Friday, February 08, 2008

Taxing Experiences

Earlier this week I gathered up the past year's worth of tax receipts, W2 and 1099 and other assorted forms with obscure numbers, and went to the local commercial tax preparation office for my annual date with Pat, the nice lady who navigates the rocky shoals of tax law and turns all my paperwork into the tax return that tells me how deep Uncle Sam and the Governor of Virginia have stuck their hands into my pockets for the year.

For many years, I calculated my own taxes and filled out my own forms, but I eventually reached the point at which it was worth it to me to pay someone like Pat to translate the Old Church Slavonic of the IRS instructions into a return. I'm afraid of the IRS. I mean, I'm really afraid of the IRS. Few agencies of the Federal government can cause you as much grief and agony as the IRS can. Make an innocent mistake on your return, and you can owe not just extra taxes, but interest and penalties on the extra amount...often running to huge amounts. And did I mention jail?

Unless, of course, you are wealthy enough to be able to afford a reinforced battalion of tax attorneys who can face down the IRS on your behalf, or help you hide your income in exotic tax shelters.

Or you are a corporation.

Last week, the President published his proposed $2.7 trillion - yes, I said trillion - 2009 budget (not including the cost of the wars in Iraq and Afghanistan). Most major newspapers published charts showing the distribution of that 2.7 trillion dollars, and some also included other charts which showed where the income to pay for that budget was to be raised. This latter charts are the ones I found most interesting.

The largest single source of income for the Federal government is "Individual Income Taxes" (that's what you and I shell out to Uncle Sam), accounting for 1.259 trillion dollars. "Social Security, Medicare, and Retirement tax receipts" (these are also ones you and I pay) amount to $949.4 billion. "Excise Taxes" (yep, these are taxes you and I pay on commodities we buy) bring in $26.3 billion. "Estate and Gift Taxes" (we pay those, too) - $26.3 billion. There are other sources of income, but this is the one I want to call to your attention:

"Corporation Income Taxes" - $339.2 billion.

Yes, you heard that right. Corporations, the big industries and businesses that can earn vast sums - frequently on the basis of jobs farmed out to overseas workers - paid very little in taxes compared to what you and I are asked to deliver.

Maybe it's just me, but I think there's something wrong with this picture. I think there's something wrong with big businesses paying such a small proportion of their income in taxes while the rest of us worry about things like the Alternative Minimum Tax and jump for joy at the thought of a measly $600 or $1200 tax rebate.

I know some will argue that businesses should pay less in taxes so that they can use their income to create jobs and fuel the larger economy...but when more and more of those jobs are sent overseas, that excuse rings a bit hollow.

I've often written here that I don't object to paying taxes, because I realize that they provide the money the government needs to operate. I do, however, object to a system I believe is fundamentally unfair, skewed to provide shelter and protection to the wealthy and to big businesses at the expense of the middle and lower classes. And, of course, we can also have the philosophical discussion of what amount of government we should be required to pay for.

But that's a discussion for another day. For now, if you've finished your taxes for 2007, I hope you came away relatively unscathed. In our case, we'll be getting a small refund from the Feds, half of which will be spent on the amount still due on our Virginia taxes. Go figure.

Have a good day. Don't do anything too taxing.

More thoughts tomorrow.



The Mistress of the Dark said...

Speaking of taxes, I need to do mine. I'm just glad I only have 1 W-2 and one little 1099 to deal with, so it's not too frightening.

NathanRyder said...

Don't do anything too taxing.

Well, if you insist...

If you've not seen it, I highly recommend the documentary "The Corporation" (there is also an accompanying book which is very interesting too) - it's a long time since I've watched a documentary and felt so angry afterwards, and it's a very interesting and well-presented insight into the history and practices of corporations.

Jean-Luc Picard said...

There are quite a few zeroes in all those numbers.

Mike said...

I think people will put up with a lot if they think they are being treated fairly.