Broker Check

 May 31, 2015

Date, Mate, and Impregnate

           That is the cure for the economic problem we face.  The millennial generation are not dating, mating, and impregnating and because they have put off marriage for at least 5-10 years later than the baby boom generation, they have therefore denied our economy the blessings of   5-10 years of children and growth.  Why are children a blessing? Having children means a couple typically needs a larger place to live in which may mean buying or renting a new premises.  A new premises means more appliances, carpeting, flooring and other furnishing is needed. It is because children grow and therefore need new clothes because they outgrow what they have.  Typically, five years after having a child a couple starts to think about the education of a child and focuses on school districts and the homes within it.  So, five years after a child is born, a couple typically purchases a home.

            Our economy is based upon the housing industry.  If people buy homes, they buy appliances and carpeting and otherwise fix up the home.  This means companies will add production lines and, hence, more workers to fulfill this increasing demand.  These new workers now have more money in their pocket to buy more stuff, which, in turn, propels the economy further. It is axiomatic that economic growth is ultimately tied to demographic growth.  And that is what we are missing.  And this is a reason why the economy is stuck in the mud.

            The media has made much of the fact that home starts have increased from 450,000 to 461,000 on an annual rate.  The problem is that, just based upon demographic growth, we need to build 1,500,000 homes each year.  So, we are missing 70% of what should be there.  And of those 461,000 homes, most have been built for active adult communities for retiring Boomers.

Not Enough To Retire

          52% of working Americans who are at least 55 years of age have less than $50,000 in savings and retirement accounts according to the Employer Benefit Research Institute.  These Boomers need to continue working and will therefore deny the opportunity for Millennials to take over their higher paying jobs.

          This is yet another snag in our economy.  Boomers should be saving their excess funds for retirement.  Millennials and Generation Xers would be spending and therefore helping to propel the economy.

IRS Taxpayer Service Declines

          Congress continues to cut the IRS’s budget and because of this, 60% of taxpayers who called the IRS could not get through.  Assistors are not answering tax law inquiries on toll free phone lines.  Instead, callers are being directed to the IRS website to find the answers themselves.

          Tax professionals are being affected, too.  Wait times of an hour or more are normal on the practitioner priority line.  Two helpful electronic services were shut down: Disclosure Authorization and Electronic Account Resolution.

          Some lawmaker say the IRS did not have to slash taxpayer service; they claim the IRS deliberately diverted millions of dollars away from customer service.

 Among IRS actions found to be objectionable:

  1) Giving $60 million in performance bonuses
  2) Reallocating $125 million from user fees from private rulings away from taxpayer    service
  3) Failing to use outside firms to collect tax debts
  4) Letting workers spend time conducting union duties while on the clock. 
                                                                     Kiplinger Tax Letter 5/8/15

           As always, if you have any questions about these or any other matters, do not hesitate to call us.

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