Monday, July 4, 2011 by Dick.

Editor’s Note: This column is the second in my three-part series on taxes; it appeared in the Burlington Free Press in 1996. I have not updated the numbers.

I have met many people who think paying taxes is fair. I have met even more who think our current tax system is unfair.

Taxes on earned income are the most equitable way to raise revenue. Our income comes from our productivity: make a widget, sell the widget, get paid. Taxing land, cars, stock certificates, machinery, bank franchises, electric energy, and insurance is an artificial method to sneak money out of your wallet. Current tax laws do all that and more.

Politicians have made the flat tax this year’s buzz word. Unfortunately, these same representatives just passed the 12th “short term” spending resolution, instead of working on substantive tax reform.

I have long admired the flat tax in principle; in practice it has the potential for burdening the low income taxpayers who today pay little or no taxes and for hammering the middle class taxpayers who pay most of the bills.

We need four canons to make a flat tax work fairly:

• Every wage earner pays a small percentage of his income as tax; income includes interest and capital gains but not dividends.
• Every wage earner files an income tax return.
• Every wage earner gets a substantial “personal deduction” and no other discounts.
• Every wage earner pays a different percentage of any remaining income as tax.

Every citizen owns a piece of the federal government and each of us has a responsibility for its good operation. Let’s set a figure of 4% of income as the minimum cost of governance. Everybody pays that, regardless of their [dire or rosy] straits.

Obliterate the married/single/household head categories. That simplifies our calculations, eliminates all discussion of the “marriage penalty,” and assures we each file a return.

We ought not tax a wage earner for the cost of creating that income. That means we should exempt some common amount for basic shelter, food, and commuting costs but not spare any other expenses. Let us remember that the current tax code grew out of a fairly simple system. Once upon a time, our income tax taxed income; then the politicians and special interest groups changed the code to foster social change. Want everyone to buy a home? Grant a mortgage deduction. Need more babies to work the fields or factories? Create an exemption for kids. Need to work those oil wells? Concoct a depletion allowance. Make the personal deduction $21,500.

After deducting that $21,500 from your paycheck, pay an additional 24% percent on whatever is left.

If you earn less than $21,500, you owe 4% of what you made. Period. If you earn more, the flat tax percentage assures you will pay a little less than today’s tax schedule demands.

“But wait!” you say. “Gomer Gotrocks netted half a million last year. The tax table says he owes $145,072 but under your plan he’ll pay $29,372 less in taxes. He’ll save more than I make in a year!”

Reality check. Anyone clearing half a million a year can find $100,000 in effortless deductions today. With those “small” deductions, the tax table says Gomer now owes only $114,072. That’s a wee bit less than the expected $115,700 flat tax on his half million. Now imagine this dream in living color; Gomer can actually find a lot more than $100,000 to subtract today.

This plan gives folks earning under $8,800 a small financial stake in governance for the first time. It also makes taxpayers earning between $40,000 and $65,000 and those earning over $200,000 pay a little more.

We may have to fiddle with the percentages and deduction. My rates and deductible may not produce enough revenue to run Washington. If that’s true, we have two choices: (1) change the tax rate or the deductible, or (2) put Washington on a diet.

Posted in Taxed Again, Random Access | 3 Comments »

Thursday, June 23, 2011 by Dick.

Again. The Obamanation announced it will release 30 million barrels of oil from the strategic reserves and has another 30 million barrels pledged by our energy partners. Two million barrels per day for a month. And they can do it again next month and the month after if prices don’t drop enough.

It is to “make up for Libyan oil,” administration officials say.

Bwahahahahahahahahah hah ha. And hah.

It’s not a hail Mary to jumpstart the economy.

It’s not to fill in the gaps in our oil supply. There is plenty of oil.

It’s not even to ease the summer driving season.

But it is to drive speculators out of the market. See, if the price at the pump drops for 90 days, the third quarter Cost of Living calculations look flat again.

At the beginning of June, I said the Obamanation would try to get gas prices down to $2.47/gallon for July, August, and September, the “window” for Social Security’s 2012 COLA calculations. Artificial Cost of Living Adjustments are a free tax on the back of American seniors and the gummint needs more money. Way to go, Mr. Obama.

Posted in Taxed Again, Throw Da Bums Out, Seasonal, Politics & News, Random Access | 3 Comments »

Thursday, June 9, 2011 by Dick.

General Motors CEO Dan Akerson has drunk the Kool-Aid. Mr. Akerson called for a $1 a gallon higher gas tax to get us to buy more fuel efficient cars. Mr. Obama’s man using tax to force social change. Imagine that.

It’s what you get when business becomes an arm of (and mouthpiece for) government instead of government becoming an arm of (and mouthpiece for) We the Overtaxed People.

Posted in Taxed Again, Government Motors, Dick's Dumps | 3 Comments »

Saturday, April 30, 2011 by Dick.

“At a time of high gas prices and massive oil industry profits,” Mr. Obama has renewed “his call to end the $4 billion-per-year subsidies for oil and gas companies and invest in clean energy.”

Let us remember that the heavy “subsidies” are actually the tax breaks they get at virtually every stage of the exploration and extraction process rather than cash the taxpayer hands them at the pump. It’s also worth remembering that the oil business just happens to invest more in “clean” energy than any other industry.

Americans consume about 322 billion gallons of crude oil each year. Some of that goes to plastics. Some goes up the smokestacks heating our homes and making electricity. And about half, 146 billion gallons, is gasoline.

Oil producers pay on the order of $90 billion in income taxes each year and, in fact, pay a higher percentage of their earnings in taxes than most other American corporations. Obama wants to take $4 billion more in taxes from them. That translates to around 1.4 cents per gallon of crude or, if you want to assess it all on gasoline, about 2.7 cents per gallon at the pump.

2.7 cents per gallon.

Speaking of the pump, We the Overtaxed People pay 18.4 cents per gallon in Federal tax on gasoline so that not-quite-3 cents is really coming from our driving.

Do you think Mr. Obama will drive the price at the pump down or up?

And do you really think Mr. Obama has an energy policy here or a political platform?

In the interests of full disclosure (regular readers know this), I do own ExxonMobil stock. I remain disappointed in their performance. I dislike subsidies but I despise political poseurs.

Posted in Taxed Again, Throw Da Bums Out, Politics & News, Random Access | 3 Comments »

Monday, April 18, 2011 by Dick.

Like millions of Americans (except Rufus), I used tax preparation software again this year. Rufus is about the only individual filer I know who uses a computer and who does his taxes in a spreadsheet.

Like millions of Americans (except Rufus), I wanted to “click here” and have a finished return print out with the stamp(s) already attached.

Sigh.

I don’t much like Intuit’s Tubbo™ Tax™. I’ve had years of experience trying to get that program to manage my not-very-complicated mix of a couple of small businesses and some 1099s from Charles Schwab, a brokerage house of which neither Intuit nor H&R Block has heard. I decided to try the other guys this year.

Yup, I bought into H&R Block At Home™. Deluxe.

Mr. Block will be history here in No Puffin in 2011.

My first run through, it gave me twice the mortgage interest deduction I had entered. I’m sure I made a mistake by putting it in twice, but I have no idea where. I burned down that return and started over using the tax-software-for-dummies interview exclusively.

“That is the problem with these freakin’ programs,” Rufus said. “They presume you have no idea what you are doing (or that you know the software intimately.)”

When I assumed I knew what I was doing, Mr. Block said I would owe a few grand more in taxes than I had already paid in. That was also when I saw Mr. Block had doubled the declarable mortgage interest I claimed.

Time passes.

The time came to checkprint the Vermont return (”full return for filing” the Blockheads call it). Mr. Block did not print the three Vermont homestead claim forms. Vermont has those forms online as PDFs, fortunately, because nobody mails tax booklets any more. Unfortunately, all I can do is print them and fill them out by hand.

Transferring all the appropriate figures from one form to the next (which is why we all buy tax software) and doing the calculations (which is why we all buy tax software) is all on me.

By hand.

!@#$%^ Blockheads.

I don’t care how much trouble Tubbo gave me, at least it printed all the freaking forms I need.

The very nice overseas tech support girl said, “First I want you to reinstall Windows…”

Actually, she sent me a link to download a new copy of the program. Yes, they wanted me to uninstall my current copy of H&R Block At Home™ and install the new copy. As expected, the new copy of the program comes with exactly the same state feature as the purchased CD has, meaning that after I install it, I must then download the Vermont files from exactly the same place I got them last time.

!@#$%^ Blockheads.

So I uninstalled the old version and installed the new one. The uninstall apparently did not remove the registry entries because it knew just where I had left all the data files.

Time passes.

Mr. Block includes an Error Check. It found a bunch, many related to Copy 9 of the Vehicle Worksheet for which the program couldn’t figure out in which Schedule C it belonged. Their Forms Central display is so crammed together that I simply can’t tell what data it has, let alone where it belongs.

Time to checkprint the Vermont return. Again. Everything is still smushed together.

Mr. Block has a nice online forum with bonafide tax experts just moments away to answer your pressing tax questions in real time. I posted as “Disappointed User” yesterday evening.

“Q: This program won’t print anything but squeezed together ‘Not For Filing’ pages.”

Mr. Block answered my question this morning at 4:39 ayem through Kathleen Drenzek, Master Tax Advisor and Enrolled Agent who wrote: “Disappointed, did you try rebooting your computer to see it that works. Or call tech support at 1-800-HRBLOCK.”

Another happy user worried about this:

“Q: software is telling me I sent my tax estimate late and owe a fee- but in RI we got an extension last year. What to do?”

Jayant Kanitkar, Master Tax Advisor and Enrolled Agent wrote: “If you believe otherwise, pay only the amount due.” What, is he nuts?

I think I did resolve the smushy question. When it prints its “mini worksheets,” it sends out the smushed up text you see in the example. When it print the return forms alone, they appear to come out fine.

OK, sort of fine. It is still printing three blank copies of Form 4562-page 1, but I can simply throw those away. And it keeps putting xxxxxxxxxxxxx in for the bank account number. Means no e-filing for me, though.

Looks like I cannot use even the one form TaxCut DID print. Here’s the word from the Vermont Tax Department:

FORMS THAT CANNOT BE PROCESSED
If your filing is not acceptable for our processing equipment, the Department may send your filing back to you… The Department may also transfer your filing information onto acceptable forms but you can be assessed a $25 processing fee that partially covers the costs of transferring the information. Examples of unacceptable filings are: forms marked “draft”, forms not pre-approved by the Department, photocopies of forms, faxed forms, writing in other than blue or black ink, and mixing computer generated forms with forms printed by the Department.

This software used to be called TaxCut but H&R Block wanted to leverage their own name to boost sales.
Why?

If this were my program, I’d never put my name on it. I might call it Rufus’ TaxCut. Anything but Dick’s Own Software.

Despite all that, I made the trip to the post office today. All three returns are in the mail at a cost of only three Forever stamps and two additional ounces at the new-today rate.

I wonder if the IRS shares DNA samples collected today with other agencies.

Posted in Taxed Again, Tech Toys, Random Access | 6 Comments »

Monday, March 7, 2011 by Dick.

But did anybody listen? Nooooooooooooooooo.

And so it begins: Vermont Governor Peter Shumlin has proposed a budget for the new year. Gov. Shumlin is a “Big-D” Demorat but one who won’t raise taxes. Gov. Shumlin’s budget increases the provider tax on Vermont’s hospitals by $17.4 million.

A “provider tax” ain’t a real tax, right?

The gov says this increase will simply “maximize the draw down” of matching Federal Medicaid dollars to help fill the State’s budget shortfall. It will tax hospitals, physicians, Home Health Agencies, and pretty much any other healthcare providers. Probably even WalMart because they (used to be able to) sell prescriptions for $4 which makes them a provider.

“Hey, Dick! I get my scrips from Wally now,” Raul Garcia told me. “Did you know that some of the stores charge me sales tax on them some of the time. Some don’t.” Mr. Garcia is North Puffin’s best known hypochondriac and was our most respected grant writer until that little trouble with the Feds. He ended up serving 18 months of a four year sentence for fraud after he used the $4 million he “borrowed” from a major pharmaceutical company as the matching funds for an $8 million corporate gene splicing study at North Puffin College of Veterinary Medicine. The Pharma got their “investment” back when the grant came in. It wasn’t the first time. Even so, he says he has not yet determined which phase of the Moon determines the sales tax boondoggle.

Back on point. Northwestern Medical Center is a small, friendly, not-for-profit, hospital in St. Albans, Vermont. In the interest of full disclosure, I served on the Board of Incorporators for NMC for more than a decade. This regional, primary care facility offers a broad range of high-tech medical equipment and services to the area.

For that one local hospital’s privately insured patients, the added tax means sharing an increase of $350,000 in tax expense alone in the coming year. Yeppers, ObamaCare is gonna reduce the cost of medicine.

And Gov. Shumlin is right at the forefront of that reduction. Newspeak. Word.

No small town hospital is more vital to the community and none is better liked. NMC has earned national Avatar awards for the last three years for patient satisfaction but that’s just part of the story. They sponsor local events like the ArTrain and the Summer Sounds concert series. They field teams for the United Way. And 600 of our friends and neighbors work there.

The original St. Albans Hospital was built in 1883. It has grown and morphed from two hospitals into one that now cares for 1,900 inpatients each year. The E.R. sees over 28,000 emergency patients and 7,000 people already walk in to the new Walk-In Clinic in Georgia each year. 400 babies arrive via storks at the Family Birth Center. That all adds up to more than $129 million of patient care each year.

Gov. Shumlin “proposes to increase the tax assessed on hospitals by $17.4 million from 2011. This increase will be used to draw down Federal funds to help address the State budget shortfall,” NMC Chief Executive Officer Jill Bowen told the St. Albans Messenger. “However, the State no longer returns the provider tax to the hospitals in full after it has secured the matching funds.”

In case you missed it, the State of Vermont told the Feds they took in beaucoup bucks as matching funds to increase the “grant” money funneled back to the state. Then the State of Vermont gave most of those beaucoup bucks back to the hospitals.

“Hey, Dick?” Raoul Garcia said. “Isn’t that what I went to jail for?”

Posted in Taxed Again, ShumpleCare, ObamaCare, Throw Da Bums Out, Politics & News, Society, Random Access | 2 Comments »