Wednesday, April 29, 2015

Taxes


Taxes

 

 

 

Taxes. The bane to middle class families and single people.

If you are single, deductions are limited to buying a home, getting married, donating to charity (yeah right, please read previous posts), or car repairs if you use your car for work. But then, if you buy a home, that deduction only works once, and then you have to start paying property tax. If you get married, the deduction only works once, and then you become middle class with joint incomes and are screwed again. You already know how I feel about wasting money on charities. And unless you are a salesman, a tow truck driver, a taxi driver, or a traveling veterinarian, mileage deductions don't really cut it compared to the wear and tear on your vehicle. Of course, you can carpool it, but then there is the wear and tear of driving to pick people up and having them spill drinks, smoke, laugh too loud, listen to bad music, and fart in your car.

If you are part of the middle class, more than likely, you are paying around 15% of your income to taxes after deductions.

You may deduct your dependants, your house repairs, and your charitable deductions. But if you earned 50,000 dollars last year, you paid 7,500 in taxes.

I am not saying you should mind this at all. In fact, if the average American and American Corporation paid a straight tax of 20%, for the next 15 years. And if the government actually managed to tighten its belt and restrict spending. The coffers would be full again and the US would be out of debt.

The frightening rest of the story is that corporations only pay around 12.5% in taxes.

The other glitch in that little thought is the fact that is a corporation is based in the US, but they earn money in other countries, if they keep it in that country, they don't pay US tax on it.

If a company produces things that harm the environment, like petroleum, cigarettes, or alcohol, the taxes go up, but again it is the buyer that pays those taxes whenever they pull up to the pump, buy a pack of cancer sticks (editorial license there), or needs to get a buzz on.

The corporation calmly hands those taxes over to the government, and the reaps profits with the income.

I actually completed taxes for one of my neighbors once.

She was a single mom with three kids. The year before she hadn't worked a single day. She lived with her boyfriend and he paid the bills.

She received 1,800 dollars in taxes back from the federal government.

How flawed is this system, really?

She worked zero days and was a single mother of three kids. Her boyfriend paid all the bills, the rent, utilities, and groceries, and she got 1,800 dollars back that year.

Kudos to her for not being on welfare, or on any support programs, but if she didn't work a single day, and she didn't earn a single dime, she shouldn't be rewarded through taxes!

The down side to this would be if a single woman didn't work, and was supported by her boyfriend, her tax breaks would be zero.

So let's think about this for a second... A person who doesn't have children is penalized through the choice of not having children. But a person who has three kids, (by choice) gets to claim a tax break.

Why is having children a tax break?

If it's a single, struggling mom, or even a struggling couple, have a baby then that new baby just became a burden on our society. It really is true that it takes a village to raise a child, because our taxes are the proof of it.

Some younger kids are opting NOT to get married before having kids. On the whole, this means that the woman is a single parent and qualifies for more services from the government.

I remember a married friend of mine that decided to have a child. It was a fully conscious decision on her part. I looked at her like she was crazy. "Do you know how much it costs to raise a kid?" I asked her.

She brushed away my concerns with, "Oh, we have insurance."

To me, that qualifies as the stupidest thing I have ever heard.

I knew how much she was earning, and I also knew that her husband wasn't working. Even with insurance, the average cost of child birth is $2,500.00! And this is not including all the necessities that have to be bought AFTER the baby is born. The cost of cheap diapers is enough to make one swoon. Daycare, if you are lucky, will run you 2-300.00 a week. Add formula, baby food, post birth checkups with the doctor, and the bottom line is that a person should have a good stash of 20 grand just to get the kid into kindergarten.

It's not surprising that years later, that friend is still living hand to mouth.

So let's put a little more heat on the fire. I love my cat. I have one cat. I pay $30.00 a month for cat food. I pay 20.00 a month for a litter box. I pay 120.00 a year for shot updates and check up. I literally gasp when I think of the $720.00 I pay for that demon cat (no exaggeration there), to reside in my home, or should I say his home. This is not including his bath soap, because cats aren't clean just because they lick themselves, and the cost of Band-Aids from all the injuries (I did point out that he was a demon, and nobody can prove me wrong!) The only thing I can claim in this entire list as a deduction are the Band-Aids, as long as I use my HSA card.

Most people can't afford a pet, do they really think that they can afford a child?

The sad part of it is that most people don't want to pay more taxes because they are tired of the government taking and taking, and giving only to those who know how to play the system.

No, I don't want my taxes to go up, but let's put this into perspective:

I don't think that anyone, and I do mean A-N-Y-O-N-E over the age of 65 should pay any taxes. It seems that Uncle Sam has grown fangs and is sucking us dry! This means that those people over 65 that shouldn't have to pay taxes and they would have paid into the system at least 20 years of their life.

I don't think the disabled should pay taxes. I've seen the disability checks before with a broken leg, and it wasn't even enough to pay rent, let alone give Uncle Sam his fair share.

I don't think that parents and welfare recipients should be exempt, or get the tax breaks they do get.

If we taxed at a flat rate, it would virtually disable to IRS. The only reason they would be in existence is for the self-employed and contract workers. Everybody else could just say: Hey boss! Take out that 20% and give me the rest! You would always know how much you are getting in your check (as long as you know percentages). You wouldn't have to save receipts, or stay up late at night sweating over tax returns. 

We could donate our time to charities. We could spend more time being couch potatoes. We could spend our time breathing down the government's neck to balance the budget. And the good news is that we can get rid of that ugly bearded guy that dresses up as the Statue of Liberty, stands on the corner, and waves that sign around like a dead albatross!

In 1996, and then again in 2000, Steve Forbes ran for president.

Part of his treatise was a flat mortgage rate of 4.5% which would have kept the banking industry from falling on their collective face in 2009. But his biggest initiative was a flat income tax. He wanted EVERYONE to pay 17%. He was rough and gruff, and very irritating on the whole. His speaking ability would have voided the vote for most normal people.

But the flat income tax grew a lot of momentum.

Politicians on both sides of the fence began discussing it like it could become a reality.

And then Steve Forbes fell off the grid along with his mortgage rates and flat income taxes, and the idea was no longer discussed.

Why?

 The bigger problem with this is one of the largest lobbying groups in D.C.

They represent the accountants and the tax firms. This group will fight until their dying day to stop straight tax from ever happening.

With a flat income tax and a flat mortgage rate, accountants would be out on the street begging for dollars.

Their existence would become an obsolete thought read about in history books.

It was never going to happen.

So in essence, this thought will stay a thought and you can move on to the next blog!

1 comment:

  1. Try living in the UK. Basic rate tax is 20%...Top rate is 45% increasing to 60%+ as tax breaks are taken away at higher levels. I live in Portugal now and max rate reaches 60%. I would take 15% hand over fist, or the max rate at c. 35?? Any day.

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