The astonishing thing about this happening is not that it happened, but that there are so many people involved who fell for too high interest rates on the internet. If a thing looks too good to be true, it usually is. So all the greedy can't get enoughs just got their deserts. Who cares? Obviously some governments do, like the British government. Probably because Labour desperately tries to buy votes for the next elections, the flunkies clamped down on Icelandic holdings in the United Kingdom and restarted the cod war of the 70ies which incidentally was lost on all counts, including the fleet which was tamely handed over to the EU to be scrapped. What really started: A coming alive of the protectionist markets of the 18th century. Brave new world, indeed.

But who would be stupid enough to invest online into a bank they have never seen, situated on an Island nobody wants to go to, with a population as big as Islington's? Who were these idiots that are costing tax money now? Taxes paid by people with more sense in their little toe than any of these hazarders ever accumulated in a lifetime? Apart from the obvious crooks in the public sector, the town councillors, the accountants of police and fire brigades, and the advisors of the charities, these were just very very very stupid people that now have to be bailed out by sensible us. Maybe it is true that 90 percent of humankind is too stupid to live.

At least I hope that these dummies are proud of themselves. They should be, as mostly it's the same British individual who is bemoaning too high taxes (which will rise now, thanks), the sell out of British companies to foreigners (which was only possible with this money), the ever worsening public service (which will be crippled now by lack of money), and the too high prices in the stores (which were caused by too high interest rates caused by capital leaving the country). Yes, they should all get a medal for the harm they caused to their country. Or rather give them a peerage, which is the normal payment for services rendered against the interests of the country. As a known war criminal Tony Blair is in the lists for at least a Duchy.

But let's get back into the frosts of the north, where people still believe in elves. Is it to wonder that gnomes ruined their economy? When collapse erupts over the country like a volcano, the banks bring forth naught but a fountain of hot air like a dried up geyser. If the nationalisation of the banks will do anything to appease the cold wind of economy must be seen, usually replacing bank gnomes of little morale through civil servants, little men of little intellect, serves just the opposite.

As an example, serve the council sleazes, juggling with millions in council taxes and feeling themselves all like men of the world and in the know, instead of admitting that they don't know much more than the mud they serve in the council for. But squandering millions of hard earned cash to banks on the brink (either the brink of the world or the one of collapse) gives them the power feeling necessary to all useless politicians on the go to line their own pockets at our expense. Failing this, they line the pockets of their friends, like Sir Ian Blair.

As an aftermath to Ragnarok we end up with nationalised banks all over the place, nationalised in fact if not in name, and start to replace the gnomes with dwarfs for whatever it is worth. The time of reckless bonus payments to bankers will be over, maybe, and replaced with reckless other payments to politicians and their flunkies. So let's look forward to more of the same. But there is relief; the gnomes didn't know what they were doing, so there is no knowledge lost when the men of little brains come to the fore now.

For all the idiots who gave their money away to nameless, faceless internet doodles: There are Swiss banks, called Kantonalbank, that have full government guaranties since they were founded. They are small, they have outlets, and they have a face. And they are no risk nonsense banks, just dealing locally for mortgages or loans to companies. If one of the oversized multimillion dollar ventures knocks on their doors, they say no thank you, and peacefully look on as they founder.

Has it not even struck anybody in the slightest, that Switzerland has not had even one panic attack in all this time? The Swiss government allows itself the luxury of having its head of Finance on a prolonged leave of recovery, replaced by the Minister of Justice, should the need arise. The two Swiss banks, Credit Swiss and UBS, hit the hardest by the fraudulent American mortgage papers were recapitalised within weeks with money from Dubai and Singapore. Not a cent from the taxpayer. And nobody is worried.

Libya, in retaliation to a lawsuit in Swiss courts against one of the useless sons of the terrorist leader Khadafy, has retracted all its money out of Switzerland on Friday, a paltry 10 billion. Did one sea a single Swiss bank even bat its lids? No. The banks just stated that considerable funds had been replaced in other banks. Also on Friday, Libya declared an oil embargo on Switzerland. The President of the government just stated, that he had heard of it, but was not worried.

And actually, that is the way to handle a crisis. But little stupid men like Brown, or Cameron, or Bush, or Obama, or McCain, or what's their name, go jumping around like flea-bitten monkeys shoring up dams after the flood has passed and binding wounds on dead men. So let's watch these little rats scurrying around, always one step behind the events taking place. For the brainy ones, go put your money into the Swiss Kantonalbank, there it is safe.

First off, two figures for those that simply want the stats.

• Average yearly income is $50,000 GROSS income. (As in before tax)
• Needed capital to start living off interest to match this income is $1.7m

For those that want the working and details I will explain step by step below.

Note, all % rates are based in New Zealand terms. A quick exchange rate calculation for the majority of the readers, 1NZD = 0.62 USD as of writing.

For a normal gross income, deduction tax will give you net income. However, for gross interest income, deductions of both tax and inflation must be done to find your net interest income.

Interest rates in New Zealand for term deposits are near 8.25%. However, these rates are one of the world's highest, so I will be using 8% instead of 8.25%. As for tax, since I am using New Zealand's interest rate as an example I will use New Zealand's tax rate aswell.

As of writing, tax for gross income of $59,999 or less is 19.5%. Thus average income earners of $50,000 will receive a net income of $40,250. Tax for interest of anything over $60,000 is capped at 30% with PIE funds.

Now the calculations. We need enough capital to earn net interest to match that $40,250 figure we found earlier. Interest rate of 8% will need to be deducted the tax and inflation.

8% less tax of 30% will leave you with 5.6% left. 5.6% less a 3% inflation rate will give you a net interest of 2.6%. 2.6% of $1,700,000 will give you $44,200 NET interest income. As you can see we have $44,200 to match an average net income of $40,250, that's $3,950 MORE than average income earners, who work all day and everyday. This $3,950 takes account of bank charges and the such easily.

The biggest problem now is getting that $1.7 million capital in order to retire. This figure may seem a lot, but the stats show it is actually not that hard. As described here, there is 8.9 million households which are now millionaires, and increase of 33% from the previous year. Thus, even as a average income earner, we will be able to retire and live off interest with just $1.7m and be classified as another “mega-rich”.

What are stocks?

When you buy stocks, or shares, you're buying part of a company. A company will offer a number of shares for sale. You can buy some, hold them as long as you like, buy more, or re-sell them.

Buying and selling is also known as trading. Once trading begins, the price of the stock can rise or fall.

Most stock is bought and sold at a stock exchange. Examples of stock exchanges are Nasdaq, the New York Stock Exchange, and the London Stock Exchange. You can also buy over-the-counter (OTC) stocks, which are not listed on stock exchanges.

You don't buy and sell stocks yourself, but act through a stock broker or brokerage firm. Usually you make the decisions, and the broker represents you on the market. You can also choose to let the broker invest your money for you.

You might buy stock at a low price, and sell at a higher price to make a profit. Or, you might invest in companies that will pay regular dividends over several years, for a more stable flow of income. The stock you buy depends on your financial goals, and your personal investment style.

There are two types of stocks: common, and preferred.

• Common stocks give you voting rights in the company. If you want to stage a hostile takeover, you would buy up as many voting shares in the company as possible. In general, common stocks give you a say in the way the company is run. Dividends fluctuate, depending on the fortunes of the company.

• Preferred stocks return a fixed amount, with regular payments, but you have no voting rights. If the company has financial problems, the dividends on preferred stocks are paid before those of common stocks.

A company pays dividends in cash, or in shares. Taxes may apply to cash dividends.

Price of Stock

What determines the price of stock?

Broadly speaking, the price of stock depends on supply and demand. The more people buying the stock, the more its price rises.

The market price of a stock is not the same as its intrinsic (real) value. A stock price can rise, simply because other people are buying. People may buy in hopes of quick wealth, or because they have emotional ties to the product or service - or, just because everyone else is doing it.

Scams, such as Pump and Dump, take advantage of this. Worthless stocks become inflated in price by increased buyer activity, based on hype and high-pressure sales.

Avoid stock market scams and bad investments, with five simple rules.

1. Research, research, research.
   
   Research is your best friend on the stock market. Usually, companies offering stock for sale must disclose financial statements and other company information. Know the company history, the key players and company structure. Look at past performance, and strategies for the future. Know the industry as well as the company. Examine the economic factors affecting its success or failure.
   
   Never invest in a company or industry you don't understand. If you do, it's not an investment. It's a blind gamble.

2. Put personal feelings aside

   Emotional factors can affect the price of stocks. Often, stock prices are driven by greed, emotion, or pure ignorance.
   
   Keep a cool head. Don't buy out of impulse or passion.
   
   Don't buy into wind power, for example, because you believe in saving the environment. Buy because the company has a solid performance record, a strong demand for its product or service, and good potential for growth and profit.
3. Diversify your stock portfolio
   
   Buy stock in more than one company. If you're just starting out, choose at least three or four different companies. Even the most reliable stocks can take a sudden dip.
   
   For instance, Maple Leaf Foods (MFI) stock was $16 a year ago. Recently, several people died of listeria found in Maple Leaf meats. In August of this year, stock hit an all-time low of $7.60.
   
   MFI stock is now rising again, largely due to investor interest in the low prices. The company has a solid history and will probably bounce back. However, this illustrates the potential for a sudden price dive even in established companies.
   
   If your portfolio includes several investments, you have a backup if one or two do poorly. Even seasoned investors make mistakes, or are subject to factors beyond their control.
4. Know when to hold 'em
   
   If a company's revenues go down, so do the stock prices. Is it temporary, and will the company recover? Wise investors know when to hold their stock, and when to cut losses, and sell.
   
   Don't listen to gossip or rumors. People will offer stock market tips, or claim to know stock market secrets, wink wink nudge nudge. Inform yourself, do your research, and make your own decisions.
5. The greater the risk, the greater the reward
   
   In general, the more risk you're willing to take, the more potential for high return. Also, the more chance the investment will fail, and you lose your money.
   
   Reliable companies command higher stock prices. Returns are less, but so is the risk.
   
   If a stock offers high return with low risk, be wary.

Experiment without Spending

Before investing your hard-earned money, set up a mock portfolio with several stocks. Follow your investments online, and chart their progress. Amend your choices, "buy and sell", and watch them perform in real time, without risking a penny.

What is the Capital Gains Tax?

As usual, the tax man is after a piece of your pie. If you sell your stock at a profit, a capital gains tax applies. Taxes may also apply to stock dividends.

You have a capital gain if you sell your stock for a higher price than you paid. If you sell your stock for less than you paid, it's known as a capital loss.

If you hold your stock for longer than a year, it's a long-term capital gain. Under a year, you have a short-term capital gain. Short term capital gains are taxed as regular income.

Long-term capital gains holders pay a tax of up to 15%. However, in 2008, investors in the 10 - 15% tax bracket paid a long-term rate of 0%. This won't change until the year 2010, when the rate will go back to 15%.

Be aware of the tax advantages or disadvantages of any stock you purchase.

What's Your Investment Style?

Are you a hard-nosed rogue or an armchair softie? Does losing money fill you with stress and worry, or do you hunger for challenge? Are you looking for a quick profit, or a long-term retirement strategy?

Understand yourself and your goals before you invest. Read up on the investment styles and strategies of top investors like Warren Buffett, his mentor Benjamin Graham, and people like Kirk Kerkorian or Jesse Livermore. You'll find that their styles are different, but they all believe in the five simple rules listed above.

Stock Brokers

When you're ready to invest, choose a stockbroker or brokerage firm that you trust. Licensed brokers are either full-service or discount brokers.

• Full-service brokers charge a higher fee. They provide information, details and guidance to the investor.

• Discount brokers charge a lower fee, provide minimal information, and usually don't give any guidance.

Decide on the type of service that's best for you. Again, research is your friend.

With a basic understanding of the stock market, you can make confident, informed decisions, and increase your chances of investment success.

There are seven states with no personal income tax, and there are two additional states that tax just dividends and interest, meaning no personal income tax on wages. The seven states are Alaska, Florida, Nevada, South Dakota, Texas, Washington, and Wyoming, and the two states taxing just dividends and interest are New Hampshire and Tennessee. Thus, wages earned in these states are free of state income tax. Unfortunately, a wage earner in these states must still pay federal income tax and those rates continue to be far in excess of what they were under Ronald Reagan when there were just two federal rates of 15% and 28%. That is in addition to the social security and Medicare taxes of 7.65% from the employee's wage and 7.65% paid by the employer.

If you are starting a business, there are a few states that are indeed business-friendly by offering no state corporate income tax. The states with no corporate income tax for most corporations are: Nevada, South Dakota, Texas (although Texas has a modest 1% tax on gross receipts of a business), Washington (although Washington has a gross receipts tax), and Wyoming. Thus, one can see why certain states are not only people friendly but also business friendly.

Bear in mind that even if a state has no corporate income tax, it may still impose a privilege - or franchise - tax on doing business in the state. Nevada does this, and bases its franchise tax on the par value of the company's stock, with a minimum and maximum payment range. Typically, with proper structuring, these franchise taxes are substantially lower than an income tax assessed at usual 6% or higher rates imposed by most states.

Also, it is good to keep in mind that physical contacts with other states may subject a company to taxation in those states for the corporation's activities in those states. For example, if your corporation were incorporated in Nevada but did ½ its business in California, then it is possible that up to ½ of the income of the business could be taxed by California, depending on the nature of the corporation's contacts to California.

To give you an idea of the importance of contacts, Amazon.com ships millions of dollars of merchandise to California each year, but pays no California income taxes because it has no physical presence in California. Sears, however, may ship merchandise via its website to consumers in California, but because Sears has physical locations in California, Sears pays California a tax on Sears' income. Whether a state is going to tax the income of an out-of-state business depends on whether that business is “doing business” in that state. Each state has a statute that specifies what constitutes “doing business” in the state. If a company is “doing business” in a state, then the company will have to register with the state, and pay its share of taxes to that state. Good luck with your business!

Deductible Expenses

1. Attorney for business affairs
2. Bank fees
3. Business cards
4. Bad debts, if you have already reported the debt as income or if you actually lent out money
5. Association fees
6. Advertising cost, including agency fees, printing costs, and giveaways
7. Accountant/bookkeeper fees for business finances
8. Computer and printer costs, including software, online services, and instructions related directly to business; If use is split between business and personal use you must keep a log of time used for business purposes and deduct only a percentage of the total cost
9. Courses taken to improve business skills, including training tapes
10. Public relations costs and fees
11. Office supplies, including paper, stationary, folders, pens, pencils, tape, envelopes and other materials
12. Employee salaries and wages
13. Car expenses including tolls, parking, and gas for business usage
14. Postage fees, including mail, supplies, and post office fees
15. Travel expenses, including transportation (car rental, bus or train costs, and airline tickets) meals, lodging, and entertainment
16. Licenses needed for operation of business
17. Pension Plan contributions
18. Interest on business loans and credit cards
19. Insurance fees for business
20. Office space costs, including rent, taxes, mortgage interest, and utilities, for home offices, the office spaces must be used exclusively for business purposes (including meeting with clients), and the deduction can only be a percentage of the total house costs based on the amount of space the office takes up in the house
21. Health Insurance premiums
22. Gifts to clients and associates
23. Entertainment for business purposes, including dinners, parties, and events for clients (usually only 80%decuctible)
24. Industry directories and listings
25. Magazines and journals for business
26. Consultant fees
27. Books used for business purposes

Human nature. Everyone feels that he is getting a good deal when he can get something he needs in exchange for a skill that he possesses. It might only take the CPA a few hours to provide the painter with the needed tax help. But for his knowledge and expertise, the CPA gets an excellent return from the painter. The deal is negotiated, and both parties are happy. One of the reasons for bartering success is tax evasion. Most people who engage in bartering don't realize that they are receiving income when they accept a product or service as part of a trade. Since it is extremely difficult for the IRS to clamp down on bartering, most people get away with it. According to the IRS, the value of bartered services must be included in gross income.

Everyone is vying for how they're going to spend that shiny new rebate check, and yet, most Americans will stimulate the economy and have nothing to show for it by next year. Have you considered how you could possibly double its value by using some of it to invest in your business?

If you can hurry up and file your 2007 tax return before October 15th, I recommend four ways you can utilize your rebate check to maximize your business and save hundreds of dollars next year when you file your 2008 taxes.

1. Tools & Equipment

   Think of the new laptop you could get that would pay for itself in less than a year.

2. A “Conference” Vacation

   If your family insists on going out of town, why not find a location or cruise that also has a conference going on related to your business? That way the trip can be at least 50% tax deductible as opposed to 0% deductible if it was a personal vacation.

3. Marketing Budget

   How about funding that great advertising campaign that could get your business more name recognition. Sponsor a local event or get an ad in a local newspaper.

4. Pay Off Debts

   Make an extra principal, interest, or lease payment. Not only will it lower your liabilities, but it can be deducted next year if you file Schedule C.

Think of the long term gains that could be had if you earmarked some or most of that windfall from Uncle Sam towards these four financial strategies. You never know, those diamond earrings you were eyeing could come a lot quicker through your own business success if you consider investing in your business.

Business would be the greater is they paid less taxes too. For example, if you knew you would have more money to "play" with wouldn't you be willing to take greater risks that would be good for you and for the Government taxes in the end? In my opinion, this way the company would make a lot more money and in the end it would pay even more because of the higher profits!

Let's hope the Government open the eyes quickly!

Lack of sufficient capital is one of the important causes of business failures. Sometimes a business with suffient capital will fail, because the owner invests too much money in equipment and buildings, and does not keep enough for working capital.

In starting a new business, a person should not be eager to own his own building or to buy expensive equipment. He must know that he can noı operate his business profitably because of a lack of working capital. A building can be rented and equipment can be obtained on some plan of payment that does not require the immediate outlay of the total amount in cash.

Tax can be defined as a compulsory levy by government on goods, services, income and wealth. Primarily to obtain revenue. In other word, it is levy or dues on the income of persons and companies. It provides definite source of revenue of person for government expenditure. It is the way by which government obtain extra money it spends from income of individual or companies.

Tax in Nigeria

In the Stone Age, tax was collected in Nigeria long before the coming of Europeans. It was collected by the Local Chiefs for the purpose of administration and defense. Every person was expected to give part of his or her proceeds from cultivation of land to the state. Those who were cultivations were required to give their sources for public work such as clearing the bush, digging the pit latrines, wells etc for the benefit of the community as a whole. Failure to render such services usually resulted in loss of properties, which might be reclaimed after payment of line.

With the coming of Europeans, taxes were collected from individual through local chiefs. In 1946, a legislative council was set for the whole country, which obliged the regional council with a large measure of financial responsibilities.

After independence state government were to find out other sources of generation revenue. The first tax was introduced in 1904 in the northern region by Lord Lugard known as community tax.

According to the tax laws the board can revised the assessment if it deems necessary, and can institute legal action against any tax defaulters in respective of his status in the community such legal rights have been derived by politician and poor administration of tax laws.

Types of Taxes

1. Direct Tax
2. Indirect Tax

Direct taxes in Nigeria consist of the following:

1. Personal Income Tax (PIT)

1.  
   • Company Income Tax (CIT)
   • Withholding Tax (WHT)
   • Capital Gain Tax (CGT)
   • Capital Transfer Tax (CTT)
   • Petroleum Profit Tax (PPT)

1. Indirect taxes in Nigeria consist of the following:

1. Custom Duties
2. Excise Duties
3. Value Added Tax (VAT)

Problems Encountered in Tax Collection

According to Lawal (1982) posits that the following are the problems of tax collection in Nigeria.

1. Inadequate Staff

   Lack of adequate staff or manpower to carryout the assignment efficiently and this has contributed to the low revenue generated for the country

2. Mismanagement of Tax Collected

   Where taxes collected were not been utilized for the purpose for which it was collected. This makes taxpayers not to give out their wealth for the nation.

3. Bribery and Corruption

   In this day, tax collected personal interest has over ride their official interest in the performance of their duties, consequently affect revenue generation for the nation

4. Poor accounting record

   Most businessmen, traders, professionals do not keep proper records of their income and expenditure

5. Inadequate Facilities

   The facilities like motor vehicle and motorcycle to carry out the assignment effectively is inadequate

6. Lack of voluntary compliance from the taxpayers

   This attitude of taxpayers cause tax avoidance, evasion and delinquency

Prospects of Tax Collection

Adam Smith (1968) identified the following prospects of tax collection.

1. The administration of tax collection will be strengthened to ensure more efficient tax collection, through training of staff, awareness, campaigns & computerization.
2. Government should continue to ensure that the tariff policy enables our local industries to be competitive.
3. Specifically, aggressive action should be taken to block revenue leakage on high duty goods and bulk items.
4. VAT has become a veritable source of revenue earnings for the government and therefore needs to be strengthened and expanded. To broaden the tax base and to bring the VAT administration closer to the taxpayers, new local VAT offices should be established all over the country.
5. Government should also ensure fair tax administration based on the principle of derivation of tax proceeds; it is recommended that the tax law should be enacted.