm as a whole, and that there was another tool that Romney used to become rich that has nothing to do with founding and building companies--or, for that matter, just "making great investments."

This other tool is a financial engineering trick.

And it appears to have been designed and used at least in part to avoid taxes.
Here's the trick, which was explained in great detail by Mark Maremont in this excellent Wall Street Journal article:

When Bain bought companies, it changed the capital structure to create two classes of stock.
The first class, so-called "L" shares, were a form of preferred stock. These shares had less upside than standard common stock, but they were also safer. They earned interest, and they offered capital protection in the event that the investment did not work well. These preferred shares likely ensured that Romney and Bain would not lose money on investments unless everything went completely to hell.

The second class, so-called "A" shares, were common stock. These shares had a vastly higher risk/reward profile than the preferred shares. If the investment worked, they made much higher returns than the "L" shares. If the investment didn't work, they got wiped out.

So far so good. And now comes the tax-avoidance part of the trick.

In the days in which Romney was at Bain, capital gains taxes were 28%. If Bain made a killing on an investment, therefore, a big chunk of the partners' gains would go right to the government. And no one likes writing checks to the government.

So, Romney and other Bain employees, who were allowed to "co-invest" in the firm's deals (common in the industry, but also a potential conflict of interest), figured out a clever way to get around paying these taxes:
They put the safer preferred shares--the "L" shares--in their regular taxable investment accounts.
And they put the high-risk/high-reward shares--the "A" shares--in their tax-deferred retirement accounts.

Alex Wong/Getty Images
On another topic... you can't be CEO and not be responsible for what the company does. Click for more >
Because of the way the risk/return for the "A" shares worked, this was akin to placing stock options in a tax-sheltered account. If things went badly, the entire investment in the risky shares would be lost. (But the partner still might make money overall--through the return and interest on the "L" shares.)

But if things went well--bingo--Romney and his partners hit the jackpot. And they didn't have to pay taxes on their winnings. Rather, they could cash them out, keep them in their IRAs, and then use the proceeds of the bet to make much bigger bets next time.

And as Mark Maremont discovered, Bain's "A" shares often hit the jackpot.  In one Bain deal that Maremont describes, Bain increased the equity value of a company by an extraordinary 36-fold in 20 months. But the value of the "A" shares over that period--many of which had been placed into Bain employee IRAs--jumped 583-fold.

So, that was the first part of the trick: Dividing a company's stock into two classes of shares, with the aim of having the high-risk/high-reward class compound tax-free in individual retirement accounts.
The other part of the trick was the value that Bain assigned to the high-risk/high-reward shares during this period.

The lower the value Bain placed on these shares, the more of the shares Romney and other Bain employees could stuff in their retirement accounts without exceeding the annual contribution limit. And, therefore, the more explosive their tax-sheltered gains on these shares might end up being.

So Romney and Bain had a strong incentive to place a low value on the IRA-bound shares. Which they apparently did.

In the days in which Romney was running Bain, Maremont found, Bain valued the IRA-bound shares at about 1/10th of the value of the safer "L" shares.

Tax lawyers Maremont spoke to said that was a very low valuation to place on the risky shares, especially by today's standards. Most private-equity firms who use this technique these days, he reports, value such shares at 1/3rd or 1/4th of the value of the safer shares.

Now, in Romney's defense, valuing illiquid equity and options (which is essentially what these shares were) is a subjective craft, not a science, and there's a wide range of defensible conclusions. But suffice it to say that Romney & Co. appear to have placed very low valuations on the risky shares that went into their retirement accounts and that, if they had placed a higher value on these shares, they would have sheltered less money from taxes.

Such financial engineering and tax-avoidance tricks obviously require a high level of sophistication, both in terms of investing and tax-planning. As a result, for all intents and purposes, they're only available to a tiny minority of Americans.

Furthermore, these tricks illustrate that Romney's financial success is not, in fact, just about "making good investments" (although he certainly made many of them), but about taking advantage of loopholes and tricks that a handful of people with considerable financial means can exploit.

Lastly, although such tricks may well be perfectly legal within the letter of the tax code (it depends whether the value that Romney placed on the IRA-shares really was reasonable--a question that's worth looking into), they're clearly miles from the spirit of what IRA tax-deferral laws were designed to encourage:

Namely, providing a little tax help to help average Americans save modest amounts of money for retirement.
By limiting IRA contributions to a few thousand dollars a year, Congress clearly meant these vehicles merely to be tools with which Americans could save a bit each year on a tax-deferred basis--not to place high-risk/high-reward bets that could allow people to amass vast fortunes beyond the reach of the IRS.

Romney and his colleagues, obviously, never needed the tax help to save for retirement--because they quickly had more money than they would ever need to retire on. So for Romney and Bain, the IRAs were merely tools with which to allow returns to compound without paying taxes.

And it also likely explains, again, why Romney is so adamant about keeping his tax returns secret. Because the "L" shares and "A" shares tax trick was likely only the beginning. And, for obvious reasons, Romney doesn't want average Americans to discover any more details like this.

Read more: http://www.businessinsider.com/heres-one-of-the-clever-financial-tricks-that-mitt-romney-used-to-become-dynastically-rich-2012-7#ixzz20nTca7QW

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My Thoughts:

It is very obvious why Mitt wants to keep his tax returns secret. But you have to give him credit for the brilliant manipulation of the tax code and other unique and probably unforeseen use of the IRA structure to amass such a large sum of money. If you notice the chart below

Fig. 1 - Data from IRS

As you can see, it is nearly impossible to amass $102 million dollars in an IRA based on the maximum contribution limits shown above. I now tax accountant around the country would like to know how he was able to do amass so much given the law.

Now these millions of dollars are tax differed. That being that as he removes the money from the IRA, he will pay taxes on them at his tax rate at that time, which is usually much lower in retirement than in your working years. And if you pull it out in small chunks, then it also lowers your tax liability.

But on the other hand, his brilliant manipulation also shifted the money burden of running our government and paying for wars he strongly supported onto the middle-class at the same time his company was outsourcing jobs.

For me that brings to question his real loyalty to the nation and the middle-class. His willingness to manipulate the tax code and other tax avoidance strategies with off shore banking proves to me it is all about the money, personal wealth and power to obtain more and more wealth. He is part of the plutocrats that now control our government with their money and influence. If Mitt reaches the White House, then the plutocrats will have a trifecta in absolute control. The middle-class will be further decimated and as history has taught us, revolt and revolution will follow.

The Dark Side of Mitt Romney's Bain Days

New revelations about Mitt Romney and his Bain Capital company. Recent SEC documents disclosed shows that Mitt Romney retained 100% ownership and listed as CEO, Chairman and President of Bain Capital far beyond the 1999 date his campaign has said, it was as late as 2003.

Romney holds up Staples as his shining star of building a business. But there is a problem with this claim.

Let me explain how venture capital investments and private equity investments differ: The first venture capital investment deal for Mitt and Bain Capital was the Staples deal. It was a traditional Venture Capital investment that mean the investors are in it for the long haul and allowing the current management of the company to remain. Bain's and thus Mitt's position was a minority investor and had absolutely no control of Staples. The VC stays out of the management of the company and may only work with the management about improving operations and how to expand it's market to reap the profits the VC is looking for. So Staples is not a fair example of the overall operation of Bain Captial under Mitt. 


Bain shifted its focus to a new type of Private Equity model of finding under performing companies and instead of strengthening them for the long term, they bleed off cash by leveraging the companies assets with huge loans to use to purchase the company, thus not using any of their own money, and then part of the loan money they take as fees which turn to millions of dollars in profit for Mitt and his investors, if any. The business model is to then reduce costs, which means laying off workers, but still having inventory to sell to generate revenue. The balance sheet will then look fabulous; high revenue with very small expenses to produce that revenue. They will then sell the company on the value of that balance sheet. The new owners will then realize when inventory is depleted that they are unable to fulfill orders and lack labor to create more product. But they have no assets free from incombrances to use as collateral to borrow against to hire more employees to keep the company going. Now the loan payments on the loans Bain took out against its assets are now the responsibility of the new owners and lack of capability to produce the goods or service forces them into bankruptcy. It is a great legal con game Mitt created. So the closure of the company will occur far later than with Bain and Mitt own and operated it for that short period of time.

Why is this important?

Because Romney is making claims of creating hundreds of thousands of jobs and avoiding the huge loss of jobs and outsourcing of jobs by Bain Captial under his watch. So the truth is finally coming out. Both in when he actually left control of Bain and the companies that went bankrupt because of him.

Here are just a few of the companies that lost jobs under Mitt Romney:

– GS Industries – 750 Jobs Lost: In a series of ads earlier this year, the Obama campaign hit Romney over Bain Capital’s purchase of GS Industries, a steel company that closed its Kansas City plant and eliminated 750 jobs in February 2001. The Romney campaign responded by claiming that Romney had left Bain Capital well before 2001, and was therefore not tied to the collapse of the GS. Bain Capital and its executives, including Mitt Romney, earned at least $12 million on the initial investment.

– KB Toys – Up to 3,500 Jobs Lost: During the primary season, Newt Gingrich’s 30 minute documentary on Romney and Bain Capital spent a significant amount of time focused on KB Toys, a retail chain bought by Bain in 2000. At the time, the Romney campaign, with an assist from fact-checking groups like PolitiFact, pointed to the calendar. As these new filings show, Romney was still very much at Bain Capital when they purchased KB Toys, and profited mightily when the company took out crippling loans to pay Bain Capital an $83 million dividend.

– Dade International – 1,700 Jobs Lost: Months after Romney claims to have left the company, Bain Capital received a $242 million bounty for its stake in the medical supply company. Romney profited substantially from the deal. In 2002, Dade International filed for bankruptcy, costing more than 1,700 people their jobs. At the time, Romney was the 100 percent owner of Bain Capital, the new documents show.

–DDi Corporation – 275 Jobs Lost: In 1996, the circuit board manufacturer was bought by a group of investors, with Bain Capital in the lead, for more than $40 million. By December 1999, DDi closed a Colorado plant and fired 275 workers. Bain Capital, with Romney still listed as Chairman and CEO, then proceeded to take DDi public, raising $170 million during the company’s IPO in 2000. Over the next few months, Bain began selling off its stock, raising almost $100 million, more than doubling its investment. The stock plummeted shortly thereafter.

There are many more that lost jobs because Mitt outsource them to other countries, but kept the company going and then selling them off. 

It is not clear when, but about the time Mitt was handing over management of Bain to some of his pals at Bain, there was a modification in their investment focus by shifting more into traditional Venture Capital deals and into pull purchase of viable companies, like Clear Channel radio and television stations and many other companies that they are investors in. Some of these they manage, some they are a majority investor and others they are a minority investor.

From what I understand is that his pals who are now in charge of Bain Capital are paying Romney on contract for his 100% ownership. Thus he gets a fixed amount each year for payment of its value and he also has a deal that he still gets commissions of any deals they do. A very nice departure package. 

Now what is also interesting is that how they structured these investment deals is that the moneys that Bain and Romney received were considered capital gains, NOT ORDINARY REVENUE TO THE COMPANY like other businesses. There are and have been several types of capital gains which can reduce the tax liability considerably. Mitt would have paid at best 20% on his capital gains and since 2003 15% or less, depending on the type of investment the money is coming from.

Further, Bain placed these capital gains into off shore investment deals that avoids US taxes and can then be discounted as "Liquidated Value Capital Gains" when drawn out for personal use, thus reducing the amount of the capital gains he actually received. For example: If you have 10 million invested in one of the shelters and you are earning say 10%, the initial 10 million is considered capital gains, but deferred because it is off shore. The 10% additional gain is considered "Liquidated Value" from the original 10 million still sitting there. After time with each 1 million dollars received, it reduces the original capital gains value by the 1 million dollars. So over 10 years, it has zero capital gains value, even though the total 10 million is still in the investment and now no longer taxable at all. So he received 20 million dollars and paid only 5% tax on only 10 million, because it was taxed at the liquidated value tax rate. I'm not clear on what happens to the 1 million he would receive on the 11th year and thereafter, since the original value is now zero, on paper that is. He probably rolls it over into another similar investment off shore and pays the 5% tax on the return just as before.

Now under current tax laws all that he has done is legal and that is why he states that his "blind trust" has paid all the taxes he is required to pay. He is correct in that statement. But the other point is that when you have a country in an economic depression, do we want a president that worked the system so well that he reduce his tax liability that funds the very nation he wants to be the leader of and is desperate need of tax revenue to keep it going? What kind of moral example is that to the nation?

We have had many very wealthy presidents, none were so blantanly obvious and gross about shielding their income from taxes. Most took the normal deductions and business gains and losses as everyone else. But Romney has cross the line and exceeded that normalcy to an extreme which leaves a question of how loyal is he to his country?

High Capital Gains Tax Does Not Deter Capital Investments

Illustration by David Gibson

By David M. Abromowitz Feb 8, 2012 5:01 PM MT  Bloomberg View

For all the attention devoted to Mitt Romney’s tax returns last month, one element went largely unnoticed: They directly refute the Republican candidate’s argument that higher tax rates deter capital investment.

Simply put, all of the investments made by Bain Capital LLC, the private-equity company Romney cofounded in 1984 and ran until 1999, occurred when capital-gains rates were much higher than they are today. Yet Bain consistently attracted massive amounts of private capital, and thrived.

Bain’s haul is further evidence that fair tax rates don’t hold back profit-seeking capitalists, at least until those rates reach a point that no one is proposing. From 1984 until 1999, the top rates on capital gains -- the profit from investments as opposed to compensation for work -- were often at 28 percent, and never lower than 20 percent. Indeed, in 1987, under President Ronald Reagan, the 20 percent rate rose to 28 percent -- a 40 percent increase in potential taxation of Bain investment profit. (Yes, Reagan did raise taxes, even on capital.)

An analysis by the Wall Street Journal of 77 Bain deals in that time period showed that the firm “produced about $2.5 billion in gains for its investors,” on about $1.1 billion invested. Clearly, even with capital-gains rates almost double those today, fund managers such as Romney didn’t lack investors.

No Deterrent

Others can debate whether the private-equity crucible created more jobs than it destroyed. One thing is certain, though: Investors signing up for a chance to earn, say, a gross $10 million profit on a deal weren’t deterred by the prospect that taxes meant they would only keep a net $7.2 million.

Potential taxes were certainly disclosed to investors, and figured into the expected rate of return. And individual investors might have had offsets, such as the carried-forward losses from other deals reflected in the Romney tax return.

Particularly remarkable is the windfall Romney received from steep reductions in the capital-gains rate that took place after most of the deals he oversaw had closed. In 1997, the rate was cut to 20 percent, from 28 percent. It was reduced to the current 15 percent in 2003.

No one investing in a private-equity deal in 1990 could possibly say they anticipated the rate would be only 15 percent on profit still being paid out in 2010. Applying the reduced rate to deals previously closed couldn’t possibly be viewed as an incentive to investors.

At the same time, because these rate cuts were applied retroactively, the Romney family enjoyed a windfall of about $600,000 each year in lower taxes paid (assuming the Romneys received the same $12 million in income from carried interest and other capital-gains returns since 2001 as they did in 2010).

When multiplied by thousands of similarly situated taxpayers, this after-the-fact tax-cut windfall contributed significantly to the budget deficit, even though its value to the economy remains dubious, as numerous analysts of capital- gains rate cuts have concluded.

At a time of ballooning federal deficits and frayed social safety nets, higher capital-gains rates can contribute meaningfully to deficit reduction and to helping a middle class that is struggling to stay afloat, without hampering good investments in American businesses.

The Romney tax returns vividly illustrate that fair tax rates don’t deter those whom Republicans now routinely call “job creators” from investing.

As Warren Buffett so aptly put it, “I have worked with investors for 60 years and I have yet to see anyone -- not even when capital-gains rates were 39.9 percent in 1976-77 -- shy away from a sensible investment because of the tax rate on the potential gain.”

Conservative commentators will continue to recite their credo that letting the lower Bush-era tax cuts on capital gains expire -- and returning to the pre-2001 percent rate of 20 percent -- would kill investment and jobs. It will be hard for them to ignore the window provided by Romney’s returns into the real world of private-equity investing and the economy.

(David M. Abromowitz is a senior fellow at the Center for American Progress Action Fund. The opinions expressed are his own.)

Read more opinion online from Bloomberg View.

To contact the writer of this article: David M. Abromowitz at dabromowitz@americanprogress.org

Soaking the Poor, State by State

 By Kevin Drum| Fri Feb. 3, 2012  Mother Jones.

You have heard, perhaps, that rich people in America are egregiously overtaxed. And the poor? They're the lucky duckies! Why, 47 percent of Americans pay no taxes at all!

(This is not true, of course. Many poor and elderly Americans pay no federal income tax, but they pay plenty of other taxes.)

Still and all, it's true that the federal income tax is indeed progressive. Conservatives are right about that—though it's not as progressive as it used to be, back before top marginal rates were lowered and capital gains taxes were slashed in half. But conservatives are a little less excited to talk about other kinds of taxes. Payroll taxes aren't progressive, for example. In fact, they're actively regressive, with the poor and middle classes paying higher rates than the rich.

And then there are state taxes. Those include state income taxes, property taxes, sales taxes, and fees of various kinds. How progressive are state taxes?

Answer: They aren't. The Corporation for Enterprise Development recently released a scorecard for all 50 states, and it has boatloads of useful information. That includes overall tax rates, where data from the Institute on Taxation and Economic Policy shows that in the median state (Mississippi, as it turns out) the poorest 20 percent pay twice the tax rate of the top 1 percent. In the worst states, the poorest 20 percent pay five to six times the rate of the richest 1 percent. Lucky duckies indeed. There's not one single state with a tax system that's progressive. Check the table below to see how your state scores.

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MY THOUGHTS:

This is another indicator of how the Republicans have been purchased by the top 1% of the country and the corresponding large corporations and banking institutions.

The level of GREED is so reminiscent of the Gilded Age of America and the Roaring Twenties that came to an abrupt halt in 1929.  This greed is manifested in the huge tax reduction that the 1% of the population, the very wealthy, got from G.W. Bush's two tax reductions. Do you remember him saying during the State of The Union address, "The country has a surplus and this money is your money and I intend to give it back." He was not talking to the middle class or the poor, he was talking to his buddies the very wealthy. The ones that did evil things with our money that brought the economy to it knees and the world near another Great Depression Part II.

Taxes

Before the federal income tax was established by the 16th Amendment to the Constitution in 1913. There were periods when income taxes were collected, 1862 to 1872 to pay for the Civil War. But otherwise the federal government received its revenue from tariffs, taxes on businesses, tax on property and property transfer (sales), sales tax, import/export tax and tax on alcoholic beverage production. But the country needed a more stable form of revenue and there was a need to redistribute the county's wealth to the common citizen to counter the overwhelming wealth that developed during the gilded age of the robber barons.

There was a need to build paved roads for the new automobile and trucks delivery goods, string power lines across the country, build water treatment plants and sewer treatment plants, build new sea ports for the new and larger steel ships being built and damns on rivers for drinking water and power generation.

The income tax was a very progressive idea highly supported by the progressives of the Republican Party at that time. Just the reverse of today's Republican Party. Why? Well as soon as the 16th Amendment was passed, the very wealthy collectively chose the minority conservative wing of their Republican Party to throw their money behind to eliminate the majority progressives in the party. They were very successful and it transitioned into the very conservative, anti-tax party we have today. Why the Republican Party? It was the party of the northern states where most industrial companies were located, whereas the south were solid Democratic as it was an agrarian economy. Today politically that has flipped completely.

After the Great Depression, FDR pushed for a more progressive tax rate to obtain badly needed revenue for the country's depression recovery and war, so it came from the very wealthy. Taxes on the very wealthy rose to as much as 70% to 90%. However, few every paid that rate, as there were hundreds of loop holes and deductions they could take to reduce their taxable income and tax rate. The tax rates rapidly dropped after the war and today the highest tax rate is a very modest 35% for incomes $300,000 and above. Most of the loop holes and deduction are now gone. If the Democrats get their tax proposal passed during the lame duck session, it would raise the tax on the income over $250,000 to 39% (same as during the Clinton area), but they would be taxed at the current lower 35% level on their income of $249,999 and below. All the lower brackets would remain the same as they are today, which are the lowest they have ever been, thanks to Obama's stimulus bill.

No one wants to see their taxes increase, but adding 700 billion dollars to our already huge debt over the next ten years, and if the Bush tax rates are made permanent, it would be nearly 3 trillion dollars the ten years after that. Our grandchildren will be paying huge taxes just to pay the interest on the debt. The interest payment alone would exceed our total annual budget we have now. That is not sustainable.

Those who are making millions and some billions (hedge fund managers) from the financial collapse should pay higher taxes to help in the recovery of the nation and reduce the debt for which they have received great benefit from. We learned that lesson before, we must understand why it is needed so greatly now. Without it we will be forced to default on the debt and send the country and world into another Super Great Depression. There is no other alternative. Even eliminating every entitlement from the budget would not save us. Even eliminating federal government in totality would not pay for the interest payment on the debt.

70% of our total annual budget is for defense, a sum that is greater than all the other countries of the world defense budgets combined. We do need a strong defense, but we must look at our deployments in Europe and other nations to see if they are truly necessary for their and our security. We must stop spending money on systems that we no longer need that are costing tens of billions of dollars.

The next largest amount goes to paying the interest on the total national debt. The only way to reduce that amount is to reduce the debt. Most of this is due to the Bush tax cuts and his huge increase in expenditures for two wars, expansion of government, and Part D prescription drug plan for Medicare.

We need to get our intelligence expenditures under control. Much like the defense industrial complex that is eating huge sums of money, the newly created Home Land Security has hired hundreds of private intelligence contractors and it is unknown what they provide in the way of security.

And yes, most other departments can have budgets reduced and still provide their needed services, but they only make up a very small portion of the total budget.

With all the talk of Social Security and Medicare, people forget that every working individual pay into these programs separate from their federal income tax deductions. Social Security is self funding and does not draw money from the general budget. The issue with it is that there are fewer workers paying in right now and the baby boomers are drawing funds at a larger rate than incoming payments limited number of workers today. Of course if we can get everyone back to work with higher wages, the amount of money coming into Social Security would easily cover its outgoing. One simple change would be to eliminate the income cap for paying into the system and maybe an income litmus test to receive money. The same for Medicare, however, that one needs further reform and modification into the only national health care program that then could be self sustaining and cover everyone.

The conservative Republicans and Blue Dog Democrats have got to understand the realities of the situation and come to grips with what is needed as a solution before it is too late.

Bush Tax Cuts

The Republican's want to extend the Bush tax cuts but how are they going to pay for them. Ten years ago the Republicans who controlled both houses of Congress and the White House passed two tax cuts for the very rich without paying for them with spending cuts. The only way tax cuts can be legislated without paying for them by law is through budget reconciliation. This limits the tax cuts to a maximum of ten years, then the tax rates must return to the pre-Bush cuts, which were in place during the Clinton era that had the highest growth in wealth for the middle class and the very wealthy since the gilded age of the 1890's through 1929.

They knew back then that they could not afford the tax cuts after they consumed the budget surplus they inherited from the Clinton administration, so they decided to passed them under the reconciliation process.

This also setup the situation that if they did not control Congress and the White House when they expired, the Republicans knew they could make it sound like a tax increase created by the Democrats. They also knew there was no way to pay for them without cutting Social Security and Medicare, which was untouchable at that time. Also at that time they wanted to win over seniors to vote for Bush in '04, so they passed the Medicare Part D Prescription Drug Plan without paying for it either. Both of these actions helped contribute to the economic collapse of 2008 by creating a deficit of 4 trillion dollars over the 8 years Bush was in office.

Should Congress agree to legislate to make the Bush tax cuts permanent, the cost of them, estimated to be about 2 trillion dollars, will have to be paid for with an equal amount of budget cuts for programs controlled they the Senate Budget Committee. The only programs this committee can reduce budget for are Social Security, Medicare, Food Stamps and Medicaid funding. This would mean that all of these programs would have to be abolished in order to pay for the tax cuts for the very wealthy, those who make $250,000 a year or more, like me.

Yes I have enjoyed the tax cuts the past ten years, but the increase when these expire in January would not break me and I feel a moral obligation that my mother and siblings who depend on these social programs are funded. I do not want to see more and more of our citizenry living on the streets and having to find food at charity shelters in dangerous parts of towns. Is that the society we want to become?

If there should be changes to the tax code, then raise taxes on the wealthy, reduce taxes on the middle-class, eliminate corporate welfare and eliminate the tax loop holes that allow the very wealthy and large multi-national corporation avoid taxes all together.

To help small business, allow them to keep the federal tax withheld from themselves and their employees to hire more employees with the money. They could not keep the social security and medicare premiums withheld, since they are essentially an insurance plan. This would be less costly than extending the Bush tax cuts for the very wealthy and will encourage hiring new employees or at least retaining employees, rather than letting employees go.