Posts Tagged ‘Taxes’

Seven Myths about Taxes for April 15th

1.) I didn’t pay any taxes this year! This irritating myth, often uttered around in early April, stems from a confusion between one?s tax burden throughout the year and any additional taxes one must pay by April 15th if they didn’t pay enough earlier in the year. I didn’t pay usually means I didn’t have to pay any more to Uncle Sam on Tax Day.

2.) No, I really didn’t have a tax burden this year! That’s certainly possible. Many lower-income and lower-middle class folk don’t pay federal income taxes especially if they have children. Federal income taxes are paid almost exclusively by those in the upper half of earned income. But that’s at the Federal level. What about state and local income taxes? In Indiana and Kentucky, many hard-working people in the lower income brackets have to cough up money to support state government including many below the poverty line.

3.) No, I didn’t pay any state or local income taxes either. Well, you don’t make much money then! In any case, you still paid a significant tax on your income?through the payroll taxes for Social Security and Medicare. No wage income is exempted and there are no deductions, so the 15.3% flat tax is applied to every dollar you earn (up to a cap of nearly $94,200 in 2006). About 80% of wage earners lose more to this tax on income than its far more famous cousin, the income tax.

4.) OK, but the employer pays half of that tax, right? Not quite. Firms are often able to shift the burden of taxation. Who do you think pays the tax on gasoline? The tax is imposed on firms and they cut a check to the government, but they easily pass on that burden to consumers through higher prices. In a similar manner, firms pass on the cost of the Social Security tax to workers through lower wages.

5.) Well, at least the corporations are paying their share. Yes and no. Again, companies will pass the burden to consumers as much as the market allows. Beyond that, a corporation is made up of people so the extent to which the burden remains with the firm, it will be shared by workers and owners/shareholders. Many taxes start with corporations but are transmitted to consumers, workers, and shareholders: sales taxes on most items and special taxes on everything from cigarettes to liquor, from telephones to recreational vehicles. And don’t forget about tariffs taxes on all sorts of foreign-produced goods.

6.) Well, taxes could be worse. Yes and they probably will be. Whatever one thinks of current taxes, things are actually worse because of government debt and unfunded mandates. Debt must be repaid?and government debt must be repaid through higher future taxes. Unfunded mandates like Social Security and Medicare (tens of trillions of dollars in promised payments) must be paid through future taxes or defaulted upon. So, save up now and support politicians who courageously address these difficult topics!

7.) Of all tax reforms, the flat income tax would be the worst since it’s regressive. Nope. The flat income tax has a number of merits, including the elimination of loopholes and greatly reducing the amount of time spent filling out forms. Beyond that, a flat tax is at least proportional the same marginal tax rate is applied above some exempted income level. Or using the common definition, a flat tax is progressive; the average tax rate would rise as income increases.

Assume a tax system with a 20% marginal tax rate applied to all income earned above $30,000. Someone earning $30,000 would pay no taxes a 0% average tax rate. Someone earning $40,000 would have $10,000 in taxable income (above the $30,000 of exempted income), pay $2,000 in taxes, and face a 5% average tax rate. Someone earning $100,000 would have $70,000 in taxable income, pay $14,000 in taxes, and face a 14% average tax rate.

Imagine how much easier life could be with a less complex and burdensome tax system. Or maybe you should let your imagination roam after you finish filling out your 1040s this year. It might be too frustrating to think about until your task is done.

D. Eric Schansberg
Professor of Economics, Indiana University (New Albany)

Adjunct Scholar, Indiana Policy Review

Author, Turn Neither to the Right nor to the Left: A Thinking Christian?s Guide to Politics and Public Policy

Reposted from our friend’s blog at http://lpinscr.blogspot.com/2007/04/schansberg-on-seven-myths-about-taxes.html

Hardy Machia goes on the offensive by pointing out the incumbents ads of wanting to work for lower taxes are just not true. This PDF of Can’t Afford These Taxes postcard shows how much new spending the incumbents approved last session, and highlights how the Vermont state budget has doubled in the last eight years, but what we are getting in services hasn’t.

Andrew Thomas sent out a similar mailing for his race, but the incumbent in his race voted for budgets in excess of 15 billion dollars in new spending since she took office….Andrew’s mailing.

The cover story of Livin – The Vermont Way was “Vermont’s Tax Nightmare — What it means to the working people.”

They highlighted a quote from me…”Vermont’s spending has doubled in the last eight years from $2.2 billion to $4.4 billion. Vermont’s population hasn’t. Vermont is the third highest taxes state in the nation. New Hampshire doesn’t have a sales or income tax, and is the lowest taxed state in the nation. When Vermonters can’t afford to stay, the folks in Montpelier have to go.” — Hardy Machia, Chairman, Vermont Libertarian Party.

The answer is easy as to what party supports youth rights — the Libertarian Party

Lower voting age to give teens a voice

Rutland Herald, August 10, 2006

At “alcohol summits” held this past spring in Windsor County and throughout the state, teens complained that adults did not listen seriously to their concerns. As a result, the young people argued, community leaders and police developed unrealistic and excessively harsh approaches to teen substance abuse. As we enter this most political time of the year, it is worth considering whether young people have been given the “voice” they deserve in helping to shape local and statewide policies.

In my judgment they have not, and the time has come to allow teens to participate directly in our democracy by giving them the right to vote. I propose amending Vermont law to give 16- and 17-year-olds to right to vote in state and local elections.

Giving 16- and 17-year-olds the right to vote would serve many laudable goals. It would help instill civic awareness, encourage meaningful dialogue between adults and teenagers, and develop, perhaps, a lifetime pattern of voter participation. It would also change the nature of the political process. Currently, some candidates make an effort to address the concerns of young people. Matt Dunne’s candidacy for lieutenant governor comes immediately to mind. This proposed reform would obligate all candidates to speak to issues affecting young people and, more importantly, to speak to young people directly. Politicians would ignore youth at their peril.

One can fairly ask if 16- and 17-year-olds are mature enough to vote. We have already decided they are ready (or at least permitted) to drive, hunt, drop out of school, consent to sexual relations, become emancipated, join the work force, and be charged as adults for criminal behavior. Certainly all of these activities pose greater public risks than affording teens the right to vote. Granting the right to vote to 16- and 17-year-olds in state and local elections would be commensurate with and complementary to the existing responsibilities and privileges given to these teens.

Additional criticisms that could be levied against the teen vote are the likelihood that teens will simply parrot their parents and/or be heavily influenced by teachers. As to the first criticism, it is true that our home environment influences all of us and may affect how we vote. However, one rarely hears parents complaining about teens following their directives too closely. Most teens are far too independent simply to mirror the views of their parents. Regarding undue influence by teachers, one would hope that ethical educators would not overstep appropriate bounds. But even if they did, the societal benefit of a more active citizenry outweighs the risks of undue influence.

Here it is worth noting that this proposal only extends to state and local elections. The 26th Amendment to the U.S. Constitution extends voting privileges in federal elections to those 18 years old and older. Federal reform can only occur with a constitutional amendment. For information on efforts to address federal voting issues, a group called youthrights.org maintains an interesting Web site.

State reform, however, is readily accomplishable with a statutory change and logistical coordination. With tiered state and federal voting ages we create graduated voting privileges, akin to a graduated driver’s license. Sixteen- and 17-year-olds could vote first in state and local elections and then at 18 in all elections.

What party would gain an edge by this reform? It is almost impossible to say. Polls show that on certain issues such as gay marriage teens are more tolerant than adults. On the issue of substance use and abuse, the teen vote might help move us toward more intelligent drug policies based on a public health rather than a criminal justice model. Regarding fiscal, environmental, religious, and myriad other social and political issues, no one can accurately predict the impact of teen participation in the electoral process.

Teens and adults routinely complain about inadequate understanding and communication. Politicians pass laws and shape social policy in ways that affect young people profoundly. The time has come to give young people a greater voice in helping to shape those policies. And in the process, young people and adults just might start talking to each other more.

Robert L. Sand is Windsor County state’s attorney.

VERMONT LIBERTARIAN PARTY RELEASES LOCAL OFFICIAL SURVEY RESULTS

Montpelier: The Vermont Libertarian Party announced the survey results of local officials for 2006. There were 12 questions ranging from eminent domain to death with dignity. Responses were received from 31 towns across Vermont.

Hardy Machia, Chairman of the Vermont Libertarian Party, stated, “The survey responses highlight the need for a state government and party that better represents the respondents’ views.

Nearly all survey respondents wanted much tougher eminent domain restrictions. Only one respondent agreed with the weak bill passed by the Vermont Legislature this year.

Seven out of ten respondents thought spending should be reduced instead of raising gas taxes. A backlash of protest and some moderate leadership in the Senate removed the gas tax increase passed by the Vermont House.

Nearly all survey respondents thought we needed major reforms in health care, but were split 40-60 on whether a single payer system or free market system was the better way to accomplish those goals.

Support for Death with Dignity and treating marijuana like alcohol both had strong support, with over 80 percent supporting both these reforms.

Zero respondents thought our school system was working great. Getting out of No Child Left Behind received majority support, as did, public and private school choice, limiting spending to the rate of inflation, and shifting funding to an income tax instead of the controversial Act 68 & 68 property tax distribution.

Seven out of ten respondents thought Vermont’s state budget should be 4 billion dollars or less, with a quarter of respondents believing spending should be rolled back to 2002 levels, 3.3 billion. The Governor and Legislature passed a budget that was a 400 million in excess of 2005’s budget of four billion.

The open-ended question on the biggest issue facing their town revealed that education funding is still a top priority for many towns, followed by roads.

The Vermont Libertarian Party has been active in Vermont politics for over 30 years. Vermont Libertarians have served in local office throughout the state. The National Libertarian Party was founded in 1971 and is the third largest political party in the United States. Millions of Americans have voted for Libertarian Party candidates in past elections throughout the country. Libertarians believe the answer to America’s political problems is the same commitment to freedom that earned America its greatness: a free-market economy and the abundance and prosperity it brings, a dedication to individual liberties and personal freedom, and a foreign policy of non-intervention, peace, and free trade.

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