Tax Day 2010 Best Ever! Voters Enjoy Lowest Taxes In Years! Tips

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Today Is The Best Tax Day Of Your Life


Almost nobody likes tax day, but people may look back nostalgically on tax day 2010 and those of earlier years because, almost certainly, taxes are going up in the future, and they may go up a lot. With hindsight, tax day 2010 may seem almost dreamy.

Why?

For starters, almost half of U.S. households aren't paying any income taxes on their 2009 earnings. The exact figure is 47 percent, says the Tax Policy Center of the Urban Institute and Brookings Institution, two think tanks. Among elderly households, 55 percent pay no income tax; among all households with children (including those headed by single parents), the nonpaying share is 54 percent.

By contrast, only 38 percent of married couples filing jointly don't pay. (Of course, this doesn't mean people pay no federal taxes; about three quarters of households pay more in Social Security payroll taxes than in income taxes.)

The personal exemption and standard deduction, combined with the child tax credit and the Earned Income Tax Credit, shield many poor and middle-class families from the income tax.

In 2009 they got extra protection from President Obama's Making Work Pay tax credit, which was $400 for single workers (phasing out at $75,000 of income) and $800 for a couple (phasing out at $150,000 of income). Without that credit, probably only 40 percent of households or less wouldn't have paid income taxes.

President Obama has proposed that the credit be renewed for 2011. But given the massive federal budget deficits, there's a good chance that the credit will someday expire.

So that's one pressure for higher taxes. But it's peanuts compared to the real threat: an aging America. As almost everyone knows, the huge baby-boom generation is edging—or collapsing—into retirement. Its first members, born in 1946, turn 65 in 2011, when they will qualify for Medicare.

Some have already taken Social Security as early as 62 at a reduced rate. Boomers collecting benefits, combined with uncontrolled health costs, are the underlying engine for rising federal spending and endless budget deficits.

To which there's at least one obvious solution: raise taxes. By all estimates, the budget outlook is daunting. The latest projections of the Congressional Budget Office reckon the cumulative deficits under President Obama's policies to be $12.7 trillion from 2009 to 2020.

In 2020 the estimated annual deficit will be $1.25 trillion, or 5.6 percent of the economy (gross domestic product), despite assumed "full employment" of 5 percent.

And the deficits get larger with every succeeding year. Given unavoidable uncertainties, these precise projections are likely to prove wrong. But their basic message seems incontestable: there's a large and growing gap between the government's promises and the existing tax base.

How big a tax increase would be needed to close the gap? Well, huge. To put things in perspective, all federal taxes (income, payroll, and excise) averaged 18.1 percent of GDP from 1970 to 2009.

Under CBO's assumptions about Obama's policies, taxes in 2020 would already be slightly higher, at 19.6 percent of GDP. But on top of that, there'd need to be a further tax boost approaching a third to balance the budget, because spending is projected at 25.2 percent of GDP. Needless to say, this would be the largest tax burden in U.S. history, even including World War II.

A recent study by Rosanne Altshuler, Katherine Lim, and Roberton Williams of the Tax Policy Center shows what this would mean for income tax rates. Their study uses earlier and somewhat more optimistic CBO projections.

Moreover, the study assumes only that the budget deficit is cut to 2 percent of GDP—not that it's balanced. Still, income tax rates would have to rise sharply to reach even this goal. If all income tax rates were increased proportionately, today's lowest rate of 10 percent would go to 15 percent and the highest rate of 35 percent would go to 52 percent.

If only today's top two tax rates of 33 percent and 35 percent were raised, the new top rates would be 86 percent and 91 percent. At those astronomical levels, the study says, the well-off and wealthy would work less and pursue aggressive tax avoidance. Tax revenues would suffer.

These bleak estimates demonstrate why politicians of both parties have avoided confronting the government's long-term budget deficits. Anything they might do—raising taxes or cutting retirement benefits such as Social Security and Medicare—risks a public backlash.

Some experts urge new taxes, such as a value-added tax or energy taxes. Others talk of "broadening" the income-tax base by eliminating or reducing tax breaks (deductions, credits, or exemptions).

But of course, none of these steps would be popular. Hardly anyone wants to pay higher taxes, and most big tax breaks (the home-mortgage interest deduction, credits for college tuition, the charitable deduction) benefit major constituencies.

Almost all the pressures on taxes are in the same direction: up. It will be hard for President Obama to keep his promise not to raise taxes on households with incomes below $200,000 (for singles) and $250,000 (for couples).

It will be hard for economic conservatives or the tea party to achieve meaningful tax reductions. Just about everyone will be tempted to deplore federal budget deficits—and do nothing about them. But this escape route may close; many economists warn that endlessly large deficits risk big jumps in interest rates. Someday, higher taxes may be unavoidable.

So, the lesson for tax day 2010 is simple: enjoy it while you can. It's not going to get any easier.




Sources: Fox News, MSNBC, Newsweek, Youtube

America's Tax Burden 1960's To 2009..."Energy Tax A Declaration Of War" (Tax Reform Desperately Needed)

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(Rep. Mike Pence, (R-Ind.) calls the Energy Tax a "Declaration of War".)

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We have a new president, with a restless and far-reaching agenda — but how will the nation pay for that agenda?

For John F. Kennedy, elected in 1960, it was taxes and borrowing. For President Barack Obama, to whom JFK is often compared, the answer’s the same: taxes and borrowing.

But with the April 15 filing deadline looming, it’s worth noting that the tax system over which Obama presides isn’t the one workers knew two generations ago when Kennedy was entering the White House.

If you’re 70 today, you may have just retired, but do you recall that when you started working in 1960, making a beginner's wage, you paid only about $70 in payroll taxes? And that was for whole year, not for one week or one month.

The biggest tax change since 1960 is the growth in Social Security and Medicare taxes, also known as payroll taxes.

You may not think about them as you prepare your income tax returns, but for most taxpayers, payroll taxes are a bigger burden than income taxes. According to a report issued last week by the congressional Joint Committee on Taxation, for more than four out of five tax filers, employment taxes are a bigger burden than income taxes.

Growing importance of payroll taxes:

And payroll taxes have become a larger source of revenue for the federal government than they were in 1960. Back then, they accounted for 16 cents of every dollar of federal tax revenues. Last year they accounted for about 35 cents of every revenue dollar.

Why? The Social Security tax rate today is more than twice as high as it was in 1960 and the amount of income subject to the tax is far bigger.

In 1960, only the first $4,800 of income was taxed — and at a rate of just three percent. This year the Social Security tax rate is more than twice as high, 6.2 percent, and the first $106,800 of earned income is taxed. (The amount subject to taxation goes up every year, using a formula based on increases in average wages.)

Another reason the payroll tax burden today is heavier than it was in 1960 is that 50 years ago there was no Medicare — and thus no Medicare tax (that didn’t arrive until 1966.)

Workers in 1960 didn’t have to pay the 1.45 percent Medicare tax which workers pay today. And that Medicare tax applies to all earned income, not just to the first $106,800, as the Social Security tax does.

One thing that has not changed appreciably since 1960: the biggest piece of the revenue pie comes from taxes on incomes. In 1960, 44 percent of all federal revenues came from income taxes, while in 2008, 46 percent came from the income tax.

Who bears the tax burden?

But what’s different is that the income tax burden is being carried to a greater extent today by upper-income people than it was 30 years ago, according to an analysis by the non-partisan Congressional Budget Office which tracks data going back to 1979.

In 1979, the top 10 percent of households, as measured by income, paid 40.6 percent of all federal taxes; other ninety percent paid 59.4 percent.

But by 2005, the top 10 percent accounted for nearly 55 percent of all federal tax revenues, while the rest of the population paid about 45 percent.

“In large part this is due to the large increase in the concentration of income, rather than a more progressive tax system,” said Joel Slemrod, the director of the Office of Tax Policy Research at the University of Michigan Business School.

Economists Thomas Piketty of the Paris School of Economics and Emmanuel Saez of the University of California at Berkeley find that the share of income going to the top 0.1 percent of the income distribution "was around 2.5 of total income in the 1970s and reached a peak above 9 percent of total income in 2000. In fact, most of the overall increase in the inequality of income has been driven by the very top of the income distribution...”

Measuring tax progressivity:

Piketty and Saez say that “the federal tax system is clearly progressive,” that is, as a person’s income increases, the percentage of his income that he pays in taxes also increases.

One way tax experts use to measure the progressivity of a tax system is the effective tax rate, which is the total tax divided by total pre-tax income.

The Congressional Budget Office study found that a person in the middle of the income distribution (the middle fifth, if you divide the population by fifths according to income) paid an effective federal tax rate of 14.2 percent in 2005, while a person in the one percent of the population with the highest income had a effective tax rate of 31.2 percent.

People in the lowest fifth, or quintile, had an effective tax rate of 4.3 percent, partly because tax law changes in the past ten years removed many low-income people from the income tax rolls entirely. They pay only payroll taxes.

The lessening of the tax burden on the lowest quintile is a big change from 1979. That year, according to CBO, people in lowest income group (the bottom fifth of the income distribution) paid an effective federal tax rate of 8 percent.

But while Piketty and Saez say the tax system is “clearly progressive,” they seem to imply that it isn’t progressive enough, especially when it comes to the very top of the income pyramid.

Their concern is with using the tax code to bring about a more equal distribution of income. They say, “a tax system can be defined as progressive if after-tax income is more equally distributed than before-tax income.”

Using the tax code to re-distribute income more equally is a goal that many — but not all —Democratic members of Congress would support.

Obama has proposed to raise income taxes on upper-income people and to limit the amount that people with income of more than $250,000 a year can deduct from their taxes for charitable contributions.

Since the tax cuts which Congress enacted in 2001 and 2003 are set to expire at the end of 2010, Congress will face a momentous decision next year on tax rates.

Decline in Excise Taxes:

For taxpayers of the JFK era, the tax system was much more targeted at spending than it is today. Excise taxes — the taxes you pay when you buy tires, gasoline, wine, beer, firearms, fishing rods, and other items — have dwindled from 13 percent of total revenues in 1960 to only about 2 percent today.

Why did this happen?

Ken Kies, former chief of staff for the Congressional Joint Committee on Taxation and a tax lobbyist with the Federal Policy Group in Washington, said, “It was not until World War II that individual and corporate income taxes, combined, exceeded federal excise tax revenues. Then in the post-war period, excise taxes settled in at about 13 percent of total receipts, until the mid 1960s when President Lyndon Johnson and Congress cut them.”

And, Kies said, the high inflation of the late 1960s through early 1980s eroded the real dollar value of excise taxes.

Corporate tax less important than in 1960:

Another noteworthy change in the mix of tax revenues today compared with 1960 is the decline in corporate tax revenue as a percentage of the total, from 23 percent to 13 percent.

Slemrod noted that in 2006, “corporate income taxes were back up to 15 percent of federal revenues, a level not seen since the late 1970s. The secular decline from 1959 to 2002 was apparently due to a decline in both the share of corporate profits in gross domestic product and a decline in the the effective tax rate.”

Kies partly agreed, noting that “the top corporate rate was a lot higher in the 1960s than it is now.”

But he added the most significant reason is that as a result of the 1986 tax law a lot of corporations converted into entities such as S corporations or partnerships. “As a result, a lot of business income that was previously taxed as C corporation income now shows up as individual income tax,” Kies said.


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Sources: MSNBC, Wikipedia, Flickr, Huffington Post, Day Life, Google Maps

Do They Hate President Obama because he's Black?

"They hate him because he's black".

On the heels of the "Tax Day Tea Party" protests which took place on April 15Th while visiting the Daily kos (one of my favorite blogs), I came across a soul stirring post on that site entitled "They hate him because he's black".
The submission was authored by a regular DK contributor named Turka.

In the post she refers to President Obama as a Black man rather than an African-American. A Black man who dared to infiltrate the previous "White Only Leaders of the Free World" club.

As you can tell by Turka's penned thoughts, she describes the deep hatred towards our new president stirring up across the country among certain groups with a brooding, though-provoking aura.

Racial Hatred hidden behind false concerns for the well-being of our nation's future.

Here's an excerpt:

"I deliberately use the word black rather than the words African American. The latter lacks the proper emotional value. It is cultural and geographical. The former is visceral. Bigotry is not subtle. It is primal. It is not about ideas. It is irrational."

"He is smarter and more educated and more articulate than they. A self-made man, he represents everything they would claim to value. But he looks different, to them. They hate him because he looks different. They hate him because he is dark. In "Western" "Culture," the very words black and dark have powerfully negative value. They often are used as synonyms for the sinister."


Thanks to the mainstream Media, by now we are all aware of the false concerns I'm speaking of: "President Obama is turning our country into a Socialist regime", "President Obama included too much spending in his Stimulus package", "President Obama wants to use the government to kill Free Enterprise". Yes, those types of false concerns.

Of course I highly recommend that you read Turka's article, however more so I recommend you conduct a thorough self-evaluation regarding what you really feel and think about President Obama's election.

Are you genuinely concerned for the future of our nation or......do you too hate him and Michelle because they're Black?

MSNBC reporters discuss Texas Governor Rick Perry's threats to secede.



Sources: Daily Kos, TPM, Huffington Post, MSNBC, Newsweek, Youtube, Flickr

Are Republicans Using "Tax Tea Parties" To Regain Power? Democrats Beware!

Today thousands of Conservative American citizens attended "Tax Day Tea Party" protests to demonstrate their so-called displeasure of President Obama's Big Government spending.

Via the use of popular web 2.0 social networking services such as Facebook and Twitter, the "Tax Day Tea Party" movement was sparked largely by Peter Roff, a Strategic Policy Advisor for the Institute of Liberty in Washington, DC.

However before it ever reached DC here's a brief synopsis on the origin of this movement.

The initial purpose of the movement was to provide a national Grassroots outlet for Taxpayers opposed to the passing of President Obama's Stimulus Bill. It was initially started by Keli Carender a Blogger from Seattle, who organized her own mini-version of a "Tax Day Tea Party" back in February of this year.

Moving forward who can forget CNBC's Rick Santelli's televised "Tax Tea Party" (sort of), of him ranting at President Obama from Wall Street about the president's Mortgage Bailout plan proposal.

On Feb. 21 another grassroots group headed by Michael Patrick Leahy called "Top Conservatives on Twitter", planned via the use of Twitter of course, to hold simultaneous local "Tax Tea Parties" from state to state.

As word of the movement spread, it reached the ears of Peter Roff and Fox News reporters, the rest is history.

Other grassroots coalitions also (TCOT, Smart Girl Politics, etc., worked diligently to help coordinate today's event.

With more than 500 to 700 "Tax Day Tea Parties" in action nationwide, according to Peter Roff the event was a huge success.

In fact he published an article on the Fox News Forum, informing the entire country that the mission of the "Tax Tea Party" movement had been accomplished.

Now I don't doubt that many of the people participating in today's protests were perhaps sincere, as it relates to their concerns about big government spending however....

Where were these same angry, conservative protesters when President George W. Bush was sending our soldiers overseas to be killed to help protect American Oil Interests?

Where were these same angry, conservative protesters when it was discovered that President George W. Bush had basically given the Military a Blank Check to spend $10 Billion Dollars a month in Iraq, while fighting "The War on Terror"?

Where were these same angry, conservative protesters when President George W. Bush gave Bank CEOs $700 Billion Dollars with NO Accountability, in Bailout money?

Where were these same angry, conservative protesters when President George W. Bush allowed hundreds of thousands of Minority students attending Low Performing, Segregated, Poverty level Public Schools to fail?

I don't recall anyone saying a word about those issues when President George W. Bush was still in office, do you?

Who were the real winners of today's "Tax Day Tea Party" events?

The Republican Party!

The G.O.P. used today's protests to revamp their party.

Did it work? Yes! Now voters including many registered Democrats, are going to begin focusing more than ever on Government Waste and Big Government Spending, just as it was so during former President Reagan's era.

No doubt this could mean insurmountable trouble for the Obama Administration, especially as it relates to his Policy Reform efforts.

Despite President Obama's earth shattering victory last November 4Th, if the Dems (especially the Black Democrats) don't get it together now, the Republican Party will be back in control come November 2012.

Watch Out Democrats! Especially North Carolina Democrats!

The G.O.P. led by Michael Steele (notice I intentionally didn't mention Rush Limbaugh, OOPS!) are coming for us full force.

Its NO laughing matter. President Obama used the Internet to win the 2008 election.

Now it appears as if the Republican Party or Conservative Independents are using it to gain back control of White House.

Democrats Beware!

NBC's covers highlights of today's "Tax Day Tea Parties".

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Sources: Huffington Post, MSNBC, Newsweek, Recovery.gov, Michelle Malkin, Newsobserver, Fox News Forums, NY Times, CNBC, Youtube, TaxDayTeaParty.com, TCOT Report, Top Conservative Twitter, Smart Girl Politics, Institute for Liberty, Redistributing Knowledge, News-record, Google Maps