Decibel (decibel45) wrote,
Decibel
decibel45

Record tax income in April...

My Aunt recently sent me this tidbitCollapse )

(I believe that's from the Wall Street Journal).

I started emailing a reply, but I thought instead I'll put it in a blog post:

Wow, funny how the major media seems to have largely missed this story. Searching for "april tax receipts" in Google provided a number of news links.

Interestingly, this has also occurred in Pakistan: http://lnk.nu/brecorder.com/elq.php I suspect we'll see more of that as technology work becomes more global in nature.

I'd be much happier if instead of record taxation we had record spending cuts. Perhaps that would push tax freedom day closer to March rather than nearly into May: http://www.taxfoundation.org/taxfreedomday/

This revenue boom certainly casts doubt on the political wails about tax loopholes for the rich. So far this year, the taxes paid on so-called nonwithheld income, which are dollars that don't come from normal wages and salaries, have climbed by nearly 30%. This is income largely derived from capital gains, dividends and other investment sources -- i.e., the tax rates that President Bush cut in 2003. Individual income taxes are also up by 17.5% -- a handsome fiscal dividend from rising wages and low unemployment.


Or perhaps the loophole is just getting smaller... http://www.washingtonpost.com/wp-dyn/content/article/2005/05/04/AR2005050402134.html "Taxpayers were confronted with unexpected tax bills, many from capital gains and the alternative minimum tax, a parallel income tax system designed to hit the rich but that is increasingly pinching the middle class."

Politics aside, the problem with the AMT (as well as much of the rest of the tax code) is that it's tied to hard dollar amounts. When it was enacted in 1970 the intent was to target 155 households (no, that's not a typo) that had become eligible for so many tax benefits that they owed next to nothing. (From http://en.wikipedia.org/wiki/Alternative_Minimum_Tax)

So clearly this was targeted at the ultra, ultra rich. Think Bill Gates, Warren Buffet, or the Walton family (aka: Wallmart) in todays terms. But according to the Congressional Budget Office, in 2010 one in five taxpayers will have to pay AMT. I'm pretty sure that I'll fall into it this year, but what's most disturbing to me is that "nearly every married taxpayer with income between $100k and $500k will owe". $100k may sound like a lot, but if both parents are working it's very easy to hit that.

Of course, if we're serious about closing loopholes then we should be looking at something like the FairTax (http://fairtax.org), which replaces the IRS, personal and corporate income tax, gift, estate, capital gains, AMT, sosial security, medicare and self-employment taxes with a simple sales tax. How high a sales tax? 23% Sounds like a lot? Consider this: the lowest federal income tax bracket is 15%, and on top of that everyone pays 7.65% for FICA and Medicare. That's 23% right there. Now consider that employers have to match that 7.65%. And if you're lucky and make enough to push you out of the 15% tax bracket? Oh, and because the FairTax is a sales tax in order to truly equate it, you'd have to spend 100% of your income.

NOTE: With the stock market hitting new highs and the interest rates staying steady, the 1% federal deficit will soon disappear unless we are dumb enough to elect Dems. In my life time we never had it so good even during the tech bubble in the late '90s.


Well, I don't know who wrote that note, but if you look at the national debt, we've never had it so bad in my lifetime: http://zfacts.com/p/318.html

If you want to draw partisan conclusions from that, then it seems that modern-day republicans are not who we want to be looking to in order to reduce our debt. And reducing that debt is becoming more and more important; in FY2006 we spent $406B on interest alone. Compare that to $520B in DOD spending.. and $61B on education. http://www.federalbudget.com/

All the talk we hear about approvals for spending in Iraq? According to http://zfacts.com/p/447.html , the *entire* war in Iraq has cost $392B... which means that we could have paid for the entire 4+ year war with what we would have saved on interest in 2006 if we didn't have a debt.
Tags: politics tax
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