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Feeling overtaxed? General Electric & the Oracle aren’t

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POSTED April 16, 2013 1:31 a.m.

The Great American nightmare is over.

Well, it is for at least 53.6 percent of us who pay income tax. Everyone else didn’t including General Electric. Keep in mind most of the 46.4 percent are retired on Social Security or are too poor. In the case of GE, the corporation makes over $6 billion a year.

The Oracle of Omaha himself, Warren Buffet, paid taxes. Rest assured it is not his fair share. Buffet lectures Americans that we need to raise taxes yet has a large number of companies he controls  that aggressively lobby Washington for specialized tax credits whether they are big breaks for his railroad or delaying taxes for his energy companies for decades.

If you think Congress anytime soon is going to implement fair tax reforms or jettison tax credits on a wholesale basis then you also believe North Korea crazy man Kim Jong Un will give up nuclear weapons in exchange for his country becoming the 51st state.

Congress can’t even get the IRS to simplify the personal income tax rules and forms. The reason is simple. The more one twists the tax code to make it look like the masses are getting a break the less real pressure they’ll apply to get the folks along the Potomac to clean up their act.

Those of us who get refund checks get downright giddy acting as if we won the lottery. Only one problem: It’s our money to begin with. Uncle Sam took too much from us. And unlike if the tables were turned and we underpaid Uncle Sam after our taxes were legally due, we don’t get paid interest. In fact, Washington makes interest off our money while they hold on to it.

If the 1040 form were simplified, the government wouldn’t be able to use smoke and mirrors to make us feel as if we’re beating the taxman.

Take the personal exemption worth $3,800. Every taxpayer filing gets it so why is it needed? Simply recalculate the tax tables downward.

The same goes for California’s $104 personal tax credit.

We really don’t get $3,800 off our federal taxable income and $104 off our state tax liability. One reflects a phantom tax liability and the other represents a phantom tax. But psychologically we think we’re getting a break as we’re trying to find ways reading the 1040 instructions to reduce the tax bite. In the end, we think we partially dodged a bullet and we’re semi-happy. In reality, there was no bullet to dodge. The IRS and state Franchise Tax Board are just yanking our chain.

Then there is the Earned Income Tax Credit. This part of the annual April 15 ritual gives back to people who don’t pay taxes because they aren’t making enough to support themselves. Thank Richard Nixon – the liberal in a Republican cloth coat that liberals love to loathe – for this one and countless other grandiose federal programs.

The real problem isn’t a need for the government to intervene to help the struggling working poor. Instead the government needs to leave the working poor alone when it comes to taxes.

Back in the 1950s the minimum wage wasn’t taxed. Not by Uncle Sam or any of the states. Now it is. Congress needs to raise the level at which income is taxed by any jurisdiction. Make up for the lost revenue by making sure General Electric and every other company that has benefited from the aggressive hounding of the courts to confer constitutional rights on corporations that the constitution conferred  on individuals to pay the same tax rates that individuals do.

At the same time Congress needs to do what they do best – usurp state authority. They need to set a universal floor for income taxes that effectively reduces the need for the Earned Income Tax credit.

If folks in Washington, D.C., suddenly get a pang of consciousness and say there is no way they could legally do that under the constitution, they can just go to their favorite fallback position and use the RICO Act. They can claim the states are engaged in an act of racketeering against the working poor no matter where they move to in this country.

You see, if Congress and president who are in charge of the entrenched bureaucracy were really serious about reforming taxes they could do it. They find ways to do everything else in manners that are more than borderline questionable.

But making the flow of money into the federal treasury transparent and easy to follow would be akin to the Mexican drug cartels posting on the Internet where they are moving their goods and depositing or investing drug money.

The corrupt power structure of the drug cartels would be greatly weakened.

Get the picture?



This column is the opinion of executive editor, Dennis Wyatt, and does not necessarily represent the opinion of The Bulletin or Morris Newspaper Corp. of CA.  He can be contacted at dwyatt@mantecabulletin.com or 209-249-3519.

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