Tax time always causes me heartburn. I believe that as you earn, you should be taxed, within limits. The challenge for many small businesses over the last 18 months has been to keep the doors open and employees on the payroll as the economy slid into the dumpster. My tax accountant told me that increases in taxes, fees, Medicare and Social Security will add an additional 11 cents on every dollar I earn next year. This level of taxation goes beyond income redistribution (stealing from the working to give to those who refuse to work). To me and other small businesspersons, the anticipated level of taxation confiscates funds from the people who create jobs. Small business owners are asking themselves if they should hire new staff? Should they expand their business? Should they struggle to keep the doors open? Taxes are a deathblow to business just as the recovery sets in.
As I write this, there are new attempts to raise revenue at the federal and state levels. Most people focus on the income tax rate, retail sales taxes, tobacco and liquor taxes yet are unaware of the "hidden" taxes, such as the gas tax. Our economy runs on fuel and the government knows it. The federal gas tax is 18.4 cents per gallon across the nation. Here in Pennsylvania, the state gas tax adds another 31.1 cents per gallon. Together, the tax on a gallon of gasoline is 49.5 cents (http://www.gaspricewatch.com/usgastaxes.asp). This tax is easily paid by the rich but it truly hurts the poor who must commute to low paying jobs in older gas guzzling cars.
I just paid "additional taxes and fees" on an airline ticket of $42.80. The fees and taxes on my phone bill was $19.81. Everywhere I look I find taxes buried on our everyday wants and needs. Clearly, our elected representatives have been very creative in burying taxes. I have heard the call for flat taxes (a straight percentage of what you earn) or fair taxes (a value added or sales tax on the purchase of goods) and a combination of the two. What we need is a complete revamping of taxes. Let's put all taxes on the table for everyone to see along with the cost of collecting and administering the taxes. Don't forget the taxpayer time and aggravation in preparing and submitting taxes and the required paperwork. The tax burden is bad, the labor cost to compile and submit the taxes is a burden on all taxpayers.
The current federal tax code is too complex. Special interests have lobbied for and obtained special exemptions and deductions. The Alternative Minimum Tax, originally implemented in 1970 to capture taxes from 155 of the wealthiest families paying little or no tax. Since then, it has expanded until most of the middle class is crippled by this tax. I cannot condone the government sucking the money from the pockets of struggling middle class families who are trying to raise and educate their children.
Since the income tax was first implemented in 1913 as a "temporary" tax, it has grown in both the amount of tax and the number of people who pay at the maximum tax rate. It now confiscates the income of small business owners, resulting in the closures and job losses. Just look round at the many closed stores in your hometown. Wherever I go, I see boarded up businesses, for lease or sale signs and empty parking lots. Each of these empty buildings used to employ people, sell products or services and pay taxes. Now the employees are on unemployment insurances and face the treat of being permanently unemployable. They went from paying taxes to requiring government aid. No wonder the deficit is huge and growing every second (http://www.usdebtclock.org/).
Yes, we are Taxed Enough Already! It is time to throw out the current tax code and replace it with something simpler. I like a flat tax. I could accept a value added or sales tax if it is in place of an income tax. I want all special interest benefits in the tax code eliminated. While I prefer a mortgage and education tax deduction in any future tax program, I would give these up to get the flat tax implemented. It is time to flood our elected representatives with emails, letters, and faxes to ensure that they work on simplifying taxes and ensuring that everyone pays some tax.
As always, I invite your comments, positive and negative. Please email them to email@example.com.
I you liked my previous article, Save yourself, Save your Family: Be Prepared, I will be speaking on this topic May 14. Admission is free, but a donation to Valley Forge Patriots would be appreciated. You can register at http://www.meetup.com/VFP-TeaParty09/.
(Editor's Note: Gordon Smith is the owner of a small business that has specialized in computer control and security for more than 25 years. He is a frequent speaker at industry conferences and chapter events. John Wiley and Sons has published two of his books and he is currently working on a third. He was awarded the 2002 Wassermann Memorial Award for outstanding achievement in the field of Information System Audit and Control. The Tea Party Movement captured his attention and ignited his passion for America. He now is an active participant in this movement, regularly attending events in Lehighton and Reading, as well as participating in Tea Party demonstrations in Harrisburg and Washington DC.)