Posts Tagged ‘taxes’


An Economics State Of Mind

   Posted by: Michael Bernier   in Today's Reality

The debate over whether our country’s economy is improving or not always seems to get more lively around this time of year. That’s probably because tomorrow is Tax Day, the day everyone’s personal income tax returns should be at least in the mail heading to the IRS. [As I mentioned in an earlier post (Death and Taxes…Mostly Taxes), my wife and I filed our tax return a couple of weeks ago;  now, we get to sit back and watch as those late filers make their mad dash to the post office as the midnight deadline looms ever closer.]

I was reading a posting elsewhere today by someone who appears to be a strong supporter of the current Administration; he made a comment which (paraphrased) said, “Through his stimulus programs, the President has cut the deficit and lessened the tax burden on Americans more than any other president in our lifetimes.”

That’s a pretty substantial claim. Do you suppose it’s true? Or not?

I’m not going to argue either way about that statement; as I’ve also said in an earlier posting, I am not good at debates, so I won’t even try. I’ll leave that to you, my readers, to discuss/debate/argue any and all points of that claim. Please leave me out of it!

Instead, I would like to offer some personal observations:

When I studied economics in college 30-odd years ago, the rule was that if you are already in debt, and you spend more money (or you borrow money from someone else and then spend it), the result is that you go deeper into debt. How does one cut a deficit (or reduce a debt) by spending more money? Has our President somehow changed the laws of economics? Why hasn’t anyone else figured out how to do this before? Is there a secret handshake that goes along with knowing how to do that?

As far as tax burdens go, I can’t say that my situation has improved any in the past year or so. Last spring I had to take a pay cut to keep my job, and the entire company shut down for half of December; this year, we were told the pay cuts and annual shutdown will stay in place and that we shouldn’t expect to see any changes in the foreseeable future. I’m also paying more for my health coverage this year than ever before, and not hearing even a rumor about those costs coming down anytime soon. Wasn’t the new health care bill recently signed into law supposed to reduce my medical costs? When and how does that happen? I haven’t got a clue; no one (for good or bad) has been able to explain it to me in terms that make any sense, or that show me in real dollars where I’m going to save any money.

I don’t live an extravagant life by any measure I can think of. My newest vehicle is 14 years old, my house is in need of significant repairs, and I haven’t taken my family anywhere on vacation in close to 10 years. If something major breaks, it may take a while before we can afford to fix or replace it. Given that the costs for basic needs (food, fuel, prescription drugs, utilities, clothes for the kids, car insurance, etc.) continue to go up each year but my income does not, it is highly unlikely that I will have any disposable income to afford things like new vehicles or vacations in the foreseeable future. Even my future feels somewhat uncertain; when I took the pay cut, I stopped contributing to my 401k retirement plan to make up some of the loss…with the result that I’m not saving anything to live off of when I reach my golden years. I can’t afford it right now.

All in all, I suppose things may be better for some people, but from what I can tell I am not one of them.

I guess I don’t know the secret handshake.


Death and Taxes…Mostly Taxes

   Posted by: Michael Bernier   in Today's Reality

“In this world nothing can be said to be certain, except death and taxes.” ~Benjamin Franklin

My wife and I filed our tax return over the weekend. Ahh, taxes. It’s that special “season” that comes every year between January 1 and April 15 where, for a few hours at least and several days at most, everyone tries to remember their math skills as they fill in the lines on their tax forms. Some people have more forms to fill out than others; sometimes I think the number of forms grows exponentially with the number of people in the family. With three children, I shudder to think how many more forms it takes for me to file my taxes than for someone who is single.

Years ago, I gave up trying to fill out the forms by hand and started purchasing tax preparation software for my computer. It’s been a great help, especially when it comes to dealing with all the changes in tax laws that happen every year. How on earth would I have otherwise known I could have taken a substantial tax credit if I had purchased a new hybrid car? Of course, the tax laws don’t take into account the fact that I couldn’t afford to buy a hybrid car, or any other new car for that matter…but if I had, I could have received a credit for it.

Another advantage of using tax software is the ability to file taxes electronically. No paper forms to fill out or sign, no trips to the post office, and no chance that the return would get lost in the mail. Of course, it also means if you owe taxes, you can’t use any of those as excuses for not filing on time. But, the tax software can still help you there as well, by allowing you to electronically request a 6-month extension for filing. Yes, it looks like the software companies have thought of almost everything…except, of course, for how to pay your taxes in the first place.

My wife and I are getting a refund this year. Refunds, of course, are overpayments of taxes throughout the previous year. Some people try to walk a fine line and have just enough taken out of their paychecks to cover their taxes, and no more; that way they get the most in their pocket each payday. Raising three children, I already walk enough tightropes as it is, and I don’t need another one courtesy of Uncle Sam. So, I let them take more out than necessary, and I get it back as a refund the next year. Yes, that means I’m taking home a little less money each payday and it’s like giving the government a loan for a few months, but I’d much rather do that then get to the end of my tax forms and find out I need to pay additional taxes with money I don’t usually have in the first place. I like to think of it as a form of “indentured savings” where the government is helping us save throughout the year, and then they give it back for us to spend on the things we couldn’t afford to get all at one time otherwise, such as new wardrobes for the kids, or electronic gadgets, or appliances for the house. This year, it looks like appliances will take center stage; we have some that are in need of replacement, and others that could stand some repairs. If there’s anything left, it will probably go toward paying other bills that we’ve been putting off because, well, we didn’t have the money to pay them. Then, once the refund money is gone, the spending spree will be over with and life will return to normal, albeit with a few different things around the house.

At that point the cycle will start all over again, just as old Ben said it would over 200 years ago.