More Dogs on Main
April 16, 2010
Tuesday was another surprising late-season powder day, sending the ski season out with a bang. It’s nice that PCMR stayed open for an extra week when there doesn’t seem to be much business. But it’s done. It can quit snowing any time now. So melt, already. Enough.
Thursday was tax day. For most people, the effort of filing the return is rewarded by a refund of money they already paid through the year. It’s a lousy way to save, but getting a refund is a sure way to get people to file the return. For others, particularly the self-employed, the process is more complicated. They have to make quarterly estimated payments based on a best guess of what their income might be for the year. With the economy still in turmoil, nobody has had a clue what their income will be. So a lot of people end up writing some big checks on April 15, both to the federal government and the state. That sets off the whining.
I’m always puzzled by the inability of the American people to see the connection between payment of taxes and maintaining our quality of life. Paying your taxes isn’t quite as immediate as paying for a movie ticket and walking into the theater to see the show. But it’s the same concept. We pay taxes and we get roads, sewers, national defense, clean air (sort of), edible meat, safe pharmaceuticals, bank bailouts, and on and on. We can argue about the price we pay or the effectiveness of the services provided. But the concept of paying what it costs to maintain our way of life shouldn’t be that difficult to comprehend.
On April 15, there is no discussion of the services provided through tax money. It’s all on the burden of having to pay with the implication that we are paying for nothing at all. The suggestion is that there is some big federal bonfire with all that cash.
As a society we are currently spending about a buck and a half for every buck we collect in taxes. The hole is filled with borrowed money, and we borrow more and more every year. So while we are all whining about the taxes we pay, the simple truth is that we need to be paying more, not less. There’s no question that spending needs to be cut, too. Both have to happen, and probably to an extent that will cause complaint all around.
The tough question is how that increase gets spread around. It’s OK with me if your taxes go up, but don’t fuss with mine. Exxon Mobil Corp. pays no federal income tax despite something like $35 billion in profit. There are some inequities in the system. Warren Buffett always points out that his secretary pays a higher percentage of her income in taxes than he does, despite a pretty substantial difference in income.
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That hit home this year on my own return. The software I use to do my taxes has a screen that shows the actual tax rate. That isn’t the "bracket," which is the tax paid on the last dollar earned. It’s taking the total income, and seeing what percentage of that is paid out in taxes. In my case, the answer was "not much." I’m mostly retired, so there is no wage income to speak of. That means there isn’t much paid in Social Security or Medicare taxes. For most people that’s 7.5% off the top or for the self-employed, 15%. I’ve got some of my savings in municipal bonds that are tax exempt.
The financial meltdown of the last couple of years hit hard, and I’ve got losses carried forward from prior years. Throw in itemized deductions, personal exemptions, a little of this, a little of that, and "the amount shown on Line 38 divided by the amount shown on Line 7," and the end result is actually kind of embarrassing.
It’s also kind of an outrage. Not that I’m going to voluntarily send an extra thousand bucks in, just in the spirit of equity. But somebody who is still working, making the same income I’m enjoying in retirement, would be paying more in taxes. A lot more. The FICA alone would be more than my total tax bill. If the other guy’s income is all wages, rather than classes of income that Congress has decided to treat specially, the net tax rate would be about three times what I paid.
The system is rotten to the core, with every paragraph in the tax code tainted by corruption and special deals. The most important government reform we could ask for is simple. Elections should be held on April 15.
Tom Clyde served as Park City attorney in the 1980s and is the author of "More Dogs On Main Street." He has been a columnist at The Park Record for more than 20 years.