Lecture Notes on IRS and Tariffs
Introduction
- IRS is considering a new tariff-related policy.
- Focus is on personal finance implications rather than politics.
- Discussion on how proposed changes could impact individuals and households.
Taxes Overview
- Taxes are a portion of income paid to the government before personal earnings.
- Emphasis on understanding taxation types, especially for newcomers.
Types of Taxes
- Income Taxes: Levied on individual earnings from work.
- Payroll Taxes: Additional taxes businesses pay on behalf of employees.
- Capital Gains Taxes: Taxes on profits from investments like stocks and crypto.
- Property Taxes: Annual taxes on owned real estate.
- Sales Taxes: Taxes on purchased goods and services.
- Sin Taxes: Higher taxes on items like lottery and cigarettes, deemed undesirable by the government.
- Tariffs: Taxes on imported goods.
Proposed Changes by Donald Trump
- Proposal to eliminate income tax.
- Proposal to increase tariffs instead.
Potential Impacts
- Income Tax Removal: Would increase take-home pay.
- Increased Tariffs: Could lead to higher consumer prices, affecting cost of goods.
Example Scenario
- Hair extensions imported from China could see price increases due to higher tariffs.
- Businesses might pass on increased costs to consumers, leading to overall price inflation.
Economic Considerations
- In 2024, IRS collected $5.1 trillion in income taxes.
- Only $500 billion was refunded, leaving $4.5 trillion retained by the government.
- U.S. government still borrows money despite high tax revenues.
Financial Planning Advice
- Strategy: Importance of legal and ethical tax planning.
- Savings: Emphasize saving and investing in assets.
- Spending: Discourage unnecessary spending, especially on liabilities.
- Global Perspective: Discussion on building and retiring in Ghana, Africa.
Conclusion
- The importance of being financially prepared and living below means.
- Encouragement to stay informed about potential changes and how they affect personal finances.
- Importance of trusting in God and responsible financial stewardship.
Upcoming Events
- Invitation to join trips to Egypt and Ghana in 2025.
- Encouragement to plan and save for future experiences without incurring debt.
Final Thoughts
- Emphasis on financial education and preparation for potential economic changes.
- Encouragement to invest wisely and manage finances effectively.
Note: These notes summarize the key points from a lecture on IRS considerations and potential economic impacts of tariff changes, focusing on personal finance implications and responsible financial planning.