Back to Basics

What does healthcare have to do with gold sales? In the minds of the fascist crafters of the Obamacare law: apparently a lot.

Tucked away in the 2,300 page bill, in section 9006, is a provision that expands the scope of the Internal Revenue Service (IRS) Form 1099. Beginning Jan. 1, 2012, a Form 1099 will have to be filed to report to the IRS the purchase of all goods and services by small business and self-employed people that exceed $600 during a calendar year.

This is an onerous bookkeeping nightmare for all small businesses. But precious metals dealers will really take a hit.

“Coin dealers not only buy for their inventory from other dealers, but also with great frequency from the public,” Diane Piret, industry affairs director for the Council for Tangible Assets, told ABC News. “Most other types of businesses will have a limited number of suppliers from which they buy their goods and products for resale.”

One coin dealer told ABC News he deals with about 1,000 customers each week and predicts he’ll be filling out between 10,000 and 20,000 tax forms per year because of the new law.

“I’ll have to hire two full-time people just to track all this stuff, which cuts into my profitability,” he said.

That may help the unemployment situation a little, or maybe not. Many dealers will have to cut loose some on their staff who actively contribute to their bottom line in order to hire someone just to create paperwork to satisfy the IRS.

The ABC News report said the new tax provision was intended to mine what the IRS deems a vast reservoir of uncollected income tax and was included in the Obamacare bill as a way to pay for it. The new law is expected to raise $17 billion over the next 10 years.

What this provision truly is is another attack on small business and a way to better track who is buying and selling gold.

Just think, if you decide to sell some gold or silver to a dealer because you need some cash, the IRS is going to know about it.

The establishment hates gold in the hands of the public. In 1933 President Franklin Delano Roosevelt confiscated gold from the American people. These new reporting requirements will make very it easy for an oppressive, overbearing, out-of-control fascist government to do it again.

House Speaker Nancy Pelosi (D-Calif.) said we’d have to wait until the Obamacare bill was passed to learn what was in it. The bill was a stinker on the surface, but the deeper we dig the more odiferous it becomes.

How much did the “Cash for Clunkers” program really save you?

If you traded in a clunker worth $3500, you got $4500 off for an apparent “savings” of $1000.  However, you have to pay taxes on the $4500 come April 15th (something that no auto dealer will tell you).  If you are in the 30% tax bracket, you will pay $1350 on that $4500.  So, rather than save $1000, you actually pay an extra $350 to the feds.  In addition, you traded in a car that was most likely paid for.  Now you have 4 or 5 years of payments on a car that you did not need, that was costing you less to run than the payments that you will now be making.

But wait, it gets even better: you also got ripped off by the dealer.  For example, every dealer in LA was selling the Ford Focus with all the goodies including A/C, auto transmission, power windows, etc. for $12,500 the month before the “Cash for Clunkers” program started.  When “Cash for Clunkers” came along, they stopped discounting them and instead sold them at the list price of $15,500.  So, you paid $3000 more than you would have the month before.  (Honda, Toyota, and Kia played the same list price game that Ford and Chevy did).

So let’s do the final tally here:

You traded in a car worth: $3500

You got a discount of: $4500

Net so far:  +$1000

But you have to pay:  $1350 in taxes on the $4500

Net so far:  -$350

And you paid:  $3000 more than the car was selling for the month before

Net:  -$3350

We could also add in the additional taxes (sales tax, state tax, etc.) on the extra $3000 that you paid for the car, along with the 5 years of interest on the car loan but let’s just stop here.

So who actually made out on the deal?  The feds collected taxes on the car along with taxes on the $4500 they “gave” you.  The car dealers made an extra $3000 or more on every car they sold along with the kickbacks from the manufacturers and the loan companies.  The manufacturers got to dump lots of cars they could not give away the month before.  And the poor stupid consumer got saddled with even more debt that they cannot afford.

Our government convinced Joe Consumer that he was getting $4500 in “free” money from the “government” when in fact Joe was giving away his $3500 car and paying an additional $3350 for the privilege.