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Effects of U.S. Government Shutdown on Paying Taxes and Economic Reports

Politics / US Politics Oct 07, 2013 - 12:02 PM GMT

By: Money_Morning

Politics

Garrett Baldwin writes: Welcome to the decade of the politicization of everything. With the government shutdown in its first week, it is starting to look more and more like this temper tantrum from both sides could lead up to the debt ceiling deadline.


Government shutdown effects include as many as 800,000 workers (38% of the federal workforce) being furloughed. However, if there ever was a time to put on display the bloat and uselessness of many parts of the federal government, now it is fully on display. Just this week, the Internal Revenue Service (IRS) furloughed 9 of every 10 workers, deeming them non-essential employees.

Imagine what a flat tax would do to the agency...

The shutdown will affect every federal agency and any building or space with the federal stamp on it. National Park Service sites and multiple museums have been shuttered. Foreign travelers will be unable to get their visas or passport application approved, bankruptcy cases will be suspended until further notice, and military personnel and veterans will be unable to acquire their benefits.

Meanwhile, the Environmental Protection Agency deemed only 6% of its workforce essential.
The shutdown was certainly going to display the multiple layers of waste in Washington.

However, there are a few important government reports that could pose problems for the markets and lead to some wild swings when figures are ultimately released.

Here's a rundown of what investors will be missing this month as the government shutdown effects play out.

Effects of the Government Shutdown

  • The Bureau of Labor Statistics provides important data in the form of unemployment, wages, and other vital statistics on the U.S. economy. However, the department has shut down. Given that the White House shut down open-space memorials this week, it's possible that the Obama administration may not authorize the release of the department's highly anticipated September jobs report.
  • Did you pay your taxes? Many Americans delay their April taxes (particularly small business owners given new rules and regulations this year) until October. But if you're going up against the Oct. 15 deadline, it could be a bit difficult. Taxes will still be due, but the IRS is suspending audits. And if you have any questions, bad news. All taxpayer services, including its question and answer hotlines, will be turned off until further notice.
  • With the Commerce Department shut down, the Bureau of Economic Analysis may not be able to release its first estimate of third-quarter gross domestic product. The report is due on Oct. 30, but given the time it takes to prepare, we may not see figures until halfway into November.
  • The Census Bureau is set to report a number of economic reports this week. These reports include August factory orders, the August U.S. trade deficit, and August business inventories.

The stock market has reacted negatively because of the shutdown and concerns about the country's debt ceiling. The Dow has slipped triple digits in afternoon trading.

However, it is important to recognize that we've been here before, and history suggests that this time is no more different than the last.

No one expects the government to default on its debt. We're just watching a game of chicken while the markets begin to panic a bit. No doubt, this will lead to a can being kicked back down the road.

In fact, the shutdown will provide some buying opportunities, so long as you keep your emotions in check and know exactly where to look. That's why you should read this piece in Money Morning on why this shutdown will be good for retail investors and the opportunities that it will create.

Source :http://moneymorning.com/2013/10/03/government-..

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