Proving the Axiom

Another example of the old axiom that what starts in California follows in the rest of the country, or in this particular case, if it's a bad idea it, undoubtedly, came from California:

The trick, when looking at the new withholding tax tables for 2010 as compared to post-stimulus 2009, buries an increase in federal withholding taxes–for all income categories–basically giving the government an interest-free loan until current year taxes are filed next year. Some would blame the increase in withholding on the Making Work Pay tax credit being spread out over 12 months as compared to 2009, which was only over 9 months, but this would be impossible as some middle class wage categories carry an increase in the withholding tax of over $200 per pay period.


Unlike the middle class wage earners, who are going to see huge amounts taken out of their paychecks, unless they increase their exemptions on their W4 form, it’s an increase that most wouldn’t even notice–$10 or $20 in some cases.

So now the rest of the country can enjoy loaning the Feds an extra bit of their check every two weeks just as the unfortunate citizens of California have been doing for the past few months. On the bright side, avoiding this bit of chicanery is an unexpected benefit of being unemployed.

If it moves...

...tax it.

Perhaps the greatest Reaganism ever. But did you ever think you'd live to see what amounted to a tax on rain?

Oops

How'd that happen?

The Middle-class Tax Cut Canard

Are middle-class tax cuts worthwhile? No, yes...maybe? Larry Kudlow looks at the House Democrats' budget resolution:

The House passed a budget resolution yesterday that leaves out investor tax-cut extensions for capital gains and dividends. While it does include extension of the kiddy credits and the marriage deduction, it’s actually the investment tax cuts that deliver the real economic growth impact by reducing the tax rate on the extra dollar earned from the sale of assets or the receipt of dividends.

Ironically, the latest budget report clearly shows that these investor tax-cuts have paid for themselves. Remember, non-withheld income taxes hit a record high on April 24th at $48.7 billion dollars. So far this year, this tax collection category has shot up 30 percent. By the way, income tax collections at lower tax rates have jumped by 17.5 percent.

Democrats and the official Washington scorekeepers never acknowledge the Laffer Curve that shows lower tax rates lead to higher tax revenues through a growing economy and larger income base.

What the Dems have done in their budget resolution is to endorse the least growth-sensitive tax cuts and to eliminate the tax-cuts that possess the largest growth impact.

By the way, with congressional Dems once again vowing to end “tax cuts for the rich” and the same tired message coming from the Democratic presidential hopefuls—Hillary, Obama, Edwards—the party is crafting a losing election year tax message. Tax cuts for the rich have never worked in presidential elections. (Just ask Mike Dukakis, Walter Mondale, or Jimmy Carter. Or ask Al Gore if you can find him.)

Don't get me wrong...as a Married-Filing-Jointly, I love the marriage deduction and even if we reverted to the pre-2001 "marriage penalty," my wife and I will still file as such every year. But numbers don't lie.

Revenue gains as a result of the reduced rates on capital gains and dividends have eclipsed us poor middle-class schlubs and that's just a simple reflection of the obvious: the money is with the rich. While the top rates were not nearly so high in 2001 as they were 20 years earlier, there was still a significant amount of money in the economy locked up, doing nothing for anybody.

Democrats could do worse than to leave the marriage deduction and child tax-credits alone, the fact that they can't get past their populist inclinations to leave in-place investor-friendly tax policies demonstrates, yet again, that they don't get it.

Rather odd for a party that last captured the White House by telling us repeatedly how "It's the economy, stupid."

Doing your Civic Duty

Some are a bit more excited about paying taxes than you'd think they ought to be. Matt Stoller at MyDD relishes the opportunity:

I just paid my taxes, and I have to say, I always take pride when I do so. I don't like having less money to spend, of course, and the complexity of the process is really upsetting. But I am proud to pay for democracy, and I feel when I do send money to the DC Treasurer and the US Treasury that that is what I am doing. The right-wing likes to pretend as if taxes are a burden instead of the price of democracy. And I suppose, if you hate democracy, as the right-wing does, then taxes are the price for paying for something you really don't want. Personally, I find banking fees, high cable and internet charges, health care costs, and credit card hidden charges much more abrasive than taxes, because with those I'm just being ripped off to pay for someone's summer home.

Patriotism is about recognizing that we are all connected in a fundamental moral and physical sense, that the war in Iraq is our war, that poverty in New Orleans is our poverty, that public funding to cure cancer comes from each of us and not just the scientists who have made it theirs. The tax burden we face is a very small price to pay for the privilege of taking responsibility for our own freedom and our own society. And the hatred of taxes on the right comes from a hatred for this responsibility. It's childish and immoral and unAmerican.

Now, what is a problem is the complexity of our tax system. Complexity is a tool that powerful elites can and do use to intimidate and control people without access to capital and connections. With modern technology, there is just no reason for this complexity anymore except the business coalitions that push for specific tax breaks and the politicians who love them. This complexity not only upsets and disempowers people like us, it empowers the powerful to skip out on their tax burden.

It's not a coincidence that Grover Norquist, the architect of the right-wing ascension to power, runs an organization called Americans for Tax Reform. People like Norquist, who are charlatans at heart and deeply unpatriotic and immoral, use the complexity in the tax code that they help to create to persuade Americans that taxes are bad. This is also true in states all over the country, where it is the unpredictability of property tax burdens and not the amount that causes schools to go wanting for funding.

Our tax code is the DNA of our nation's moral compass. I am proud to pay taxes because I take pride in America, and paying some tiny burden to keep our society running is an extremely small price to pay for being able to call myself an American citizen. The old expression 'you get what you pay for' is apt for all sorts of situations. People tend to express what they value in how much they are willing to pay for it. I am willing and feel privileged for the right to pay for my country. The right-wing is embittered to do so, if they do so at all. And that, more than anything, says something about how much they value this experiment called America.

The comments are full of kind words for all of us who think Washington could curb it's income without threatening civilization as we know it. And that's fine.

They are entitled to grin madly while Uncle Sam screws 'em. Myself, I'll be laughing my right-wingnut, America-hating self all the way to the bank with sizable Federal and State refunds.

I guess that makes me a cheat!

The Tax Man

Over the last several years continuing to use our tax man has become too expensive. Not in tax preparation but in the mistakes made, things not filed and in [gulp] back-taxes.

So this year we went where none in our clan have gone before, plunking down hard-earned cash for some Tax prep software which instantly transformed me into the Tax man. That, aside from a nicely quiet Easter celebration, was the weekend.

Finished it all last night and if it's to be believed, the software programmers did something the accountant never could; produce a substantial Federal and State return. Of course, being taxed on sales commissions helps. As does seeing your itemized deductions grow substantially over last year courtesy of the Home Mortgage Interest on a ridiculous loan.

We'll see what the IRS has to say about it all a little later.