Sunday, April 15, 2007

April 15th

If you are reading this in the United States, you almost certainly knew the topic of this post just from reading the title. For those of you in other countries, April 15th is the date each year on which we Americans must pay our income taxes to the Federal government and most state governments as well.

The United States had no permanent tax on individual income for most of its existence. The federal income tax has only been around since the ratification of the 16th Amendment to the Constitution in 1913: "The Congress shall have power to lay and collect taxes on incomes, from whatever source derived, without apportionment among the several States, and without regard to any census or enumeration."

As tax systems go, ours is probably about as fair as it's likely to be, considering the irresistable urge of politicians to tinker with it for political advantage. The only real problem with it, from my perspective, is that it's drifted far from its original purpose: to raise money for the operation of the government. We expect the federal government to provide certain essential services, and somehow those services must be paid for - thus, the need for taxes. Unfortunately, our tax system has been bastardized over the years as a vehicle for rewarding political support, conducting social engineering experiments, and stimulating businesses. Each dollar of tax revenue lost because a business gets a tax break or a particular social group gets a special benefit must be made up somewhere, and that somewhere is generally the checkbooks of the working middle class.

I see nothing wrong with paying taxes. I don't like it any more than anyone else, but I recognize that they're a necessary evil. The real problem is that, as the system has moved from its original purpose, the tax code has become progressively less fair and more complex, leading to the creation of an entire industry dedicated to helping people cope with the calculation of their taxes. High taxes and the perception of unfairness create an atmosphere in which we spend more time and effort hiding or underreporting income than in just writing the check to Uncle Sam.

This year, I paid nearly $300.00 to a nice lady at H&R Block to calculate our federal and state income taxes for us. I could probably have done it myself, but the complexity of the tax code and my fear of the draconian powers of the IRS make it worth it for my peace of mind to pay someone else to navigate the twisted and murky legal and fiscal landscape on my behalf.

And that $300 is tax deductable, by the way.

So, if you are one of those who has taken advantage of April 15th falling on a Sunday this year to put off doing your taxes for one more day, it's time to get off your fannies and get cracking. It's just short of 11 o'clock in the morning have about 37 more hours to go.

Good luck.

Have a good day. More thoughts tomorrow.


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