# 024 April 15, 2009
By: Allen Wells
Welcome to Tax Day! Well folks… it’s tax day in the good old “Land of the Free (to pay) and the Home of the Brave.” I thought you might want to know some interesting tax facts.
Based upon the latest release of IRS data on individual income taxes, from tax year 2006 – way back when the economy was healthy and continuing to grow. In 2006 individual income tax receipts and average effective tax rates increased.
Within the top 1% of earners, IRS collection data shows that the income share paid reached an all time high. The top 1% of earners paid a whopping 39.9 percent of all federal individual income taxes and earned 22.1 percent of all adjusted gross income.
Compare this to 2004 when the top 1 percent of earners earned 19 percent of all adjusted gross income and paid 36.9 percent of federal individual income taxes. In just two years, the top 1% of earners increased their payments to the IRS by 3%. (information from The Tax Foundation)
In an article in the Wall Street Journal entitled “We Still Need a Simpler Tax Code”, Nina E. Olson the “National Taxpayer Advocate” at the Internal Revenue Service states that U.S. taxpayers and businesses spend about 7.6 billion hours a year complying with filing requirements of the IRS.
If tax compliance were an industry, it would be the largest in the United States. 7.6 billion hours a year is the equivalent of 3.8 million full time workers. The Cato Institute reports “The U.S. "tax army" is bigger than the U.S. army in Iraq. Income taxes are so complex that there are up to 1.2 million paid tax preparers in the country – six times more than the number of troops in Iraq. The tax army includes legions of accountants, lawyers, and computer experts -- some of the best minds in the country.”
There are now 526 different tax forms. According to Olson, there have been more than 3,250 changes in the tax code since 2006, an average of more than one a day!
Where is our country going with all this? The more difficult and complex the tax code, the more likely you will make a mistake. Given the incomprehensible complexity of our current tax system (unless you file a 1040 EZ) you will have errors. With those errors come IRS audits and burdensome interest and penalties.
Don’t you find it interesting that the IRS withholding schedules (if followed to the letter) will cause overpayments by you to the IRS – which they will happily refund the next year – WITHOUT any interest paid to you for their overcharges. However, if you make a mistake and are found to owe the IRS money, the IRS interest and penalties are far higher than market interest rates and their repayment plans are burdensome to say the least.
But wait… hope is on the horizon… President Obama has pledged that NO ONE making under $250,000 will pay any additional taxes…and most will get a tax cut. How can this be? Can we continue to siphon a higher and higher percentage of upper income earners salary without any repercussions?
Currently 32 percent of all Americans pay NO taxes. Let me repeat that. 32% of all Americans pay no taxes. Many of those 32 percent actually receive money from the federal government! Think about that next time you see a politician offer a handout to someone or a bailout to a company. Did you pay taxes last year? Are you aware that you and 68 percent of the rest of America are paying for everything?
If you are in the top 5% of earners in this country, you pay 60% of all income taxes paid… I know we have a graduated tax system, but don’t you think this is a little ridiculous? Under President Obama’s tax plan, 60 million Americans will pay no taxes, and many will receive a refund back from the IRS. How can it be a refund if you didn’t pay?… just asking.
By continuing to increase the tax burden on “upper income” citizens while requiring no “contribution” from lower income citizens, our government is creating a class division in this country that cannot be overcome. The division will not be between the haves and have nots, it will be between those footing the bill for all of our giveaway programs (who continue to be insulted, impugned and penalized) and those that pay nothing yet demand more and more goods and services (for nothing).
In our country there are very few “have nots”. Instead we have “do nots”. The “do nots” do not pay taxes, do not contribute financially to the Social Security system, do not contribute financially to the Medicare/Medicaid programs. They do accept government funds for food, they do accept free infant care, they do accept free medical care, they do accept free housing and so on ad infinitum, ad nauseum. They DO NOT contribute financially to these government supplied goods and services.
These people have plenty, and are acquiring more every day on the backs of the 60 percent… There is one more thing the “do nots” do – they vote. Politicians know this. The political rhetoric may be to “cut taxes” and “lower government spending”, but the politicians know who votes – more and more it’s the “do nots” that vote, and each time they vote, the “do nots” acquire more and more of the things they “have not” worked for or paid for, it is the rest of us pay that pay.
I’ll end with a quote by Alexis de Tocqueville in his 19th Century book “Democracy in America”:
“When the American people realize they can vote themselves wealth from the public largesse, it will cease to be America as we know it.”
With warmth and regards (as always),
Allen
I agree... it is going way too far! Does anyone know what kind of turn out the tea party's had today?
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