Over the last ten years our national debt has inched up to the seventeen trillion dollar range. That has brought concern on the international level. Rumors are looming about the strength of the U.S. dollar but there seems to be no media regarding this concern. In our daily lives it is business as usual. So how will our leaders recoup funds for the highest debt our country has ever had?
It is quite certain that we as a great nation will find a solution, bite the bullet and dig ourselves out of this dilemma. The means the powers that be use to recoup funds and maintain the government is via tax dollars. There is word in the media of the desire to tax the wealthy, however those tax dollars will not be enough to simultaneously recoup and maintain the country's funds. The other avenue is to tax the majority. That is a touchy subject in Washington D.C. because whoever votes in favor of such a measure stands the chance of losing the next election. So how can it be done?
The recovery steps were implemented from the economic crash included a higher fuel tax and lower interest rate. The fuel tax centered around of the cost per barrel for crude oil. The cost has now gone down, and while consumers will naturally consumer more fuel, the tax dollars are considerably less.
The entities that handle the largest amount of taxable dollars are the lending institutions. The variant for the size of tax dollars received from a bank is its earnings. What controls the bank's earnings; aside from its investments are its earnings in profit from interest. There are many banks that have associates fees for it's customers but they are miniscule compared to a bank's earnings on interest.
It is expected that we will soon see interest rates begin to climb. In recent months we saw interest rates decline, which naturally happens in an election year. However, interest rates did not decline in the same manner as they did when the economy plummeted. Interest rates declined enough to make the public satisfied. Now the election is finished, the representatives have taken their seats and the job is to fix the budget.
As the next few months progress we should expect to see interest rates slowly climb. Expect to see an increase of .15-.25 per month. Also expect a slight decline every quarter (three months) as to not seem deliberate. How will these truly impact the consumer?
The most vast taxable element in our country is land. Whether the consumer owns a home or rents a dwelling, the impact is felt by all. The advantage for the homeowner is the tax break afforded for homeownership. Typically the monthly payment increase for a home loan of one hundred thousand dollars is one hundred dollars per month per each basis point (each percent) of interest increase. In the current market, where homes are priced much higher the increase in payment is more substantial. If the consumer is renting a home the increase is passed on from the owner to the tenant as an increased monthly payment.
Owners of tenant occupied dwellings now have increased liberties where they can now charge for profit on amenities such as cable television and in cases of multiple dwellings serviced by a single meter, they can charge for water, sewer and trash disposal. This causes the cost of renting to equal or in many cases to exceed homeownership. This is one of the first signs of the tax and interest increase.
The solution to not feeling so much of the tax crunch is to either pay off your home or purchase your home at a reasonable interest rate - while still available. Many consumers feel unable to seek home ownership due to their credit situation. It should be a concern because either the consumer will pay higher fees for renting or if by chance they get qualified for a home a possible higher interest rate.
What most consumers are unaware of is their ability to increase their credit scores and eliminate some if not all of the negative marks from their credit report. While paying a company hundreds or thousands of dollars to repair their credit, consumers do have the option of saving that money and taking the steps themselves. Click HERE for more information
In the end we know what the powers that be will do, and now we know that we do not have to be the one to foot the bill.