The Debt Ceiling Crisis

The Debt Ceiling Crisis

The Senate has agreed to put off debt ceiling. Yesterday, the Senate voted to approve a measure that suspends the U.S. debt ceiling which translates to our country being able to at least temporarily pay bills.

However, two amendments touted by Republican Sen. Rob Portman (Ohio) were voted down by Democrats who control the Senate. These were supposed to stop some of the chaos in these debates.

The bill, passed by the House previously last week, suspends the $16.4 trillion debt ceiling so that the U.S. can pay bills. Mid-April is the new deadline to make a budget; if not done by this time, lawmakers do not get a paycheck. The last vote was 64-34.

Portman desired to add two amendments to this bill: the first one would necessitate that Congress would cut spending first before being able to raise the debt ceiling, and the second one was hoping to avoid upcoming government shutdowns. Discretionary programs would still be paid for even if Congress didn’t pass bills to pay for them by the beginning of the fiscal year on October 1st.

There was also an enforcement clause: If Congress missed this fiscal year deadline by 120 days, there would be 1% deducted from money for those programs. An additional percentage point would be taken every 90 days.

In the Senate, the vote was 52-46 to table this clause. Three of the Democrats were in support of this.

Since 1997, Portman claims, Congress has not been able to come to an agreement on spending bills. There were government shutdowns in some years, such as 1996.

Also voted down was a proposal by Portman to require any presidential proposal to raise the debt limit be linked to a proposal to cut spending over the next ten years. With such a request would of course, come a request to raise taxes on at least some Americans.

Portman says his measures are one way to take care of the rising amount of unsustainable debt.

Portman also voted against suspending our debt ceiling in order to reduce spending, and therefore, taxes, and prevent the United States from overspending and casting the burden onto our children and grandchildren.

Some States Are Also Dreaming Of A Mega Millions Jackpot

People who are lining up to purchase tickets for the Mega Millions Jackpot are not the only ones who are dreaming of the astronomical $540 million lottery prize that someone might win on Friday. Several state governments are also hoping to get lucky because the win would result in a big tax bonus for them.

A single winner of the Mega Millions Jackpot could generate taxes of tens of millions of dollars to some lucky state if the lump-sum payout is chosen. This could mean funding some important social service programs that are currently scheduled to be chopped. This kind of tax money coming in to a state could pay for low income housing, more state troopers, or it
could keep keep taxes lower for everybody.

The prize for the Mega Millions Jackpot is now the largest in the history of the country. A single winner who chose the lump-sum payout could get nearly $390 million.

If the winner is from Rhode Island and chooses the single payout, the state would collect more than $23 million in taxes on the win.

Each state sets its own individual tax rate on lottery wins. For example, in New York, the state charges 8.82 percent. There are some states such as California that do not tax lottery wins.

Joe Testa, the tax commissioner of Ohio, says he is not  holding his breath, but he is rooting for an Ohioan to win.

State Senator David Lewis in Montana said he would use a tax windfall from the Mega Millions Jackpot to pay for spending on infrastructure.

Self Employment Means More Taxes

Everyone now days wants to make money from home so they can spend more time with their kids. It seems the Internet is on everyone’s mind as the best way to accomplish that and it is indeed probably the best way. However, have you ever considered what it might mean for you tax wise if you are successful in starting your own home business?

Most people who start out to make some extra money online only make small amounts by maybe going to one of the surveys for money websites. They make $50 to $100 or less and then give up. But what if you are one of the ones who does break through and is successful at becoming self employed on the Internet?

The first thing that will happen is that you will have to pay both ends of the Social Security tax. If you are working for a company right now, they pay one half of the SS tax. But once you go out on your own you will be responsible for all 15.3% which is double what you are paying now. And as with all things having to do with the IRS, there is no way around it.

There might be other state taxes that you owe depending where you live. Washington and Ohio have a B&O tax which will take another 1.5% out of your pocket. It might also be a good idea to form an LLC or some other corporate entity for tax reasons and to protect yourself from liability.

All in all, working from home is a great idea that many people would like to be able to accomplish. However, few of them think about all the things that may will happen when you become a sole proprietorship and work for yourself. Like all things in life, there are both good aspects and bad aspects of becoming successful on your own.