Don't Tax You . . .

The Alternative Minimum Tax is like a boomerang. Congress flung it out there and now it comes back each year to bang them and their constituents in the head. The AMT was set up in 1969 as a way to punish a few rich guys who were using tax deductions to avoid paying their “fair share”. Today, no rich guys pay this tax. Instead it lands on the aspiring people who make more than the median income and have things like homes, mortgages and children.

The Congressional Budget Office estimates that in 2006 34.6% of taxpayers in the $50,000 to $100,000 AGI range will owe AMT. In 2010, if nothing is changed, one in five taxpayers will have AMT liability and nearly every married taxpayer with income between $100,000 and $500,000 will owe the alternative tax. You know why we have to put an upper limit on that range? Remember the really rich guys do not pay. BTW, if you take into account inflation, those of you making around $87,000 now will be in that group, even if you do not get any real raises.

AMT bites hardest in urban areas (with higher costs of living) especially in states with high income taxes. It essentially targets and punishes behaviors like home ownership and taking care of children that are beneficial to society and people who are likely to be hard working, often two income households who are doing the right things like saving and investing. It is almost as if Congress decided to create a tax to discourage responsible citizens.

Many of you are now thinking that only the fat cats make the big bucks, but think again. In the county where I live teachers who work an “extended year” i.e. 260 days, start at $50,267 and an experienced teacher can make $104,798. A police officer makes $75,703. That means the quintessential middle class couple, a cop married to a teacher with a few kids and a mortgage pays the fat cat tax, probably right about the time they are sending their first kids off to public university. Cops & teachers, families with kids: are they really your targets in your class struggle?

This is what happens when the tax system succumbs to the politics of envy. Congress patches the system every year, but never indexes it to inflation. What that means is that if you have a decent education, plan to have kids, want to own a home and live in an area with higher than average cost living, the AMT is waiting for you ... unless you get really rich. Then you can get away scotfree.

The rich are like the roadrunner in those old cartoons. The coyote taxman tries all sorts of complicated schemes to get them, but just ends up crushing the middle class with the Rube Goldberg contraptions.

The problem with the AMT is not so much that you have to pay but rather it makes life unpredictable. You can never be sure Congress will make the fix or what that fix will be. In fact, you do not know whether or not you have to pay AMT until after you figure out your taxes. Then you pay the higher of the two amounts. You expect a refund but end up writing a check to the IRS for thousands of dollars.

Congress should just fix this permanently by raising the floor and then indexing. Both parties are to blame. Cynical Republicans figure it hits the blue states hardest so let the Dems fix it. Dems sort of like taxes and some of their leftwingnuts object to giving those rich guys (like the cop & teacher couple) a break on taxes.

Congress should just do it, maybe sooner rather than later. The old rhyme goes, "Don't tax you; don't tax me; tax that guy behind the tree." Sounds good, until you figure out that you are the guy behind the tree.

Posted by Jack at March 13, 2007 10:30 PM
Comments
Comment #211857

So, let’s put all this together;

We have this tax in place, in the year 2007, that puts an undue burden on middle class tax payers

The Republicans have owned the presidency since 2001

The Republicans have owned the House, until the last couple of months, for the last twelve years.

The Republicans have owned the senate, until the last couple of months, since 2002

The Republicans have pushed through massive tax cuts that help the rich in their business’, their investments and even when they die through reduction of the estate tax (not the “death” tax, the estate tax.)

Now, over much time and over many different variations of the same subject, it has been claimed by Republicans on this board that the Republicans are really a friend of the middle class and that it was an inaccurate assertion to claim that the tax policies of the Republicans were geared toward relief for the rich. Your comments above, Jack, seem to contradict that.

Posted by: Charles Ross at March 13, 2007 11:50 PM
Comment #211860

Jack, I agree the AMT is problematic. Since 1990, Dubya has evaded paying over $2,100,000 in taxes. Nothing like having your daddy as president and, then, becoming president. I guess I am waiting for my tax cut as a 32 year Army veteran… haven’t seen it yet. In fact, my taxes have increased every year for the past 5 years.

Posted by: Dr Poshek at March 13, 2007 11:51 PM
Comment #211863

Jack,

The AMT was a good thing when it was passed. The flaw was not somehow indexing it to inflation year after year. The same could be said of many things.

I’m too tired to get into the whole long story but you can look at earning cap effects on Social Security here:

http://www.epinet.org/content.cfm/webfeatures_snapshots_20050217

I’m sure it’s no surprise to you that the “pay-in” stops before the “pay-out”.

BTW, Buffet has said he gets a Social Security check. It’s an entitlement! And that’s OK!

But it’s wrong when it’s unbalanced:

http://www.epinet.org/content.cfm/webfeatures_snapshots_20050217

Figure it out. You stop paying in at a set amount but your benefit amount keeps growing based on a different rate. I’m there! I know.

I’m not living “cushy” but I’m living OK. For Kansas this is pretty cushy. I do not do without. I can afford to pay a personal aid $600.00 a month and he (or she) spends maybe 10 hours a week here.

My Neurologist puts it in simple terms. Most Americans are lucky to end up in the safety net. I ended up in the safety hammock.

Honestly, I don’t need as much money as I get from Social Security. OTOH I’ll not be the first to send a rebate to the White House. I would say that the holes in the safety net are smaller the further out you get on the income scale.

It does seem that the safety net needs some major redesigning. I think d.a.n. has some good ideas about that.

Posted by: KansasDem at March 14, 2007 12:12 AM
Comment #211864

Charles

The Republicans have “fixed” it every year since they took over. The Dems fixed it the years they were in control. I expect the Dems to do the same this year. Both parties like to bestow the gift. Maybe they should get together and agree not to take partisan advantage and just solve the problem.

Dr Poshek

How did the president EVADE taxes?

Posted by: Jack at March 14, 2007 12:15 AM
Comment #211885

Jack, once again, you are not doing your homework and providing FALSE statements in your article.

The CBPP directly contradicts you:

The Urban Institute-Brookings Institution Tax Policy Center estimates that, under current law (that is, in the unlikely event that Congress takes no action to restrict the AMT’s reach and the AMT grows to affect tens of millions of additional taxpayers), more than half of AMT revenue in 2010 still will come from households with incomes over $200,000 (the highest income 4 percent of all households). About 90 percent of AMT revenue will come from households with incomes above $100,000 (the highest-income 16 percent of all households).

In 2010, households with incomes between $50,000 and $100,000 that are on the AMT will pay an average of about $1,000 in AMT taxes, according to the Tax Policy Center estimates, if no AMT relief is provided and the AMT is allowed to swell. AMT taxpayers with incomes between $100,000 and $200,000 will pay an average of about $2,500, while AMT taxpayers with incomes above $200,000 will pay an average of more than $11,000.

This is in direct contradiction to your opening statement that “Today, no rich guys pay this tax.”

Then there is the problem of repealing it altogether. That would add between 750 billion and 1.5 Trillion dollars to our national debt: putting the national debt way over the 10 trillion dollars I predicted years ago, Republicans were going to take us to. This would be more expensive than repealing the Estate Tax.

There is only one rational approach. Readjust it, so that the middle class does not fall into the AMT category and tighten up any holes which allow the very rich to avoid paying their full share of it.

The alternatives are: drag economic growth down a bit through inaction which causes larger numbers of the middle class to curtail consumer spending, or, eliminate it and drive up interest rates for everyone, which Bernanke says is a direct if not immediate consequence of spiraling national debt.

Posted by: David R. Remer at March 14, 2007 1:54 AM
Comment #211897

Thanks, David. This was almost as much B.S. as the death tax debate.

Posted by: gergle at March 14, 2007 5:50 AM
Comment #211902

David

I am quoting from many sources on the AMT. Most of the figures come from the CBO. So do most of the figures in your linked think tank study. They just draw them on the graph and spin it differently. Despite the rhetoric, their chart shows that 34% of the payers will make less than 200K (i.e. my cop and teacher couple) and 11% will make less than 100K.

16% will make more than 500,000. So I should not have said NO rich guys pay, but 84% are well off, but not rich. And those making less than 100,000 in places like SF, New York or Washington are not rich at all.

You concentrate on the poor so much that you miss how “rich” American families have become. The median income for a family of four in California in 2005 was $70,712, in MA it is $72,170 & in RI it is $78,297. Half the families make more than this, but they live in a place with high costs of living AND they live in places with high state taxes, which means that many will be paying AMT.

If you define “the rich” as people making more than average, than - yes - this tax hits the rich.

If you have a couple with reasonably good jobs, where both work (like my cop & teacher, owns a home, has a couple kids and lives in a decent sized city, they will almost certainly be liable for the AMT. These are the people who are playing by the rules and doing what they should do. They aspire to be better. The AMT is punishing them and will punish more people in the near future. They can avoid the tax if they do not work as much, do not buy a house, neglect their children and move to a rural area. Some incentive to work hard.

Posted by: Jack at March 14, 2007 9:33 AM
Comment #211917

The tax system is ridiculous.
Do-Nothing Congress likes it just they way they have perverted it.
With all the tax loop-holes, what’s the real tax on gross incomes?
Congress doesn’t want to simplify the tax system, because that would make it harder for some to evade taxation.

Posted by: d.a.n at March 14, 2007 11:15 AM
Comment #211923

Jack,
It all depends. The AMT hits people who meet two criteria: 1. A lot of money, and 2. a Lot of deductions. We can debate what “a lot” is and that is a reasonable debate.

The big flaw in the AMT is that, unlike income tax rates, it is not indexed for inflation. The rates were indexed in, as I recall, 1982. Simply indexing the AMT would go a long way to solving the problem.

Posted by: Steve k at March 14, 2007 11:34 AM
Comment #211925

Instead of ‘fixing’ it why not just do completely away with the AMT?
The very wealthy are going to get outta paying income taxes under our current system regardless of what Congress does. Remember these Bozos are wealthy too. They’ll do anything to make ya think they’re looking out for ya. But do you really think that Teddy Baby is gonna vote himself a tax increase?
We’ve usually had to pay something in every year sense I retired from the Air Force. But it’s only been the last couple of years that the AMT has hit us. And this year is worse than ever. With 3 kids in the house now We’re entitled to 3 more deductions but under AMT they been taken away and we ended up owing more than if we didn’t have them.

Why is it that a small tax increase will cost most folks $100. But a substatial tax break will only save them $.37?


Posted by: Ron Brown at March 14, 2007 11:42 AM
Comment #211926

Steve K

Yes. Index it. Problem solved.

Ron

Yes. Maybe we should call the AMT the Achiever maximum tax, since it hit mostly the people who are doing the right things and punishes achievement.

Posted by: Jack at March 14, 2007 11:49 AM
Comment #211927

Dr Poshek
I’m still waiting for mine too.
And thank you for serving our country.

d.a.n
We need a flat tax, absolutely no deductions, and every income level pays.

Posted by: Ron Brown at March 14, 2007 11:51 AM
Comment #211943

Jack,
The other thing about the AMT was that it was created when there were massive loopholes in the tax code that allowed the very wealthy (the very, very wealthy) to avoid paying taxes altogether. The AMT was supposed to put an end to that. The tax code changes in the 80’s plugged some (but not all) of the loopholes.

As long as there are loopholes, we still need a way to make sure a “wealthy” person (at what point one becomes “wealthy” is open to debate) pays a “fair” share of taxes (again, open to debate).

Posted by: Steve K at March 14, 2007 1:43 PM
Comment #211953

If you make 50K+ a year now adjusted for inflation you can afford to pay for some of the services you recieve for the government. $1000 (2%) isn’t that much to be asking its citizens to help pay for the war on drugs, terror, roads, national parks, ect. what is the big deal. So what if I get taxed this small amount. I make 55k last year and got back more then I payed in I could have afforded to pay my 2% and still been fine. Why are we even debating this?
Hell we need a nice flat tax with a standard deduction no other deductions or credits everyone pays all income is treated the same.

Posted by: timesend at March 14, 2007 2:09 PM
Comment #211958

timesend, appropriate perspective. Many folks want the benefits of our society which allow them to become rich, but, don’t want to share in the cost of providing those benefits (note their mantra: taxes are bad - Primarily Republicans and Libertarians). The irony is, most of them aren’t rich.

Taxes are nothing more than the cost of lesser or greater efficiency in the management of a nation. Our government was designed to be inefficient.

Modern anti-tax proponents want to argue, why should I pay for inefficiency? They don’t realize they are arguing against the defending and protecting our U.S. Constitution which is where the inefficiency is structurally built in.

Now waste is another issue, which we should all be willing to throw out incumbent politicians over.

Posted by: David R. Remer at March 14, 2007 2:58 PM
Comment #211961
Ron Brown wrote: d.a.n We need a flat tax, absolutely no deductions, and every income level pays.
Absolutely.

Eliminate ALL tax deducations, and tax EVERYONE at a FLAT 17% on all income ABOVE N times the poverty level (where N is never less than 1.0).
That is, nobody pays tax on their income at or below the poverty level.
Don’t tax corporations, because that just gets passed on to all consumers, creating another tax on all consumers; over-complicating things further.
Thus, as of 01-January of each year, nobody pays any taxes until their income exceeds N times the poverty level.
There would be no caps for Social Security or Medicare.
And benefits to Social Security and Medicare recipients should be limited to never exceed the poverty level, and every person would receive this minimum and equal amount.

Of course, that’s all pie in the sky.

Things are likely to limp along until 77 million baby boomers start drawing benefits at the rate of 13,175 additional recipients per day!, at which time things could become increasingly painful, due to probability of increased taxes, reduced benefits, and probably higher inflation (due to massive pre-existing debt) eroding savings and creating more economic instability.

In year 1998, women’s average age was 81 years.
The typical Social Security and Medicare eligibility age is 65.
Thus, 81 - 65 = 16 years.
77 million retiring entitlement recipients over the next 16 years (5,844 days) is 13,175 recipients becoming elibigle each day!

Assuming 77 million baby boomers live another 16 years (on average), the cost of 13,175 recipients more per day x $9,000 of entitlements benefits per year per recipient x 365 days per year = $43.3 billion per year .

Now consider that an additional 13,175 people are becoming eligible each day for 16 years.

The additional cost (beyond all exiting benefits) is $43.3 billion per year more for the 1st year (in addition to benefits already being paid to pre-existing recipients).
The additional cost is $86.6 billion per year more by the 2nd year.
The additional cost is $130 billion per year more by year 3 .
The additional cost is $216 billion per year more by year 5 .
And all that is in addition to those already receiving benefits in the first year.

Currently, about 45 million people receive Social Security and Medicare benefits.
That could climb significatly in only 5 years (13,175 recipients per day x 365 days per year x 5 years) = 24 million).
Of course, several million are going to die each year, but there is still a definite bubble that will definitely put a strain on many things.

Already, Medicare is facing huge unfunded liabilities.
The so-called $1.8 trillion Social Security surplus is nothing but worthless government bonds.
Can we borrow more money? Run up more debt?
Maybe, but it will only prolong the inevitable, and shift the burden to future generations.
Younger people, not being very conscientious about voting, are getting used (and that’s putting it lightly).
They would be wise to start paying closer attention to the debt being piled onto them.
If the younger people were paying closer attention, there might be a revolution by morning.

At any rate, look for taxes to go up in the middle income group more and more, as we keep sailing toward the demographics and entitlements iceberg.

  • Posted by: d.a.n at March 14, 2007 3:29 PM
    Comment #211975

    David

    You are exactly right that our government is inefficient by design. It protects liberty. That is why government should be small and stick to its basic roles.

    I do not object to paying taxes. I object to government getting too big and intrusive. Taxes help support that too. The Feds take around 20% of GDP. That is enough.

    The other thing about AMT has to do more with social policy. The government has a legitimate interest in fosting programs that creates wealth in the aggregate and legitimate interest in NOT creating programs that discourage it.

    AMT encourages bad behaviors. Those who do not save money, neglect or do not have kids and do not buy houses are less often stuck by the AMT.

    I am going to be a little judemental, but a person who raises a family, buys a home, works hard, & gets an eduation is behaving in a good way. He should be rewarded, not taxed more heavily

    Posted by: Jack at March 14, 2007 4:29 PM
    Comment #212050

    Jack said: “The Feds take around 20% of GDP.”

    I question your 20% figure, but, OK, and they give about 19.5% of that GDP back to the society in one way or another. It is only a portion of foreign aid that leaves the country and does not circulate back into our society in one way or another.

    I don’t have a problem with being taxed. I don’t have a problem with taxes going up. I only have a problem when my tax dollars are wasted (spent for purposes without expected results) or, fraudulently used for purposes which the majority of the American people do not approve. (Take note: I worded this last sentence very carefully).

    This is the only nation I have to call home. I want to support, defend, and enhance her for my daughter’s posterity. If taxes need to go up to accomplish those ends, that is fine with me. Any use of tax dollars that will enhance education (therefore the quality of people my daughter will have to interact with), make our streets safer, and preserve the quality of life I have enjoyed, for my daughter and her children, is just fine with me.

    But when my government is racking up debt to lay on my daughter’s future earnings to protect and defend the Constitution of Iraq, its government, and its borders and streets, I then HAVE A REAL PROBLEM with how American tax dollars are being spent. America’s streets are not safe for my daughter to walk in alone. That is a far higher priority to me than whether Iraqis are safe walking their own streets.

    Needless to say, I will be voting to oust all my representatives in 2008. I have the feeling I won’t be alone in this action.

    Posted by: David R. Remer at March 15, 2007 1:58 AM
    Comment #212059

    David

    The 20% figure is largely accepted. It usually fluctuates between around 19 and 21.

    How big it SHOULD be is a value judgement. If you believe the government can spend your money better than you can, you probably support a bigger government. If you feel that they will use the money inefficiently or incorrectly, you want a smaller one.

    You are actually asking for something you cannot have. You want the government to spend your money how you would like it AND to do it efficiently. The first is unlikely and the second is impossible.

    Re what the majority of the American people want is a rhetorical concept but not much use. We elect representatives and they execute what “we” want (or not). There is some dispute about how they should represent us (agent v representive) but even if they choose to be agents and a perfectly honest and competent, you still have slippage in communication.

    You mention Iraq. What do Americans want? Most want to get out as soon as possible. So does the president. But they define as soon as POSSIBLE differently. A pluarlity want to stay until the situaiton is stable. A very large group wants to get out in 1-2 years. A minority (16%) wants to get out immediately. 5% do not know. SO what is the will of the people?

    In our plural society, it might be better to let individuals make choices and force as few things as possible through the political process.

    Posted by: Jack at March 15, 2007 7:41 AM
    Comment #212079

    d.a.n
    Just checked your link. I agree with just about all of it. The only two points I disagree with is letting anyone get out of paying and the percentage rate.
    Folks below the poverty line use government services too. And most likely more than those above the poverty line. What’s wrong with them paying for these services? Specially sense they’re more likely to use them.
    I believe that by sewing up the loopholes and having everyone paying regardless of income, that the tax rate could be more like 10% to 12%. But that’s a minor point. The main objective is to get everyone paying their share.

    Posted by: Ron Brown at March 15, 2007 12:16 PM
    Comment #212081

    Well, Jack, I get an awful lot for my taxes. Not to say too much isn’t being wasted or fraudulently used. But, for my taxes I get:

    • No dead bodies in the streets to step over
    • 911 Emergency service anywhere in the country
    • Very decent highways and roads to travel on
    • Fairly safe vehicles to ride in
    • Fairly reliable and safe food
    • Pretty clean air to breathe (where I live)
    • Protection from encroachment or theft of my homestead
    • Slightly better than mediocre education for my daughter cheaper than I could pay for it myself
    • A standing military to protect me while I am asleep from invading armies from without our borders
    • Fairly good protection from being ripped off when making purchases, especially big ticket items
    • National Parks and BLM land to find solitude in without having to buy property for that purpose
    • Very efficient energy delivery to my home
    • Reliable and inter-connectible communications
    • I can send somebody 3000 miles across the country to deliver my mail for $0.39
    • Outstanding weather predictions and warnings
    • My day in court and shot at justice when others transgress against me or mine
    • And this list could go on for several pages, but, I think I have covered a lot of the biggies
    Posted by: David R. Remer at March 15, 2007 12:41 PM
    Comment #212084

    Jack, I looked it up. It is actually about 25% of GDP, and that puts the U.S. in the lowest taxed 5 countries in the modern world.

    Here are the 5 highest tax countries:

    Country……….Tax Revenue as % of GDP
    1. Sweden…….50.8%
    2. Denmark…..49.0%
    3. Belgium…….45.8%
    4. Finland………44.9%
    5. France……….44.2%

    Here are the 5 lowest tax countries:

    Country……….Tax Revenue as % of GDP
    1. Mexico…………19.5%
    2. U.S……………..25.4%
    3. Korea………….25.5%
    4. Switzerland…29.8%
    5. Ireland………..30.0%

    Src = TaxProf Blog

    Posted by: David R. Remer at March 15, 2007 12:50 PM
    Comment #212106

    Where do we rank when you add everything we are taxed on? Local sales taxes, property taxes, and state income taxes etc…

    Posted by: kctim at March 15, 2007 3:14 PM
    Comment #212110

    Where do we rank when you add everything we are taxed on? Local sales taxes, property taxes, and state income taxes etc…

    Posted by: kctim at March 15, 2007 03:14 PM

    Most likely 1 in the highst tax countries.

    Posted by: Ron Brown at March 15, 2007 3:49 PM
    Comment #212112
    Ron Brown wrote d.a.n Just checked your link. I agree with just about all of it. The only two points I disagree with is letting anyone get out of paying and the percentage rate. Folks below the poverty line use government services too. And most likely more than those above the poverty line. What’s wrong with them paying for these services? Specially sense they’re more likely to use them.
    The reason to not tax income below the poverty level is because taxing people already living at or below the poverty level only drives them onto welfare.

    That will simply cost everyone more.
    Can’t get blood out of a turnip, so there’s no sense in taxing anyone’s income below the poverty level.

    Ron Brown wrote I believe that by sewing up the loopholes and having everyone paying regardless of income, that the tax rate could be more like 10% to 12%. But that’s a minor point. The main objective is to get everyone paying their share.
    The 17% wasn’t a number pulled out of thin air.

    The 17% flat income tax rate is based on 2005 GDP, all federal revenunes, and current liabilities, and a 5% to 6% cut in overall federal spending.

    I wish it were possible to make it lower than 17% , but that simply wouldn’t be enough.
    It will be damn near impossible already to get a 5% to 6% cut in overall spending that would be required by a 17% flat income tax rate. A lot of think tanks are talking about a 20% or higher flat income tax. That’s because they didn’t figure-in any spending cuts too.

    As far as taxes go, I’m with Jack on the subject of raising current tax rates.
    We don’t need to increase taxes in the current tax system, because it is so overly-complicated with so many tax loop holes, it won’t accomplish anything but to increase taxes on the lower and middle income groups.

    What we should do first is simply simplify the current severely perverted tax system.
    Get rid of all tax loop holes and tax deductions, and quit using the tax system to monkey with the economy, and pander to those wealthy enough to control government and their bought-and-paid-for incumbent politicians.

    If taxes can be lowered or need to be increased, simply adjust the flat rate, which applies to all income above the poverty level.

    WOW ! The federal government is getting 25% of GDP ?
    I thought it was about 20% .
    Has it gone up ?
    That’s too much.
    It needs to be reduced, since the more money government gets, the more it wastes.

    kctim wrote: Where do we rank when you add everything we are taxed on? Local sales taxes, property taxes, and state income taxes etc. ?
    It raises it a lot higher. Also, don’t forget that anyone working on the books is actually paying 15.3% in Social Security and Medicare taxes (the employer pays half that, but it really comes out of the employee’s pocket). Property taxes in some states are ridiculous. For instance, my largest monthly bill is the property tax (for an ordinary house on a 1/5th acre lot in the suburbs). It’s larger than the electricity bill. Then, in Texas, there’s a state, city, and county sales tax that is roughly about 8.25% (or higher in some cities). Then, there’s a myriad of excise taxes, fees, etc. When you add it all up, it’s a lot. It may then be comparable to taxes in those other nations.

    At any rate, just becasuse other nations have higher taxation doesn’t mean we should follow in their footsteps.
    Before we raise taxes, we ought to simplify the tax system, and make it more fair.
    The current tax system is extremely complicated and it is costing the nation many billions per year, when you consider the time and effort wasted on calculating taxes, searching for loop holes, software, record keeping, audits, harassment by the IRS, tax evasion via a myriad of abused tax loop holes, abused agricultural tax loop holes, etc., etc., etc.

    However, agai, this is all pie in the sky, like the other numerous things debated here daily.
    Many problems endlessly debated here, and on blogs nation-wide, are symptoms of a more fundamental problem.
    Solutions for ALL of these symptoms are futile without education to recognize and address the fundamental root problem.
    That root problem will eventually become clear to most Americans.
    Their education is already in the pipeline.
    But will it arrive soon enough (if ever)?
    We are not invincible.
    If we keep on crappin’ in our own nest, the bough will finally break, and we will have to learn the hard, painful way.
    How bad could it get?
    A recession?
    Another Great Depression?
    Or worse?
    Like the last earthquake in California, the further we get away from the last one, the closer we get to the next one.
    History repeats itself.
    Once in a great while, we learn from it, and there is progress.

    One thing is for certain, it ain’t gonna get better by rewarding irresponsible? incumbent politicians by repeatedly re-electing them.

    Posted by: d.a.n at March 15, 2007 3:56 PM
    Comment #212114

    At first I thought this was funny …

    Tax his land,
    Tax his bed,
    Tax the table
    At which he’s fed.

    Tax his tractor,
    tax his mule,
    Teach him taxes
    are the rule.

    Tax his cow,
    Tax his goat,
    Tax his pants,
    Tax his coat.

    Tax his ties,
    Tax his shirt,
    Tax his work,
    Tax his dirt.

    Tax his tobacco,
    Tax his drink,
    Tax him if he
    Tries to think.

    Tax his cigars,
    Tax his beers,
    If he cries, then
    Tax his tears

    Tax his car,
    Tax his gas,
    Find other ways
    To tax his ass

    Tax all he has
    then let him know
    that you won’t be done
    till he has no dough.

    When he screams and hollers,
    Then tax him some more,
    Tax him till
    he’s good and sore.

    Then tax his coffin,
    Tax his grave,
    Tax the sod in
    Which hes laid.

    Put these words
    upon his tomb,
    “Taxes drove me
    to my doom…”

    When he’s gone,
    Do not relax,
    Its time to apply
    The inheritance tax.

    Accounts Receivable Tax
    Building Permit Tax
    CDL license Tax
    Cigarette Tax
    Corporate Income Tax
    Dog License Tax
    Federal Income Tax
    Federal Unemployment Tax (FUTA)
    Fishing License Tax
    Food License Tax,
    Fuel permit tax
    Gasoline Tax(42 cents per gallon)
    Hunting License Tax
    Inheritance Tax
    Interest expense
    Inventory tax
    IRS Interest Charges
    IRS Penalties (tax on top of tax)
    Liquor Tax
    Luxury Taxes
    Marriage License Tax
    Medicare Tax
    Property Tax
    Real Estate Tax
    Service charge taxes
    Social Security Tax
    Road usage taxes
    Sales Tax
    Recreational Vehicle Tax
    School Tax
    State Income Tax State
    Unemployment Tax (SUTA)
    Telephone federal excise tax
    Telephone federal universal service fee tax
    Telephone federal, state and local surcharge taxes
    Telephone minimum usage surcharge tax
    Telephone recurring and non-recurring charges tax
    Telephone state and local tax
    Telephone usage charge tax
    Utility Taxes
    Vehicle License Registration Tax
    Vehicle Sales Tax
    Watercraft registration Tax
    Well Permit Tax
    Workers Compensation Tax

    COMMENTS: Not one of these taxes existed 100 years ago and our nation
    was the most prosperous in the world, had absolutely no national debt,
    had the largest middle class in the world and even with Mom staying home
    to raise the kids.

    What the [expletive] happened ?

    Posted by: d.a.n at March 15, 2007 4:00 PM
    Comment #212117

    Speaking of waste ….
    Mosy over to Citizens Against Government Waste to get an idea of how bad it is.
    Yet, Congress must think they are doing a fine job, since they gave themselve raises 8 times between 1997 and 2006.

    Posted by: d.a.n at March 15, 2007 4:08 PM
    Comment #212146

    What the [expletive] happened ?


    Roosevelt and the ‘New Deal’ :-(
    Truman
    Eisenhower
    Kennedy and the ‘New Frontier’ :-(
    Johnson and the ‘New Frontier’ revised :-{ :-[
    Nixon :(
    Carter :[
    Reagen :\
    Bush 41 :(
    Clinton :/
    Bush 43:(
    And an increasingly irresponsible Congress :-

    Posted by: Ron Brown at March 15, 2007 7:21 PM
    Comment #212147

    Sorry that should be: And an increasingly irresponsible Congress :-

    Posted by: Ron Brown at March 15, 2007 7:23 PM
    Comment #212167

    David

    Some of these things do not come from your taxes and/or you do not need to pay such high ones to get them.

    I consistently write that the free market requires rule of law and some government regulation. I am not against all government, but I think we have enough of it already.

    The taxes v GDP are a bit misleading as all the countries still use the market mechanism. In the old Soviet Union or Cuba today taxes were not very high because the government owned and controlled almost everything important. Take the example of Russia today. Taxes are not high, but the government owns or controls a very large piece of the GDP.

    I also recall that Japan is a low tax country and often ranks below the U.S. on those table. I found one source that said the total Japanese tax was 27.1% of GDP.

    It is a good thing to be among the lowest taxed countries in the world. Your list included Ireland as a low tax country. You may recall the Ireland used to be a high tax country and became the Celtic Tiger when it reformed its taxes and opened its markets.

    BTW – Heritage has this year’s Federal tax rate at 18.5% and outlays at 20.3. I suppose your blog writer is including state and local taxes. It does show the difficulty of figuring these things out.

    Posted by: Jackj at March 15, 2007 9:03 PM
    Comment #212225

    Jackj, I too think the figures include state and local taxes, which support many of the benefits in my list.

    I agree lower taxes is better. But, it is a charade and fraud to be lowering taxes while creating an 11 trillion national debt out of a 5.65 Trillion debt in 8 years. That is simply deferring tax increases until the politicians responsible for the debt increase are out of office living on fat retirement incomes. Thus they are actually creating doubling taxes, but deferring collections to the next generation of politicians and tax payers.

    A purely Republican phenomenon. Ironic isn’t it? The party of smaller government and lower taxes. The greatest theft by one generation of the next, ever achieved in history. We now have to look to Democrats for fiscal responsibility. Buddha help us!

    Posted by: David R. Remer at March 16, 2007 1:49 AM
    Comment #212241

    While we are all writing about taxes, this is a good time of year, while you’re preparing your returns, for everyone to figure out and report their own personal (or, more likely, family) tax rate.

    How do you do that? Not too tough.

    1. Add up all the money you made. This includes income you don’t have to report and income that your W2 automatically subtracts (like health insurance payments). Don’t forget your interest (earned or unearned).

    2. Get the following tax payment numbers handy: a. Your total Federal payment (I forget the line number on the 1040), b. Your total State (and local) payment, c. Your real estate taxes, and d. Your Social Security and Medicare taxes. All these are easily found in your tax paperwork. (OK, I may have missed a few; others can fill the holes). Remember, we are talking TOTAL PAYMENT, not the refund or amount you owe, which are much, much smaller.

    3. Gather together any other large tax payments you make that you can identify. This depends a lot on your particular circumstance.

    4. Got all that? Do 1 - (2+3). (If you put $ in a tax-free account you may have to adjust here.)

    5. Multiply #4 by your local sales tax rate. This is largely guesswork. But given that not everything you buy is taxable, you tend to overstate your taxes here. You can, of course, pull out how much you put in savings before you calculate this.

    Do the following: (4+5) / 1 . This is your TAX RATE, measured as a percentage of how much money you made last year.

    I realize this probably doesn’t work for self employed people, and apologize in advance.

    Posted by: bobo at March 16, 2007 9:32 AM
    Comment #212245

    David

    The government’s foot print is what counts. Whether it comes from taxing or borrowing is less important. The deficit has been dropping, BTW, and revenues are surging. We have to cut spending.

    You can tax to whatever level you want, but there are consequences. It is also true that government, like individuals, tends to spend up to its income. If you raise taxes, you are likely just to get more government.

    We both agree that government is necessary. It depends on how much. It is also true that government is suited to some tasks and not others. It is reasonably good at infrustructure, security and public health. It is very bad at income redistribution, production of goods and services and public housing. I want government to stick to what it does best and let we the people handle what we do better.

    Posted by: Jack at March 16, 2007 9:41 AM
    Comment #212248

    government … is very bad at income redistribution. I want government to stick to what it does best and let we the people handle what we do better.

    Jack,

    Free markets aren’t always good at income redistribution either. When capitalist markets took root during the industrial revolution, there was a tremendous amount of poverty. In Asian markets today there still is, even while others live very close by in luxury. There is still a lot of poverty in the Western indistrialized world, and it would only get worse for some people if we abolished income redistribution programs.

    The habit of conservatives has been to look at the poor and ask: why can’t you be more like your rich neighbors?

    The habit of socialists has been to look at the rich and say: why can’t you give some of your money to the poor?

    Churchill said that democracy is the worst form of government, after all the others. Capitalism is the worst form of economy after all the others. (There’s a reason we call it the dismal science.) Unlike systems of government, it is much easier to develop and manage mixed economies. Isn’t that what we are really talking about here?


    Posted by: Steve K at March 16, 2007 10:30 AM
    Comment #212426

    Steve K

    Captialism is terrible. I have never seen captialism. I believe in the free market.

    What the industrial revolution did was raise some people above the abysmal level of all history before that. For the first time some people did not have to live in abject poverty.

    Now the free market has lifted all Americans out of the kind of poverty most people suffered 300 years ago. It has raised the standard.

    Next time you visit Europe think about how much fun it must have been to live in those castles w/o central heat or electricity. Now look at the peasants house. Then consider this. If you went back to Roman Gaul in AD 100 and compared living condition there to those of the same place in France in 1600, you would find little had changed in those 1500 years. Let for each decade after the industrial revolution you would notice improvements. That is the power of the market.

    The free market comprises the rule of law, market mechanism and some regulation. We are indeed talking about how much of each.

    The U.S., Sweden and France are all market economies, but different flavors. The U.S. is not the freest economy. If you look at the Index of Economic Freedom you will see the rankings.

    Posted by: Jack at March 16, 2007 10:50 PM
    Comment #212607

    Jack,
    It’s interesting that what all nations suffer from is too much corruption.
    The more corruption, the less economic freedom.

    The deficit has been dropping, BTW, and revenues are surging. We have to cut spending.
    so minutely, it’s laughable. The total federal debt is massive. The debt is still growing daily. The total $22 trillion of federal debt has NEVER been worse (ever), when you include all the Social Security debt, Medicare debt, pension debt, etc. Throw in $20 billion of personal debt (nation-wide) and things look even worse. A lot of the so-called net worth is tied up in over-priced real-estate and stocks, and the next recession will help reveal the real values.

    What does is all mean?
    Most likely, more money printing, which means more inflation.

    The government’s foot print is what counts. Whether it comes from taxing or borrowing is less important.
    Sure.

    Why tax at all, if you’re just gonna print all the money ya want?

    Posted by: d.a.n at March 18, 2007 3:37 PM
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