Source: Orange County Register
It’s Tax Time. No, not April 15, when your income taxes are due. Instead, April 24, the point on the calendar this year when Americans begin working for themselves, not for the government.
April 24 is, on average, the date by which Americans will have earned enough to pay their total annual tax burden. If you don’t think of it as a burden, consider that it’s 114 days into the year before you can call what you earn your own. Up to then, it all belongs to the government.
Then remember this: April 24 is the average. Roughly half of us continue working for the government beyond that date.
If it still doesn’t seem burdensome, consider that the $4.8 trillion collected in taxes is more than Americans spend on food. And clothing. And housing. Combined.
Feeling burdened yet?
Pew Research Center reports that 59 percent of Americans support “completely changing” the federal tax system, which this year accounts for $3.3 trillion of the $4.8 trillion collected nationwide. Any guesses what percentage of tax-collecting politicians feel the same?
Maybe you still don’t feel burdened. Consider this: Apple is borrowing $6.5 billion by selling bonds, the fourth time it has borrowed through bond sales since 2013. Is Apple short of cash? Why else go into hock to expand and operate?
Apple has $178 billion in cash. So, why incur added expense? Because it’s cheaper for Apple to pay interest on billions of borrowed dollars than spend its own money – because of taxes.
Most of Apple’s cash is kept offshore to avoid U.S. taxes. If that money were brought home to Cupertino to spend, Apple would be taxed up to 35 percent on it.
Wouldn’t you borrow money at less than 2 percent interest rather than bring home your cash stash and pay 35 percent tax on it?
Feeling burdened yet?
Maybe you don’t identify with big corporations. Maybe you want the government to soak the rich. Doesn’t that just redistribute wealth to the less-fortunate? Not exactly.
President Barack Obama’s 2016 budget would increase capital-gains taxes to 28 percent for couples earning at least $500,000 to raise $208 billion over 10 years. (Just what a government that can’t control its spending needs – more money to spend. But we digress.)
If the capital-gains tax is increased from its current 20 percent to 28 percent, a couple earning more than $500,000 a year who has accumulated an 8 percent capital gain and 3 percent dividend after one year would have a combined pretax return of 11 percent.
Paying the current 20 percent capital gains tax plus the 3.8 percent Medicare tax, a $50,000 stock sale would create a $1,309 tax bill, reducing their return to 8.4 percent. If Obama’s higher capital-gains and dividends rate of 28 percent becomes law, their tax bill would increase to $1,749, a 7.5 percent return after taxes.
According to Pam Villarreal of the National Center for Policy Analysis, if dividends were taxed at the ordinary income tax rate of 39.6 percent, the couple’s effective average tax rate would soar from 29 percent to nearly 35 percent, reducing their return on investment to 7.2 percent.
Taxes on capital gains don’t only affect the wealthy. They punish everyone at any income level who needs access to their money, as do all taxes. Ask Apple.
At what point is enough enough?
We’re not there yet. Two years ago, Obama imposed the largest tax increase in U.S. history. He’s proposing another $1.44 trillion tax increase over a decade starting in 2016. This comes in addition to 13 new and increased taxes thanks to Obamacare, which we were assured wasn’t a tax. Pickpockets rarely tell you in advance what they intend to do.
Con men never tell you the truth. It’s commonplace to demand oil companies “pay their fair share” because they allegedly make “excessive profits.”
The oil industry makes about 25 cents profit per gallon of gasoline. State and federal governments take an average of 57 cents per gallon in taxes on each gallon; 70 cents in New York.
When government’s portion of a business’s revenue is greater than the owner’s portion, it effectively ceases being a private company. It’s a government company.
If this grim reality still doesn’t leave you feeling burdened, let’s talk morality instead of economics.
A system that deems what you earn automatically belongs to someone else is the same logic thieves use.
At least, people forcing you to pay them your money or face jail should have the courtesy to answer the phone when you have questions. Nope.
The National Taxpayer Advocate service discovered what taxpayers already knew: IRS’ customer service stinks.
Apart from 30-minute hold times, and inability to answer tax questions, “The IRS is unlikely to answer even half the telephone calls it receives,” says the Taxpayer Advocate.
The IRS has a solution: more taxes. Surprised?