Tuesday, November 29, 2011

A Brief Tax Rant

If you want to watch a Republican's head explode, say something positive about taxes. Actually, nobody likes to pay taxes but, as we see every day, everybody likes the things taxes pay for. What we really want is something for nothing ... or something that, in true Wall Street fashion, is paid for with someone else's money.

But let's be realistic for a minute.

If we want frivolous things like schools, police and fire protection, and an army, we're going to have to pay taxes. The issue is not whether or not taxes are necessary - they are. The real issue is twofold: how to fairly assess and collect the right amount of tax from individuals and businesses, and how to decide what those taxes will pay for.

What constitutes fair in the tax debate is, of course, a matter of opinion. If you have an income of $20,000, any amount of tax taken out may seem unfair. If you have an income of $1,000,000, it may seem unfair that you are asked to pay a larger portion of that income in taxes. Fair is relative.

Here's an example of a tax issue that makes me go AARRGGHH!!

I commute to work every day using a so-called SmarTrip electronic card which is loaded with money that is debited each time I tap it on a Metro turnstile or a fare box on a bus...

One of the ways I can add money to this card is by designating a small, IRS-approved part (currently $130) of my pre-tax pay to be automatically loaded to it each month. This helps pay for my daily commute, keeps a car off the roads, and provides me with a modest tax savings. Is this fair, when compared to benefits not enjoyed by people who don't commute? Probably not. But it's my little tax break, and in a deep and cobwebby part of my fundamentally conservative heart, I'll defend it fiercely.

Now, the IRS has recently decided that the commuter benefit must be more tightly regulated to prevent abuse. My SmarTrip card has been automatically partitioned to separate money for commuting (by bus or train, which is not taxed) from money used to pay for parking (which is not supposed to be paid for with the pre-tax commuting benefit). The fact that you might have a multi-stage commute which requires you to drive to (and park at) a Metro station to catch your bus or train is immaterial. Is this fair?

This is a small but, to me, very annoying tax issue. The law provides all sorts of loopholes which allow some categories of well-represented taxpayers to avoid paying tax on huge amounts of money, while Congress (not the IRS, who are just the enforcers of the laws Congress passes) wants to make sure that I'm not abusing that untaxed $130 per month on my SmarTrip card.

I don't have a big point or message today ... just an observation on one small part of the stupidity of the anti-tax movement and the equal stupidity of the tax code that Congress has written - one that offers benefits and protections to those who can afford Platinum-Plus RepresentationTM from the representative they've bought and paid for.

The rest of us, just suck it up and fill out that 1040. Take solace in the fact that you're doing your part to support the job creators.

And if you believe that, I can make you a good deal on a bridge.

Have a good day. More thoughts tomorrow.



Amanda said...

Your SmarTrip card sounds interesting. We don't have anything like that here. I can see why it would be an annoying tax issue even though its a very small part of your overall taxes....

eViL pOp TaRt said...

I can see your point with regard to the disappearing tax break, and I think that parking should also be included. In some cases the per diem parking can be a substantual amount of the total outlay.

The Tax Code is so baroque and confusing: in order to get the best tax breaks, it seems that you need a tax attorney. The long form of 1040 becomes an exceeding hassle.

Mike said...

Why in hell would there be a tax break on commuting? Only in D.C. All of a sudden I feel like a flat taxer. And is that a tax break on sales tax, federal income tax, state income tax, local income tax, or tax tax?

Bilbo said...

Mike - you forgot thumb tax and carpet tax.