Taxbusters

“‘Tis impossible to be sure of any thing but Death and Taxes,” from Christopher Bullock, The Cobler of Preston (1716).

 Ted! Annette! I'm glad you could come, how you doin', give me your coats. Everybody, this is Ted and Annette Fleming! Ted has a small carpet cleaning business in receivership; Annette's drawing a salary from a deferred bonus from two years ago! They got fifteen thousand left on the house at eight percent. 

Louis Tully-Ghostbusters

Our Blog gets off the Karma stuff (well mostly)and moves on to a discussion on taxes, specifically the US Federal Income tax “system”.  Subsequent posts may get into other federal payroll taxes like Social Security, and Medicare. I may also touch on other taxes like State Taxes, sales taxes and property taxes.  Since so much of the Federal Tax system funds entitlements, and since parts of the Federal Income Tax system are actual entitlements in the form of tax credits I will touch on these as well (from personal experience).  This all may become a hodgepodge but then so is our tax system.

Why am I sharing my first “opinion” piece with taxes?  I profess no special expertise on our tax code.  Like Ted and Annette in Ghostbusters we have utilized a Tax Accountant since about 1998 (a small one person shop in Berwyn PA, we even share Personal Christmas Cards now!)  I will tell you that he is the most honest person you could find.  We have always played tax filings right down the middle, utilizing each deduction available but never doing anything not supported by hard facts and backup and obviously legal.  So why should my opinion on Income Taxes Matter? Well in an attempt to keep this introduction brief let me tell you very quickly that Barbara and I are now inadvertent experts at the whole tax income system in fact for the last few years are Tax Burden has been incredibly low in our opinion.  The last several years (say since 2011) it has been running between 5% or 10% of our income. Now before raising your eye brows between 2001 and 2009 it was incredibly high in my opinion running between 30% and 35% of our income and almost 50% when state taxes, city taxes and payroll taxes are included, I promise more on my feelings on that on a future post. However, I have become incensed by our tax system this year so much so it was the impetus to doing this blog.  Why? Well we recently refiled our 2014 Tax return and here is a quick 5,000 Foot Summary. 

  

Our original 2014 filing had a Tax Liability of $2,680.  When we refiled our tax liability for 2014 was $4,323.  Sounds like my complaint is a little off base,  OK it gets better.  How many of you have heard of TAA? (from Wikipedia please go on and read more about it if you would like!)

Trade Adjustment Assistance (TAA) is a federal program of the United States government to act as a way to reduce the damaging impact of imports felt by certain sectors of the U.S. economy. The current structure features four components of Trade Adjustment Assistance: for workers, firms, farmers, and communities. Each cabinet-level department was tasked with a different sector of the overall Trade Adjustment Assistance program. The program for workers is the largest, and administered by the U.S. Department of Labor. The program for farmers is administered by the U.S. Department of Agriculture, and the firms and communities programs are administered by the U.S. Department of Commerce.

As I read this I am reminded of Miracle on 34^th Street again when John Payne started reading off facts about the US Postal Service to the judge.

Ah but your question might well be, “Jim how has the damaging impact of Trade Imports hit you and Barbara? Did the price of an imported ACURA go up??? What “damages” did you suffer up in Vermont?”  More importantly what on earth does this have to do with your taxes??

Well according to the IRS “damages” to us were $10,140 in 2014 alone.  By Tax Code this was to be given to us as a Tax Credit on my 2014 taxes (oh and guess what I got it with interest because our Republican Congress and Democratic President did not “reapprove” and fund the details until June 2016!)

So readers, the Bottom Line you US Taxpayers gave us a tax credit of: $10,140 on a Tax Liability of $4,323.  So while my “Taxes Paid” ended up to be $4,323, and when the IRS reports to congress etc. my taxes paid would be a debit of $4,32, on a different report my credits from all other taxpayers was $10,140.  I will let you do the math but suffice to say for year 2014 we joined the 47% “takers” that Mitt Romney referenced in his little talk in 2012. I must say it was very helpful to get a check to cover our taxes and put over $5,000 in our pocket this year. Our move to Utah came with a bunch of unexpected costs so maybe this is just Karmic Justice.  However since 2011 we have gotten credits totaling over $45,000 by our Federal Government but 2014 was the first year we got credits exceeding Tax Liability.  While I had been getting this “benefit” for several years this last filing really incensed me about our tax system.  It is a bloated hodgepodge of incentives and disincentives cobbled together in back room meetings for the last 100 years.      

I have decided to try to get some more “suspense” and ongoing interest to my Blog so I am going to make this an ongoing commentary for the next week or so.  My next Blog Post will explain how a poor retiree and his wife in Stowe gets a check for a program originally designed to help workers displaced by foreign competition,  A couple of you already have heard from me verbally on this TAA thing back as early as 2013.  A few of you asked “how can you do that”?  My good friend, Steve Clark (that guy from Liberty} probably already smells some nefarious AIG Link (he actually has more details because I told him about this program a few years ago).  His Blog comment hinted he is looking for some Tax Credits and my guess is he knew this was coming.

I will end here then with a few questions for all readers- a little poll if you will.  I hope at least some of you will share honest thoughts on this specifically no matter your political stripe.  Question number 1 is also framed out in a simple “click” gadget your answer there is anonymous (unless the Russians hacked us!).

1.      Just to use nice even numbers what do you think a married Couple, no dependents, with income of say 100,000 per year should contribute as a % of their income supporting our country?  Forget for a moment the ins and outs of the Tax code and for forget where and how it ends up being spent.  Just assume you had a competent government providing the services and protection we need as a country.   I believe that our tax code is so screwed up that it is “unfixable”. Just tell me what you think a reasonable amount would be?

2.     If you “think” you are paying less than your fair share, is there a moral responsibility not to follow the Tax Code?  For example if I think 15% is the right number for number 1 should Barbara and I stop taking mortgage interest deductions, energy tax credits, charitable deductions, state tax deductions etc. (or any combination of these things) until we hit the “moral” high ground (if there is one).  I think you can see where I am going with that question.  We think that getting TAA assistance is stupid in our case but as I will discuss next time we are following clear and simple guidelines that we have been advised by a government agency to follow.

3.     Should I not have refiled my taxes to get this benefit?  Should I not have taken this same credit that I have been taking (different dollar amounts) since 2011?

4.     The credit ends for us in 2016 and in my next post I will point out how that is evidence of how crazy tax legislation is.  Of course we thought it ended in 2014 until I was notified by a government agency that the bill was re upped in June of 2016 retroactive to its discontinuance at the end of 2013, but who knows??

5.     Finally should I continue to fight Vermont over a $17.00 penalty for not filing 2014 correctly the first time (since I had to refile the Fed Tax due to a retroactive law and Vermont then requires me to refile theirs!).  I have paid them ADDITIONAL Vermont taxes and about $70 dollars in interest already since my refiled return lowered my deductions and raised my taxable income, mull that over!) but disagreed with the penalty.  They have not yet ruled and advised me for third time that this matter still hangs over our head.  I look at this as a matter of principle!  After all Bernie, Leahy etc. all were parties to this delay.

I would hope to get some feedback from at least a few of you before I continue.  This just might lead us down some very interesting discussions on any number of issues.

Until next time adieu!

Jim