My annual discussion of taxes
The propaganda is at last becoming effective. People in Iowa want to do away with incomes taxes. I’m familiar with this mindset. Beware. It is one of the old saws of the Republican Party and it will hurt most of us.
A relative who has since passed away was a member of the John Birch Society and was taught to hate income taxes so much that he told my husband he was working for the enemy by being a tax preparer. The John Birch Society was once considered a fringe wing of the Republicans and mostly ignored. It's back now with its demonizing of many facets of civil society.
Those who demonize income taxes and say they cut taxes fail to mention one important tidbit of information. There are all types of taxes besides income taxes and states use these types of taxes and income taxes to fill their coffers for things such as public schools, roads (and plowing them), recreation areas, and law enforcement, which is aide by the federal government. They can also make up for income tax cuts by reducing services. For example, my state cut back on restaurant inspections. Cities are feeling budget pinches.
Tax fairness can bring equality to a state or make it much worse. The most unequal tax state is Florida. All in all, a billionaire’s tax could generate billions for our treasury and it might make us all feel a little bit better since we wouldn’t bear the brunt of the tax burden.
Progressive income taxes are used by states who want those who can to pay more in taxes. For those who want the rich to keep what they have (and possibly donate it to politicians), other taxes and fees are added to make up the difference. States vary in what they tax more, income or the add-ons and consumption taxes such as sales taxes. A popular way to add on a tax is to have a "sin tax" on things such as gambling, liquor, and tobacco products. Marijuana is a new and lucrative taxable substance for some states, luring people from out of state to fill their coffers. Take a look at your phone bill. Mine includes over $11 worth of tax and fees. My car license fee considers my car “NEW”, and taxes it as such, until it’s ten years old! And I pay and extra tax because I have a hybrid and use less heavily taxed gas. Those are NOT income taxes. They are making up for the high-income people getting a tax break, recouping losses for "tax cuts."
My state, Iowa has a flat tax, which people see as simple and fair, but which shifts the tax burden onto lower income people more harshly than the upper echelon. It often means lost revenue for the state which means other taxes and fees must be added, or services must be cut. Personally, I probably won't see much benefit and I would love the richer people to pay more taxes so they fund fewer political ads.
When it comes to taxes, unless you are very rich, there isn't really such a thing as a tax cut. You might lose services and benefits or get charged more of another tax. Iowa for example, has gone from a 2.5 % sales tax to a 6% sales tax plus local option taxes. We also have an internet commerce tax. The basic idea is that if you have lower income taxes, you will attract more high rollers to your state and they will spend money buying things. One thing they will buy is political advertisements. They also are more likely to be tax cheats so those IRS agents are going to earn their keep.
I’m not sure if anyone noticed but filing taxes got easier in 2022 and 2023.
But now. Republicans want to cut the IRS.
You probably heard all the latest news about the IRS. My spouse is an accountant so I hear about taxes no matter if I want to or not but since it's near an election, politicians are talking about taxes. Some of what you hear is good news, in fact, on the federal level much of it is. A lot of it is just plain BS-scare tactics meant to keep the rich richer and fund political ambitions.
The announcement from Biden is that the income categories are going to be adjusted for inflation, meaning, you will probably be paying less in federal taxes.
Earned income credits are used for low income people and can add back some credit to the refund for "working poor.". This bracket will go up too,meaning those raises from $7 dollars and hour $10 an hour will not be a burden, helping those low income workers and according to my spouse, "makes taxes more fair." But if our taxes are going down, how will the government make ends meet without being stingy when it comes to the average citizen?
You probably also heard about the added IRS agents. This is needed to put the Service back in IRS. Taxes are the way we get money to run our country. To ignore tax cheating and not do all we can to collect what is legally owed is like shooting the family breadwinner. My husband calls it "malfeasance" which has been visited upon our country since the 80s.
Adding new agents will help honest people and make doing taxes and getting a refund much easier. If you pay a tax preparer, it will save money and if you do them yourself, it will save time.
And it’s already paying for itself, bringing in a half a billion dollars in back taxes owed by those who can afford to pay.
By the way, here are some ways NOT to cheat on your taxes. Be aware, itemized deductions are pretty much going away in the new Trump massaged tax plan.
Additionally, the IRS will be able to update their technology. As this article explain, they have computers that still use windows XP!
One modern lesson we've learned is that tax cuts at the top are bad for a country. Look at Great Britain today. History shows this as well. The Mayan Empire is an example, as cited in the book Collapse.
In any case, be aware of what it means to "cut taxes" and if a politician talks about scary IRS agents, they are not going to work for you--they are performance artists. Be mindful and cast an informed vote.
Diagram of taxes
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