Tag Archives: irs

Thoughtful Thursday – The Tax Man Cometh

It’s that time of year most of us dread – Tax Day! So for today, some interesting facts about taxes.

In 1861, Congress passed the “first” tax on personal income to fund the costs of the Civil War. When the war ended, the tax was repealed. (For a history of the U.S. tax system, you can read this article on Tax History at the Treasury Department.) To cope with the costs of World War I, the personal income tax was brought back and it was all downhill from there.

According to Rasmussen Reports, 61% of Americans believe cutting taxes will help the economy and 66% think that Americans are overtaxed.

Kiplinger analyzed tax burdens and reports that, “the top 1% (of Americans) pay 39.89% of all federal individual income taxes. The bottom 50% of earners pay just 2.99% of those taxes.” The top 10% (those earning more than $108905 or more) bear 71% of the tax burden (also from Kiplingers).

41% of New Yorkers did not pay federal taxes last year reports the NY Post. Now this is depressing not because they did not pay taxes, but because in a state with the world’s financial center – New York City – there should be more prosperity.

The Tax Foundation did its annual calculations and indicated that most Americans will work over three months, from January 1 to April 9 before they have earned enough money to pay this year’s taxes. In New Jersey, we get to work an additional 16 days — until April 25 — to pay all those taxes. Thanks, Corzine!

So what’s the average person supposed to do?

As the old saying goes, there are two things in life you cannot avoid — Death and Taxes. Ask Al Capone. Tax evasion did him in!

But on that note, wasn’t it John Kennedy who said:

“As they say on my own Cape Cod, a rising tide lifts all the boats. And a partnership, by definition, serves both partners, without domination or unfair advantage.”
1963 J. F. Kennedy Address 25 June in Public Papers of Presidents of U.S. (1964) 519 from Answers.com

Hmmm . . . maybe the Tax Man should Cometh a little less? Or at least leave some change in our pockets? LOL! Since that seems unlikely in the near future, how about taking advantage of some of these Tax Day Freebies being offered to take the sting out of things? Click on this link to find out how to get free and/or reduced specials at Starbucks, Maggie Moos, Cinnabon, McCormick & Schmicks and others.

Al Capone Mug Shot taken by the Department of Justice when Al went to Alcatraz for a 10 year term for Tax Evasion
Al Capone Mug Shot from Dept of Justice

Thoughtful Thursday – Dying and Paying Taxes

taxesI think you know that old saying that goes: There are only two things you have to do – die and pay taxes.

Unfortunately, it seems that the paying taxes part only applies to you and me while some people are able to make “careless mistakes”.

Case in point — Our new Secretary of the Treasury Timothy Geithner who said he hadn’t paid some taxes on time due to “careless mistakes.” According to an article in The Guardian, after a 2006 audit Geithner paid arrears on his 2003 and 2004 returns, but not immediately on his 2001 and 2002 returns. Apparently the three year statute of limitations had run on those. He did eventually pay them — after his nomination to the post.

Hmm . . . Does that mean that if he hadn’t been nominated he wouldn’t have paid them? What do you think?

I recall the IRS sending letters to my daughter when a math error meant she owed them like 5 dollars. The letter came with all kinds of dire warnings about what would be done if the 5 dollars and interest wasn’t paid on time.

So how is it some people get away with not paying thousands? Do you wonder how this happens?

Let me know what you think about the U.S. tax system or your own tax situation if you are not in the U.S. I know that many of you in other countries pay even higher taxes.