Tag Archives for " income tax "

How to Fix the Tax Code

How to fix the tax code: Remove corporate, payroll, income, and investment (dividends and capital gains). Replace with a national sales tax.

PLUS

National lottery

Sales tax has to be calculated carefully to replace the lost tax revenue attributable now to the current taxes. Additionally, the sales tax should be made to be "progressive" – necessities are taxed at 0 or the lowest rates, luxuries at the highest rates. This is an easy exercise.

National lottery is "extra." It pays for the additional obligations we're faced with from social security and Medicare due to the aging population.

And it's mostly financed by old people who spend their social security now on state lotteries and bingo anyway 🙂

Your $34,000 Bonus

…that most of us will never see. I’m not saying we don’t derive benefits from the tax money we hand over to the federal government. No, not at all. In fact, we derive very REAL benefits, even if we cannot “see” them. Stuff like defense, homeland security, important safety nets that would surely cost more if we didn’t have them, etc.

However, it is startling to see a dollar figure associated with this. I know I don’t pay $34,000 in taxes, so somebody else is certainly shouldering his weight and part of mine.

Next time you want to lament, complain, or otherwise cry about taxes, think about that figure.

I am certain that the majority of us don’t pay anywhere near that amount in taxes. Part of this (most of this) is because the government doesn’t take in nearly that amount; hence, the deficit and growing debt.

Of course, it remains to be seen who will actually pay for this. Politicians like to say that it’s our children. Surely, they will pay. However, if our economy grows at a higher pace than our deficit/debt, then we will be okay, and the only people “paying” for our shortfall will be bondholders (who ultimately get paid back and then some in the form of future dollars – that will not be worth as much as they are today).

If only we could figure out how to raise our growth rate to beyond 2-4 percent…maybe we could all start working again? That might help!

WashingtonWatch.com – FY 2010, Budget of the United States Government

Time To Prepare Your Income Taxes

I won’t go nuts (THIS TIME!) on why I hate our tax system, but I will say this:

If you don’t file your income tax returns, the government will find you!

So, do them.

But don’t pay H&R Block or an accountant to do them! Unless you’re Warren Buffett or own rental properties, there is really nothing you cannot handle. While our tax code is exasperatingly ridiculous, TurboTax walks you through the mess and delivers a complete, accurate, and relatively painless method for filing.

This year, they even include free e-file with the Deluxe version.

The most critical part of doing your taxes is getting all your records in order. Once that’s done, it’s as simple as following the guided questions that TurboTax provides.

Here’s what you do to get TurboTax:

Then, launch it and answer the questions as TurboTax presents them.

As you might imagine, I don’t really like buying packaged software – it costs more money (usually) and it costs time for delivery. Plus, it wastes a lot of paper, ink, gas, etc. Digital downloads are the only way to fly!

BUT, make a backup of the installation program onto CD or DVD and store it away, along with any serial numbers you get. A practice I like to follow is to burn any supporting material (like serial #s) onto the “backup disc” and also label the disk with the title and serial #.

I’ve been burned a few times by not doing this and it takes me a while to recover the serial #s, etc. No fun.

Here’s to a successful tax return completion!

The Problem With the Corporate Tax

I wrote this post almost a year ago, long before the “tea parties” and “tea-bagging” made it to the vernacular of the American public, tired of paying too much of their incomes in taxes.

I feel compelled to call it out again because the topic is much more in the media than when I wrote it.

In its shortest form, I’d like to see the corporate tax abolished. In fact, I’d like to see ALL taxes on income OR profit abolished.

I want a consumption tax. Not necessarily a “fair tax.” But a tax system that is based on what you buy. Necessities will not be taxed. “Nice to haves” will be taxed at low rates, and “luxury” items will be taxed at a much higher rate.

So-called “sin taxes” can be left alone, or at least put in line with my 3-tier system. We’re smart enough to figure out how to extract enough taxes to pay the government’s bills without killing prosperity,  without squeezing poor people out of the economy, and without killing innovation.

It’s really just a mathematical problem. Solve for “x” as I was always told in Algebra.

*************

One of my favorite conservative economists, Greg Mankiw, recently wrote a piece about corporate taxes in the New York Times. There are two basic schools of thought when it comes to corporate taxes: Either treat corporations like individuals, where they’re obligated to pay taxes, or treat them like a pass-through entity, where they, in effect, pay zero taxes.

It is my opinion that the double taxation that currently exists because of the corporate income tax is onerous to the economy and to individual taxpayers. I think we should abandon both forms of taxation, both corporate and individual, and use a value-added tax (also known as a sales tax).

We are smart enough to figure out how to make this fair and equitable. But we won’t because our system is so political that the special interests will fight it out until nothing happens.

It’s too bad too, because this is the time when I think real change is not only acceptable, but sought-after.

Economic View – The Problem With the Corporate Tax – NYTimes.com