A taxing question

I scraped hard ice off my window last week. The sun doesn’t come up until after I’m out of bed and I’m not a particularly early riser. Days are short and I can quit working outside earlier and earlier. The sun travels closer to the horizon and the stars are in their fall places in the night sky. The sheep have donned their fluffy winter coats and the horses are beginning to look fat and shaggy. The weather man has even predicted the four letter word that begins with “s.” Another growing season is gone. Machinery is being tucked into the shed and the perennial plants are watered and mulched for the winter. We are beginning to adjust to our winter schedule of chores.

As the growing season ends, farmers begin to do their annual bookkeeping and tax planning. It’s a job I avoid as long as I can. Getting ready to do our personal, farm and business taxes makes my head hurt. My computer has made this task easier in some ways, but upgrades to the programs I use require study and practice and learning new things. Sometimes I think a ledger and a pencil with an eraser might take less time. Deeper thought usually reminds me of the hours I have spent adding the same column over and over and never getting the same answer twice. My computer adds really well.

I understand the appeal of reforming our country’s income tax code. Just when I think I understand how I am supposed to account for income and expenses, the rules change and I have to start over. I don’t make enough money to be able to hire a full-time tax lawyer to help me figure out how I can use all the possible tax avoidance strategies which might be legally available to me. Such an employee would make more money than I do. I don’t know of anyone who would argue that our tax system is fair, understandable or that the whole system doesn’t need repair.

On the surface, a flat tax seems really appealing: one rate, no exemptions, no loopholes, everybody pays. A closer look gives new meaning to the saying, “Be careful what you ask for.”

Any proposals for overhaul of our tax system needs to be critically examined. Who is proposing this tax reform? Who will gain? Who will lose? If these proposals will be “revenue neutral” who will pay more taxes and who will pay less? If they result in less revenue for the government, what services, what infrastructure and which programs will have to be eliminated? How will taxable income be determined? Will wages be taxed at a different rate than capital gains and dividend income? Who does that help? What will be exempt from figuring income?  Will Social Security be taxed? How about health insurance benefits provided by your employer? Will self-employed people pay tax on their health insurance premiums? Will you be able to deduct excess medical costs? Mortgage interest? Donations to non-profits? What will be considered legitimate business expenses and how will they be deducted from gross income? Will depreciation rules change? What other taxes will increase as federal income tax revenues decline and assistance to state and local governments decreases? Will there be new fees be levied for use of public services?

If corporate taxes are cut to the lowest level since before World War II will the economy be stimulated enough to generate the additional income needed to provide for fixing highways, providing for national defense, agricultural subsidies, or whatever government programs you and I feel are necessary? If trickle down works, why are we in such an economic slump? The wealthiest Americans are richer than they have ever been and the poorest and those in the middle are seeing their well-being falter. The trickle-down doesn’t seem to be working.

I really would like to see our income tax system simplified and made more fair. I am afraid, however, that those who benefit most from the complex mess we now have are the same individuals who, with the help of their tax lawyers, will help write new policies.

Simple and equal does not necessarily mean fair.

Copyright © 2011 Janet Jacobson and Sustaining the Northern Plains