Musings over Forms and Schedules
For the past month I have been gathering receipts and tax forms so that I can file our taxes. Since I am technically self-employed this can be quite complicated and requires the expertise of an accountant to be done correctly. Every month there are several different taxes due, and I spend roughly three hours a month preparing and filing them. Every quarter requires yet more tax payments as well as the submission of various forms to state and federal authorities. Even with an accountant’s help I spend another two hours preparing and sending these off. Every year begins the same way – with the organizing, calculating and filing of several annual returns. I’ll spend sixty hours or more on these – and that’s with an accountant’s help. All this paper work is made more tedious every year by changing tax rates, fees, and reporting requirements.
But the penalties of failure are clear and severe. Once I filed my monthly payroll taxes two days late and the IRS sent a warning stating that in the future such late payments would incur a 2% penalty. I haven’t been late since. Some people fear al-Qaeda. Others fear criminals or gangs. As a libertarian at heart I fear the government because I know that while the Marines can fight al-Qaeda, and well-armed citizens can protect themselves against thugs, fighting the government is futile for the average American citizen.
To call the complexity of the tax system byzantine is an insult to Byzantium. After all that empire lasted over a thousand years before crumbling under the weight of its own corruption. The IRS has been around in its modern form for only ninety. The complexity of the tax code is estimated to cost average American families over $20,000 a year. According to the National Federation of Independent Business complying with federal, state and local tax codes is one of the five leading problems small businesses face in our economy. It wastes money, slows new job creation and business growth, and opens up individuals and small business to prosecution in a legal system where one is guilty until proven innocent.
But the vast majority of Americans and businesses do their best to comply with the tax system no matter how bad it gets – a system that is designed, maintained and controlled by their elected officials. What is quickly becoming clear in the early weeks of the Obama administration is that this tax system does not apply to these officials.
On February 3, Nancy Killefer withdrew her name from consideration for the newly minted post of “Chief Performance Officer” due to her failure to pay $950 on a year and a half’s worth of payroll taxes for household help. In Killefer’s defense the IRS did place a lien against her residence, but it took her five months to pay up after the lien was filed. I guess I’m a bit of a wuss because the very idea of an IRS lien against my home scares me down to my socks, let alone having one outstanding for 5 months.
Before announcing his withdrawal from the post of Secretary of Health and Human Services, former senator Tom Daschle “forgot” to pay $100,000 taxes on a luxury car and chauffeur provided to him by a friend as well as $80,000 in earnings as a consultant. Those taxes alone are more than anyone I know makes in a year, yet these same people dutifully file their taxes, waste thousands of dollars and time on accountants on paperwork to abide by a tax code that Tom Daschle himself helped craft. “Make no mistake, tax cheaters cheat us all, and the IRS should enforce our laws to the letter,” Sen. Tom Daschle is quoted as saying in the Congressional Record. If this keeps up the country is going to need a “Chief Hypocrisy Officer”.
At least Daschle had the wisdom to bow out before he was confirmed. The same cannot be said for Treasury Secretary Tim Geithner. Geithner now heads the very organization that he defrauded over five years from 2001-2006. Geithner’s problems begin after he took a job with the IMF and signed a document stating that he recognized that Social Security and Medicare taxes – the very taxes that I have to pay on time every month – were not being deducted from his wages. He then didn’t pay these taxes until he was audited by the IRS. He also deducted summer camp as a child care expense, withdrew money early from a federal retirement account without incurring a 10% penalty, failed to verify the citizenship status of his employees (Do you know what an I-9 is? Evidently Geithner doesn’t.) and filed their social security and medicare payroll taxes late. At least he’s had some “experience” of the agency he now heads.
Then there is Charlie Rangel (D-NY). Rangel heads the Ways and Means Committee that writes our nation’s tax code, but just because he writes it doesn’t mean he lives by it. Since 1988 Rangel has failed to declare $78,000 in income from a rental property he owns in Punta Cana. I don’t even know where Punta Cana is but I’m sure it’s someplace warm and expensive. He also has used four rent stabilized apartments from a developer in violation of New York statutes which demand that such apartments be used solely as a primary residence. Yet Rangel’s position in the Democratic-controlled Congress is assured.
Have we become in the words of Pejman Yousefzadeh a “Government of Helmsleys” – referring to the modern day Marie Antoinette Leona Helmsley? One would think given the lax treatment our leaders have received by their colleagues and the agencies they control. At the very least our republic has devolved into the farce portrayed by George Orwell in Animal Farm where all animals are equal, but some are more equal than others.
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4 February 2009, 5:08 pmDebbie:
We are in the same situation, considered self employed, doing our own taxes using TurboTax now. We previously used an accountant. I worked for an attorney once who was audited three times. They never found one penny out of place, but they kept auditing him. He was the kind of man who would pay extra, rather than ever give the Feds a chance to be on his bad side … but he still got audited regularly.
4 February 2009, 7:36 pmligneus:
Like many gov ‘schemes’ the complexity of the tax code is a means of providing thousands of cushy well paid jobs with all the benefits they can dream up to to gov employees. If the US adopted the Flat Tax system, can you imagine the jump in unemployment figures that would result? Which is why they wouldn’t do it.
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7 February 2009, 9:44 am