Jump to content

Recommended Posts

Well, I sat down and did my taxes during the snow storm this weekend. I am one of those suckers that actually looks at what I'm allowed to legally claim as a deduction and what I can't. My wife gets very frustrated with me because she knows her sister gets a return 2-3x what we get on less income. She's convinced I'm not taking enough deductions. I only take the ones I'm legally allowed to.

 

Now being a fiscal conservative with libertarian tendancies I'm not a big fan of taxes to begin with, but recognize the government does need some source of revenue to provide even the most basic services I would expect from the federal govt.(Provide for a common defense, deliver the mail, protect the environment, but for the most part stay out of my life.)

 

Now I read this in a recent blurb:

 

"So much for the honor system

 

Americans failed to report a trillion in income on their 2003 tax returns -- a 37 percent increase since 2000 -- according to a new Commerce Department report. A separate Internal Revenue Service study said taxpayers failed to report so much income and made so many improper deductions in 2001 that they shortchanged the government by $345 billion, an amount nearly equal to next year's projected budget deficit."

 

Note, the figures above do not include tax loopholes. This is money that is illegally denied the government by falsley underreporting income and taking improper deductions. Just wonder if this is all anti-tax conservatives who don't want to pay taxes combined with liberal tax protesters that don't want to fund the war?

 

It's time we go to a basic flat tax. No deductions, No tax returns, No tax lawyers or tax accountants. Just take the National Budget, divide it by the total annual income of everyone, and have that fraction of everyones income withheld from their paychecks, dividend checks, interest income, social security income, capital gains, etc.

 

SA

Link to post
Share on other sites

scoutingagain,

 

Perhaps you should point out to your wife that her sister has allowed the Government free use of HER money for anywhere from 12-15 months, whereas you have had the use of more of YOUR money. Personally, I don't like the getting a refund, I much prefer owing a little bit. Then I have the use of all of my money, plus a little of what I owe to the Government. Too many people view their refund as some sort of gift.

 

If she still quibbles, ask her this. Would you prepay your cable TV bill for a whole year, or your mortgage? Why is a tax bill any different?(This message has been edited by molscouter)

Link to post
Share on other sites

OGE,

I already do that. I'm self employed and do quarterly tax payments. Pretty painful to cut those checks every three months. Takes disipline not to spend everything you earn. Most americans don't understand this when its automatically taken from their paychecks every week.

 

The goal is not to have any taxable income at the end of the year. Come up with every possible deduction to reduce that amount.

 

I also have hired a tax accountant to squeeze every single possible deduction, well worth it in my opinion.

Some things are pretty complicated like hiring my wife as general manager and paying her $1 salary plus all family medical expenses. Then I deduct the medical expenses directly from income in the company. Its legal, but convoluted.

 

I even have changed my lifestyle to squeeze that little bit more. Like driving a short distance to the post office every morning to buy stamps for the business before the long haul to the office. Now most of the commute is business related. Same thing on the way home.

 

Oh to have a national sales tax or VAT and get rid of the IRS.

Link to post
Share on other sites

>>It's time we go to a basic flat tax. No deductions, No tax returns, No tax lawyers or tax accountants. Just take the National Budget, divide it by the total annual income of everyone, and have that fraction of everyones income withheld from their paychecks, dividend checks, interest income, social security income, capital gains, etc.

Link to post
Share on other sites

Kahuna, wouldn't a VAT - like a national sales tax - take care of underreporting in cash businesses? -_ While keeping the simplicity and some other benefits of a "flat" income tax.

 

I believe (tax non-expert, that I am) this plan is also purported to motivate saving over spending, and preparing for the future over spending for the moment. Though, I'm sure, that's an optimistic overstatement. And eliminates much of the IRS infrastructure and bureaucracy.

 

jd

Link to post
Share on other sites

My impression is the VAT minimizes the possibility of tax evasion through black market transactions. With the national sales tax, if the tax is not collected at the final sale, it is lost forever. With the VAT, tax is collected at each transaction and only a small portion can be lost. However, the VAT requires a larger tax service to manage and collect the taxes than a sales tax.

 

The other benenfit of VAT or Sales tax, is it promotes recycling and better use of existing resources. You wouldn't pay a VAT or Sales tax on a used item. The tax was already collected on that.

Link to post
Share on other sites

There is a difference between a VAT and Sales Tax. VAT or Value Added Tax applies to items that become something else during processing or manufacture. Sales Tax can be applied to both goods and services.

 

Gern,you are correct that the VAT is collected at each transaction it applies to. VAT is a pass through Tax and the final consumer would pay all accumulated VAT.

 

The question with a VAT becomes what becomes exempt- food items,clothing. The more you exempt the higher the VAT rate becomes. Final selling price has very little to do if anything with the VAT tax collected.

 

VAT by itself can never replace the Income Tax the rate would be so high everyone would be begging to have an Income Tax. Same things apply to a National Sales Tax.

 

Look at how many States have both a Sales and Income Tax. There are States that the Sales Tax came first and the Income Tax was added on later.

 

England for example has both a VAT and an Income Tax.

 

Part of the problem lays with politicians once they have a tax they are reluctant to remove that source of funds for something else. Perfect example is the Federal Tax on phone bills. It was created during the Johnson administration to help fund the Viet Nam war. Its still alive and kicking 33 yrs after it ended.

 

Link to post
Share on other sites

I am also a fiscal conservative and I loathe the current national debt trends. I support a flat tax system. No loopholes, no deductions, no exemptions, PERIOD. The return should have about three lines: Income, Tax, Payment/Refund. It should take about 5 minutes out of my life.

 

It will never happen.

Link to post
Share on other sites

Create an account or sign in to comment

You need to be a member in order to leave a comment

Create an account

Sign up for a new account in our community. It's easy!

Register a new account

Sign in

Already have an account? Sign in here.

Sign In Now
×
×
  • Create New...