In Government We Trust?

Having witnessed the repressions of overreaching government in Europe, our founding fathers advocated for a healthy distrust of government. Our money proclaims, “In God We Trust.” It does not read, “In Government We Trust,” despite the protestations of federal officials on the witness stand that we should do so.

As we approach Independence Day, July 4, 2013, our relationship as free citizens to our government and government’s dealings with us are heatedly debated. Henry George (1839-1897), an American writer, politician, and political economist, observed, “It is not the business of government to make men virtuous or religious, or to preserve the fool from the consequences of his own folly. Government should be repressive no further than is necessary to secure liberty by protecting the equal rights of each from aggression on the part of others, and the moment governmental prohibitions extend beyond this line they are in danger of defeating the very ends they are intended to serve.”

Tracking polls reflect growing unease regarding federal actions. For the week ending June 21, 2013, pollster Rasmussen reported that only 35% of Americans polled have a favorable impression of the federal government; 61% think the IRS targeting of conservative groups was politically motivated and 71% think the orders came from Washington; 65% think officials are lying about secret surveillance programs; 59% think our health care system will get worse in coming years; only 45% approve of the president’s job performance. Besides staying informed, petitioning elected representatives, and voting, what is a citizen to do?

At the root of independence, be it as a nation or an individual, is the need for security. Providing for the common defense is the most vital role of government. At the micro level, where the rubber meets your road, financial independence is the cornerstone of personal freedom. Government policies impact your generation of income and capital growth with ever-increasing tax law complexities.

We have a government currently led by those who desire increased taxation and the redistribution of wealth. Your role as a good citizen is to comply with the tax laws while taking advantage of all legal tax reduction techniques. The tax year is half-gone. Have you started tax planning for 2013?

With “rich” defined as those with modified adjusted gross income (AGI) of $200,000 single, $250,000 married filing jointly, planning is de rigueur in maximizing tax minimization. On top of a new top bracket of 39.6%, an Unearned Income Medicare Contribution Tax of 3.8% applies. Those in the highest bracket could see a 43.4% marginal tax rate on investment income. Add state and local taxes and the bite could approach or exceed 50%. Ouch!

For those who love personal freedom, resolve to make yourself as little dependent on government as possible. Strive to save and invest so that Social Security will be a “high side extra,” money used to enjoy life. Data from 2011 showed that over a third (35%) of retirees received 90% or more of their income from Social Security; for 66%, Social Security was over 50% of their “Golden Years” income. Enrollment in the food stamp program has increased by 70 percent since 2008, to 47.8 million people as of December 2012. Dependence is the antithesis of independence.

As polls suggest Americans increasingly are worried about depending on the government for health care. Striving for physical as well as fiscal fitness is a worthy goal. Healthier eating habits and exercise should be part of your personal security and independence routine.

English historian Edward Gibbon (1737-1794) wrote The History of the Decline and Fall of the Roman Empire. On ancient Athens he noted, “In the end, more than freedom, they wanted security. They wanted a comfortable life, and they lost it all – security, comfort, and freedom. When the Athenians finally wanted not to give to society but for society to give to them, when the freedom they wished for most was freedom from responsibility, then Athens ceased to be free and was never free again.”

May you live long and prosper. Happy Independence Day!

Lewis Walker is President of Walker Capital Management LLC. and Walker Capital Advisory Services, Inc., a Registered Investment Advisor (R.I.A.) Securities and certain advisory services offered through The Strategic Financial Alliance, Inc. (SFA).  Lewis Walker is a registered representative of SFA which is otherwise unaffiliated with the Walker Capital Companies. ▪  3930 East Jones Bridge Road ▪ Suite 150 ▪ Norcross, GA 30092 ▪ 770-441-2603 ▪ lewisw@theinvestmentcoach.com