It's been 20 years since I filed a tax return. I've been paying tax professionals since I was 17 for the honor. The last time I filed my own taxes, I was so piss poor, I didn't qualify to pay any. I worked part time at Pizza Hut in High School, and for the privilege of not owing Uncle Sam money, I smelled of pizzas ALL the time, even when I wasn't in uniform. Back then, I used to wonder whether fish market employees smelled of fish ALL the time. Things could be worse.
The last few years, my tax preparers were f*ckups. Thanks to one a couple of years ago, the IRS sent me a letter informing me that I owed thousands in undeclared income! It was then that I decided to have a professional CPA firm file my taxes at $400-$500 per filing. So this year, as I was organizing my tax documents I decided I'd go it alone. The thought of paying someone $500 to spend one hour or so inputting my well organized income and itemized deductions into a tax software just didn't strike my fancy anymore.
I figured I'd hit a snag or two, but could with some help from a few of my CPA co-workers manage to file my own return. Well, on four separate occasions I gave up faster than Vanessa Hudgens quit fast food after her "boobs were up to her chins" in her High School musical costume. The first and most serious hurdle was when Turbo Tax informed me I may have to pay taxes on my State tax return the prior year! I felt insulted. How can my previous year's tax return become taxable income the following year? If the money was returned to me because I had paid too much taxes, why would I be required to pay taxes on it? I don't understand the wisdom of this process, but then again, there's a whole lot about our tax system that is asinine. For example, how can GE who made $14.2 billion in 2010, $5.1 billion of which was in the U.S. not pay the government a dime in corporate taxes (NY Times, March 24, 2011)?
According to the non-profit Tax Foundation, in 1981, the year Reagan became president the top U.S. singles tax rate was 70% for incomes over $108K per year. When Reagan left office in 1989, the top tax rate was 28% for singles making over $89,560. The rate increased to 39.6% under Bush Sr., continued under two Clinton terms, and then dropped to 35% for singles who made $380K or more under Bush Jr. ("Reagan proved deficits don't matter", Dick Cheney to Treasury Secretary Paul O'Neill, 2004). The effective tax rate; the rate people pay after deductions, is much lower than the rate in their tax bracket. I, for example, started with a 28% federal income tax rate, but in the end, I paid the equivalent of 13%.
We have a situation that is out of control because we're cynical when it comes to the powers of our government, yet we take great pleasure in any spending that benefits us or our cause. In order for public officials to get elected, there are overbearing incentives not to raise taxes or cut spending, in the face of runaway deficits. We want to have our cake and eat it to, and our politicians are only too happy to oblige.
The last few years, my tax preparers were f*ckups. Thanks to one a couple of years ago, the IRS sent me a letter informing me that I owed thousands in undeclared income! It was then that I decided to have a professional CPA firm file my taxes at $400-$500 per filing. So this year, as I was organizing my tax documents I decided I'd go it alone. The thought of paying someone $500 to spend one hour or so inputting my well organized income and itemized deductions into a tax software just didn't strike my fancy anymore.
I figured I'd hit a snag or two, but could with some help from a few of my CPA co-workers manage to file my own return. Well, on four separate occasions I gave up faster than Vanessa Hudgens quit fast food after her "boobs were up to her chins" in her High School musical costume. The first and most serious hurdle was when Turbo Tax informed me I may have to pay taxes on my State tax return the prior year! I felt insulted. How can my previous year's tax return become taxable income the following year? If the money was returned to me because I had paid too much taxes, why would I be required to pay taxes on it? I don't understand the wisdom of this process, but then again, there's a whole lot about our tax system that is asinine. For example, how can GE who made $14.2 billion in 2010, $5.1 billion of which was in the U.S. not pay the government a dime in corporate taxes (NY Times, March 24, 2011)?
According to the non-profit Tax Foundation, in 1981, the year Reagan became president the top U.S. singles tax rate was 70% for incomes over $108K per year. When Reagan left office in 1989, the top tax rate was 28% for singles making over $89,560. The rate increased to 39.6% under Bush Sr., continued under two Clinton terms, and then dropped to 35% for singles who made $380K or more under Bush Jr. ("Reagan proved deficits don't matter", Dick Cheney to Treasury Secretary Paul O'Neill, 2004). The effective tax rate; the rate people pay after deductions, is much lower than the rate in their tax bracket. I, for example, started with a 28% federal income tax rate, but in the end, I paid the equivalent of 13%.
According to the U.S. Treasury, the U.S. national debt was $1 trillion in 1981 when Reagan took office. Under Reagan's watch, the debt began its spectacular climb and by the time he left office it had ballooned almost 300% to $2.9 trillion, never to see the light of day again. A little known fact: Reagan raised taxes on 3 occasions while in office - Read "When Reagan raised taxes", by Julian Zelizer, "CNN Opinion", May 9, 2011. Current U.S. national debt stands at $14.3 trillion; $46K per U.S. citizen. Hi ho cheerio!
We have a situation that is out of control because we're cynical when it comes to the powers of our government, yet we take great pleasure in any spending that benefits us or our cause. In order for public officials to get elected, there are overbearing incentives not to raise taxes or cut spending, in the face of runaway deficits. We want to have our cake and eat it to, and our politicians are only too happy to oblige.
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