New Year, New Tax Season!

Well, I got my copy of TurboTax 07 yesterday. I've got to do a quick turnaround on taxes each year because we have to get our completed forms in to our private school early to get in line for financial aid. So even though I haven't got any forms back from the government yet, I began playing around with the numbers (I'll revise when the real forms arrive). This is our first tax return since Mrs. Sal went back to work full-time. We need a new acronym: once we were DINKs (double-income, no kids), then we were SITCOMs (single-income, three children, oppressive mortgage). I don't know what we are now, but whatever it is, we pay more taxes. At the beginning of the new school year, I had to make a WAG (wild-a** guess) as to what our withholdings should be under this new regime. Looks like I guessed OK; this year we'll get a small refund from the feds and the state. So I guess I won't change the math until after we see how next year (the first full calendar year with two incomes) comes out.

Tax withholding floors me. It was implemented as an emergency measure during WWII so the federal government would get a steady flow of dollars. Now, of course, it's become as American as baseball and apple pie. The trick is, now that we get a paycheck with two lines (gross and "take home" pay) NOBODY has a clue how much they pay in taxes. If they still had to write a check every April, Americans might care more about the money wasted on corporate welfare, farm subsidies paid to folks living in Manhattan, and bridges to nowhere. But since our pain is doled out so gradually, we never have the wake-up call that demands fiscal responsibility from Washington.

Also, people are just plain math-dumb when it comes to withholding. Every year I hear somebody exclaim with glee, "I'm getting a $3600 tax refund check! Whoopee!!" I have to fight back the urge to kill this moron before he or she can reproduce. Hey, buddy--news flash: if you're getting BACK $3600, that means you gave the US government an interest-free loan of $300 a month out of your paycheck... a loan which they'll only pay back if you fill out their stupid forms, and on their time-table. All because you didn't have the intestinal fortitude to SAVE the $300 a month yourself. AAARGH! If you adjust your deductions, you can keep the money every month and either spend it, save it, or give it away. And if you choose to save it, you can give yourself a $3600 refund check, PLUS INTEREST, at the new year. In my perfect world, I'd owe the government $1 a year. They'd get none of my money rent-free, and it wouldn't hurt a bit to write them the check for the difference. Of course, the world isn't perfect, so I'll settle for a couple of hundred bucks in refund, just to be safe.

All that said, our current tax system isn't all bad. I know, as a conservative, I'm always supposed to favor tax cuts and hate the IRS. But in general, our current system of graduated taxes topping out at about 35%, even with all the arcane deductions, etc., is pretty good. (If it were up to me, I'd cap the top rate at 33%, on the principle that nobody should pay more than a third of their income in taxes in a nominally free country... but you have to admit we're a lot better off than when the tax rate was 70% in 1980.) If anything, I'd say our taxes are a bit too low on the bottom end. The top half of wage-earners pay something like 95% of the taxes collected. Last year, my family had (after deductions, exemptions, and 3 child tax credits) ZERO federal tax liability (not so, this year). I think everybody ought to pay at least a nominal amount of their income for the benefits of US citizenship. And certainly, a middle-class family with a brick house, 2 cars, and 3 kids in private school (albeit getting some help) should not be completely tax free. That only lends itself to the fiction that the government can give me everything I want and I can trust somebody else (the "rich") to pay for it.

All that said, I absolutely LOVE TurboTax. Several years ago I had a friend who was a CPA who did my taxes for free. His office basically used a pro version of TurboTax to knock them out in about an hour. Of course, I had to wait until after the paying customers were done. Once I had to do the hurry-up thing for school, I found I could do the same thing in an hour or so with TurboTax. This year's version cost $36 (including the state forms) at Costco. For an additional $18, I can file online and get my refund before March 1. I'll never sit down with a 1040 form, a pocket calculator, and a ballppoint pen again!