Herman

Cain

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April 14, 2008

Tax Day Arrives; National Tax Insanity Continues

According to the Tax Foundation, tax freedom day is April 23 this year. That means it takes that long into the New Year for the average worker to earn enough money to pay his or her total tax bill for the year.

In other words, we are required to pay our taxes for 2007 by April 15^th even before we earn enough to pay them. If necessary, we can request a benevolent extension beyond April 15^th if our tax return is so complicated that we cannot gather all the documentation required in order to file on time.

That’ll be me and millions of other people because of the complexity of the current tax code, which necessitates hiring a professional tax person to calculate and fill out the forms for our taxes owed.

To encourage us to file and pay our tax bill on time, the federal government withholds money from our paychecks for estimated taxes based on the number of personal exemptions we expect to claim. And if they do not withhold enough money during the year, we are charged a penalty for not loaning the government enough of our money.

But if we loan the government more than enough to cover our tax bill for the previous year, they will send us a refund for the overpayment, but with no interest paid. Now here is the real stupid part.

Some people who get a refund think it’s a gift from the government.

(Insert preferred scream here!) It’s your money to begin with!

To add insult to insanity, the federal withholding of income taxes was passed in 1943, and was intended to be temporary until after the end of World War II. Sixty-five years later, we are still waiting.

The Social Security withholding started in 1935 at 3 percent of gross wages. It is now 12.4 percent of your gross wages, plus another 2.9 percent for Medicare, which combined is called FICA for a total of 15.3 percent. This is not enough for the Democrats in Congress, because they want to raise the salary cap for FICA taxes beyond the current $102,000 in annual income.

That means tax freedom day will come even later in the year, and the top 10 percent of earners – those making about $104,000 a year or more – will pay even more than the 70 percent of all income taxes that they pay now.

The amount of federal taxes we pay, the tax withholding scam, the FICA scheme, the AMT (alternative minimum tax) rip-off, sneak-a-taxes imbedded in the tax code and the income tax filing complexity all add up to one thing.

We have slowly and gradually been conditioned into perpetual tax insanity.

The laws of physics dictate that the only way to halt this momentum of insanity and stupidity is with an equally powerful opposing force. Namely, throw out the current tax code and start over. This not only can be done, it must be done.

The most likely solution is the Fair Tax – a federal retail sales tax that replaces the entire federal income and Social Security tax systems, including personal, gift, estate, capital gains, alternative minimum, Social Security/Medicare, self-employment and corporate taxes. The legislation has been introduced in Congress. It has a massive grassroots network of support, and a fledgling base of liberal opponents, which means it must be a good solution.

National tax insanity is contributing to the weakening of our economic infrastructure. Unlike our economic vulnerability to the world supply and demand of oil, we can do something about this tax insanity, but we have to demand it from Congress and the president.

If we do not, there will be a new short form in our future for filing taxes (as a listener of my radio show shared with me last week). It will have one question and one instruction.

How much did you make last year? Send it in!

We will not be laughing.

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