March 2008 – Volume 1 Issue 1

Hello! And welcome to the first of many issues of The 5% Solution. This monthly newsletter focuses on helping South Jersey small business owners (like you and me) retire on our own terms.

This month we focus on the tax stimulus plan and what it means for you and the economy.

Best regards,

Brian Greenberg, CPA, CCPS
President
Brian Greenberg & Assocs

P.S. You're receiving this newsletter because you have a prior relationship with either me or my firm. If you received it in error, or would simply like to unsubscribe, simply click the link at the very bottom of the newsletter to be removed from our list.

Led Zeppelin wants to tour again. They're obviously a great band and I'm sure their fans are excited about seeing them. When I was in high school and college, my friends Mitch and Doug were really into seeing live groups and for them every concert was an event. But there's one aspect of the experience I never got — the noise.

The wailing of the rock bands would shriek to the depths of what little soul I had. Paint would peel off walls, car alarms would sound and I would be left with a ringing in my ears — for days.

Eventually it would go away, but as I've aged, my hearing is not so good. It's ok, but often I have to strain when the TV volume is not near capacity. I believe that the hearing issues I have today are the result of the concerts I attended (and there weren't that many).

This leads me to the Tax Stimulus proposals passed by Congress and the President.

We have been down this path before; the most recent tax stimulus occurred in 2001. And like my friends who encouraged me to go and enjoy the concert, there was a promise of prosperity in the air. But there was a ringing in the ear — the declining economy continued to drop and did not hit bottom until 2003… long after the tax rebates had fluttered about.

And like the continued hearing problems I have today, the tax rebate program of 2001 created further problems for the economy. You see, the government printed money out of thin air to "pay" for the tax program. The result is, due to this and similar types of reckless spending, the value of the American Dollar has declined 50% since 2001.

What does that mean? Should you to decide to travel abroad (approximately 8% of all Americans have passports); the costs have soared — in hotels, dining, sightseeing, entertainment, etc. Where a frugal traveler would spend $1200 for air/hotel to Italy in 2001, today that cost is easily over $2000. That is called purchasing power or the lack thereof. Our currency represents the good will of our country.

Now the purpose of these tax incentives is to get the economy "going" again. Perhaps, we could live with a declining currency if these incentives revitalized the economy. Unfortunately, they will not. This is because it will not be targeted to fix what ails us.

Declining house prices, mounting foreclosures, teaser interest rates that are due for significant step-up will not reverse themselves because of the rebates. The $600–$1200 is not even a drop in the ocean at turning around the housing mess.

By far the most serious problem the rebates fail to address is the contraction of credit. Lending money is the oxygen of this or any economy. If businesses or individuals cannot obtain money when they want to purchase goods and services, the economy will grind to a halt. Imagine not being able to use a credit card or make a short term bank loan or finance equipment necessary for your business.

This is to some degree what is occurring today. Our focus on stimulus should be to facilitate lending, encourage those with funds to lend and take risk again. That is what is needed and in future issues, we will discuss why it matters for you as a south Jersey small business owner.

If you have to ask you're not getting any

• The stimulus package begins to phase out for Single filers with Earned Income over $75k and Joint filers with Earned Income over $150k.

You must file to play

• You can't collect the money unless you file a 2007 tax return.

Businesses will be able to expense up to $250k in new equipment purchases.

Brian Greenberg and Associates is a Marlton, NJ CPA firm providing tax and financial planning services. We specialize in helping small business owners retire on their own terms. Follow this link for more on how we can help you.

Brian C. Greenberg & Assocs
1 Eves Drive, Suite 111
Marlton, NJ 08053
856-596-7800

website: www.greenbergcpa.com
email: brian@greenbergcpa.com

Brian Greenberg is Registered Representative of and Securities and Investment Advisory Services Offered Through Hornor, Townsend & Kent, Inc. (HTK), Registered Investment Advisor, Member NASD/SIPC.