What is the difference between a taxidermist and the tax collector?

The taxidermist takes only your skin-

Mark Twain

Civic pride comes with a price tag. The cost of this civic pride differs from person to person. Although we all enjoy the same benefits of having a government working for us,  the difference in price  is due to a “tax bracket.”

In America there are six brackets and four categories. The categories are fair and recognize how families are changing in definition. The tax brackets it has been argued are unfair.

The 4 categories are;

1. Married filing jointly

2. Married filing separately

3. Single

4. Head of household

Within each category are 6 tax brackets.

Things look pretty dark for families filing taxes under the "Married and Filing Jointly" category!

Married filing jointly

(1) $0-$17,000                                     10%

(2) $17,000-$69,000                        15%

(3) $69,000-$139,350                       25%

(4) $139,350-$212-300                    28%

(5) $212,300-$379,150                     33%

(6) $379,150 –  +                                   35%

Married Filing Separately

(1) $0-$8,500                                        10%

(2) $8,500-$34,500                            15%

(3) $34,500-$69,675                          25%

(4) $69,675-$106,150                        28%

(5) $106,150 -$189,575                     33%

(6) $189,575   –  +                                   35%

Single

I'd be happy too if I filed under the "single" tax category!

(1) $0-$8,500                                        10%

(2) $8,500-$34,500                            15%

(3) $34,500-$83,600                        25%

(4) $83,600-$174,400                        28%

(5) $174,400-$379,150                    33%

(6) $379,150  –  +                                   35%

Head of Household

(1) $0-$12,150                                       10%

(2) $12,150-$46,250                            15%

(3) $46,250-119,400                           25%

(4) $119,400-193,350                         28%

(5) $193,350-$379,150                     33%

(6) $379,150 –  +                                   35%

I am no mathematician or tax lawyer or accountant, in fact I cringe when I think I have to deal with numbers. But when I look at these numbers I cringe twice as hard.

America’s definition of family is indeed changing, and I’m all for it. When you take into consideration how heavily taxed married people are in comparison to single people, it makes you wonder why people are still getting married. Even more respect is due to the gay community now for their desire to get married and have same sex unions recognized by the state. I know what you are thinking; What do same sex unions have in common with paying taxes?

Take a look at the category marked single and check out that figure beside (5). Now imagine that two people are not married and share the same house, file their taxes under “Single” and each one earns $379,100, less of course their 33% in taxes, they  now keep a grand total of $507,994.00

Let’s use the same number for a family of four, Dad earns $300,000 and Mom brings home $79,100 and they have to feed and clothe four, they have two kids! So the combined income for this family filing jointly is $379,100. They too pay the 33% taxes and are left with $253,997.00.

To the novice, namely me, the tax system is set up to punish married people and promotes living together. Financially it’s a better option. Sure we are allowed to use children as deductions and there are exemptions and adjustments, but hey, why have kids or get married if we can keep more money?

The way I see it, people who have kids should have tax breaks solely because we’re providing the next generation of tax payers! If we all boycotted birthing, where would the IRS be in 40 years time? Extinct.

Warren Buffet knows more about money and investments than I ever want to know. In his op-ed piece for the New York Times this American philanthropist, Industrialist and Investor argues for “shared sacrifice” and that the government should stop coddling the super rich. It is a notion that has not made him popular among his fellow billionaires.

“We mega-rich continue to get our extra-ordinary tax breaks,” Buffet said and added that the government allowed him and others like him to classify their income as “carried interest” thereby granting them a “bargain 15% tax rate.”

The IRS compiled data between 1992 and 2008 the article in the New York Times said, and the data revealed that a staggering 400 US citizens are reporting an average income of $227.4 million (yes that says ‘million’). Furthermore, that groups’ tax rate was reduced by 21.5% between 1992 and 2008. They now pay a tax rate of 7.7% according to the Buffet op-ed piece.

According to Buffet,

“Many wouldn’t mind being told to pay more in taxes as well, particularly when so many of their fellow citizens are suffering.”

Buffet suggests government do the following three things to level the tax rate playing field;

1. Pare down future promises that even a rich America can’t fulfill

2. Grant a 2% reduction to employee payroll taxes

3. Households making more than 1 million dollars per year (236,883 in 2009) raise rates on taxable income, dividends and capital gains. Households making 10 million or more (8,274 in 2009) should pay an additional increase in tax rates.

Buffet said, “It’s time for our Government to get serious about shared sacrifice.”

According to an editorial response in the Los Angeles Times it has been 25 years since the last “comprehensive overhaul in the US tax code.” (Reagan’s Reform Act of 1986)

“In the years since,” the article stated, “congress has drilled loopholes back into the code while lowering the tax burden for wealthy people who make money through investments rather than labor.”

This type of taxing system baffles me. Why tax the people who are employing people and keeping a population off social welfare? Do people who make money off investments contribute to society in this same way? Maybe some do, but how does making money on investments and capital gains keep someone else employed?

Not everyone embraces this idea of taxing the mega rich;

“For tax-raising advocates like Warren Buffett, I am sure Treasury would take a voluntary payment for deficit reduction,” said Senator John Cornyn (Republican -Texas)

California Republican Senator Doug LaMalfa  is  introducing a bill to add a line item on state tax forms which will allow people to voluntarily pay extra taxes.

“Under my legislation, folks like Warren Buffett can easily find a way to pay the additional taxes that they believe they should owe,” said LaMalfa.

The LA Times article concludes that most people would not pay voluntary taxes, “they already resent paying what they owe particularly when they disagree with how the government is spending it.” Doug LaMalfa knows this already.

In a final shot at LaMalfa the LA Times stated, “but like most bullies confronted with a powerful argument, they’d rather mock it rather than try to confront it.”

Next on the debating schedule in Washington is a 2% increase in all workers’ payroll taxes; Item number 2 on Buffet’s suggested “to do” list for Washington.

In a payroll tax break initiated by George W. Bush and with an expiration date of Jan 1st 2012, Republicans now argue in favor of  letting it expire, effectively raising the taxes that they so adamantly said they would not. The difference with this tax, it effects even the most lowly paid employees.

In an Associated Press article   GOP May OK Tax Increase that Obama Hopes to Block Charles Babington writes;

“At issue is a tax that the vast majority of workers pay, but many don’t recognize because they don’t read, or don’t understand their pay stubs. Workers normally pay 6.2 percent of their wages toward a tax designated for Social Security. Their employer pays an equal amount, for a total of 12.4 percent per worker.

As part of a bipartisan spending deal last December, Congress approved Obama’s request to reduce the workers’ share to 4.2 percent for one year; employers’ rate did not change. Obama wants Congress to extend the reduction for an additional year. If not, the rate will return to 6.2 percent on Jan. 1.”

“Not all tax relief is created equal for the purposes of helping to get the economy moving again.”  said Rep. Jeb Hensarling. The Texas lawmaker is on the House GOP leadership team.

Remember Leona Helmsley, no one could ever call her a liar.

At Helmsley’s trial for tax evasion a discharged housekeeper’s testimony stated that Helmsley claimed, “Only the little people pay taxes.”

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