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15 April 2008

Taxman Shmaxman

The income tax has made more liars out of the American people than golf has.
- Will Rogers (1879 - 1935)

(sorry in advance to my international readers)

Hey, fellow Americans, have you filed your taxes yet?

If you're not in number overload, here are a few more numbers to chew on for the last day of tax filing for 2007:

  • 10% of us have trouble reading a calendar and will file for an extension. (Hint: April 15 comes at the exact same time every year.)
  • 10% of us wait until the last day, today, April 15th to file our taxes.
  • America's top 1% of all money makers - you know, the Grey Poupon folk - earn a whopping 21% of America's income pie. And for their trouble, Uncle Sam collects 39% of the nation's taxes from them too. All hail the middle class!
  • 140,188,000 hard working American citizens filed income tax returns last year and as measure of thanks, the IRS randomly audited 13,000 of us.

Last year (2007), the average refund was $2255 smackeroos. Which is groovy until you realize that the government was holding your overpayment and collecting interest on it while you collected zilch. Kind of like sticking 2 grand in a coffee can for a gets you nothing.

The government collects $2.5 TRILLION dollars in tax payments, with almost 1/2 of that coming from individual taxpayers like you and me. That is a lot of .10 cent beers, fer sure.

But, each year, the IRS fails to collect - wait, are you sitting down? - $346 BILLION bones. Presumably, that is money that the tax cheats under-report or otherwise bilk our system out of receiving. Be assured though, that those same tax cheats are first in line to complain about demanding services from our government that are provided by those very same dollars. Irony knows no limits.

So let's break that down further....

  • If the US actually collected that money instead, it would offset the federal cost (state and local cost is extra) each year of the 37 million immigrants (legal and criminal/illegal) being in the United States. For the over 12 million criminal/illegal aliens alone, that is nearly $3000 per illegal, per year that could be better spent (if collected that is!). [A balanced and eye opening series on our country's immigration challenges is coming soon to Daddios Daily Dose. Be sure to sign up to be alerted when it is published].
  • $346 Billion would pay the interest payment (oh no, not principal, just interest) - for one year - on our nation's growing debt.
  • $346 Billion would pay for a year's worth of exports from Taiwan to the US, China, Japan and Europe. Yep, a flat panel TV for everyone!
  • $346 Billion is equal to the country of Norway's Oil Heritage Fund - which is no small matter since Norway is the world's third largest oil exporter behind Russia and Saudi Arabia. Norway is also the 5th richest country in the world (USA is 9th) per capita and has a flourishing economy because it invests its oil revenues and supports its home economy with the earnings. Hmmm.

Then there's this:

There is growing support for an alternative tax system called the Fair Tax. You might want to sit back down because the simplicity may otherwise blow you over. Under the proposed Fair Tax model:

We don't pay taxes on what we make, only what we spend. Ergo, we collect our entire paycheck and would pay approximately 23% tax on what we buy, like a gallon of milk. If you have your own cow, your calcium is tax free. :)

And then we get to spend tax day having a cocktail with a little umbrella in it with our friends and family instead of fretting over each deductible, complex tax form and new fangled regulation.

Under the Fair Tax, the government still gets their money as usual. They just wouldn't have to spend the estimated $265 Billion dollars per year in compliance costs to collect taxes under the current IRS system.

Interested readers can go here to learn more.

So, the economic babble for today must come to a close. I gotta go file my taxes....

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