Friday, May 11, 2012

About Taxation

This certainly seems the way the federal government and many local municipalties spend money, like toilet paper.(Picture:

 This is a second post in a series which concerns factors which discusses different aspects of what may be an impending financial collapse.

          For those of you who live in other nations, or for those of you who live in a state which is administered differently than mine, I would like to talk a little bit about taxation.   When I, and my husband receive a paycheck, certain amounts are withheld from it.   Federal tax, state tax, social security tax are all withheld. In some places, there are additional local taxes withheld.  If we are incredibly lucky, the following year, we have our taxes done, and we get some of these withheld funds back.  More often than not, we owe more, and need to write an additional check, as I did for our home state, this year.  You would think then, that our taxes are paid, but that would not be true.  Next, I have to put aside funds to pay our Property Taxes on our home which is also a farm.  Many people pay property taxes in tandem with their mortgage, but we do not.  We save money monthly in order to pay our property taxes twice yearly.   Our state also has something called "Personal Property Tax" on cars, boats, recreational vehicles. This is such an expense for people now , that the once annually tax, has now been split into two payments, like the property tax, so fewer people are delinquent on the taxes on their cars, trucks, recreational vehicles, etc. If one does not pay one's personal property tax to our state, then you will find yourself unable to renew your registration at the Department of Motor Vehicles.     On a farm, we have a number of vehicles for different purposes. We pay personal property tax on each.    When I go to buy food in a grocers or grocery store, in this state,  I also pay tax on the food that we eat.  We no longer pay taxes on prescription or non-prescription medication.   On the rare occasion that we go out to eat, we pay an additional  "Meals Tax" at many of the small towns or cities in our state.  We also pay additional tax for each gallon of fuel we buy. (Whether gasoline or diesel)   Whenever I buy a car, an item to repair it or anything else, I pay Sales Tax.        When I purchase a secondary home, have it repaired, redecorated, and re-landscaped, and then sell it, I pay Capital Gains Tax on the profit. (If there is any.)  If I inherit something, over a certain value, I pay tax on that also, and it can be a chunk !
            The other things that we pay occasionally, which in point really are taxes, are annual licensing fees for our dogs. I approve of this particular "tax" because in our our local community, the licensure money goes to the care and support of homeless animals. Rabies immunization monitoring is done in other ways, through our vets here.  Professional licensure, which although expensive for me, is a necessity.
           A county near Richmond has started ticketing not to ensure the safety of citizens, but in order to generate funds, as tax revenues have fallen so rapidly.  I try not to visit there.

               I have been thinking about taxes a fair bit lately, as we are part timers in Canada.  In Canada, we pay property tax, and harmonized sales tax  (HST)  on our purchases.  On larger purchases, this can add up to a lot of money.   The taxes in Canada are certainly the results of our own choices to be there, but there is very little we could do in order to pay fewer taxes here in the US.  Most of us, as we drive have seen the bumper sticker, "My Take Home Pay Won't Take Me Home".  In Nova Scotia, for example, this is the official word on HST:

  " Effective July 1, 2010, the Harmonized Sales Tax (HST) rate in Nova Scotia will increase from 13 to 15 percent, 5 percent of which is the federal portion and 10 percent of which is the provincial portion."

Goods Exempted from the Provincial Portion of the Nova Scotia HST

The province of Nova Scotia has expanded its list of goods that will be eligible for a point-of-sale rebate of the provincial portion (10 percent) of the HST. The list now includes:
  • children’s diapers;
  • children’s clothing;
  • children’s footwear; 
  • feminine hygiene products; and
  • books.

The complexity in our taxes is so great now, that I must pay someone to file our taxes. Either this, or take a chance on a costly and stressful audit.

   This is a PARTIAL listing of some of the other taxes which Americans pay:

Accounts Receivable Tax

Building Permit Tax

Capital Gains Tax

CDL license Tax

Cigarette Tax

Corporate Income Tax

Court Fines (indirect taxes)

Dog License Tax

Federal Income Tax

Federal Unemployment Tax (FUTA)

Fishing License Tax

Food License Tax

Fuel permit tax

Gasoline Tax (42 cents per gallon)

Hunting License Tax

Inheritance Tax Interest expense (tax on the money)

Inventory tax IRS Interest Charges (tax on top of tax)

IRS Penalties (tax on top of tax)

Liquor Tax

Local Income Tax

Luxury Taxes

Marriage License Tax

Medicare Tax

Property Tax

Real Estate Tax

Septic Permit Tax

Service Charge Taxes

Social Security Tax

Road Usage Taxes (Truckers)

Sales Taxes

Recreational Vehicle Tax

Road Toll Booth Taxes

General Road Tax

School Tax

State Income Tax

State Unemployment Tax (SUTA)

Telephone federal excise tax
Telephone federal universal service fee tax
Telephone federal, state and local surcharge taxes
Telephone minimum usage surcharge tax
Telephone recurring and non-recurring charges tax
Telephone state and local tax
Telephone usage charge tax

Toll Bridge Taxes

Toll Tunnel Taxes

Traffic Fines (indirect taxation)

Trailer registration tax

Utility Taxes

Vehicle License Registration Tax

Vehicle Sales Tax

Watercraft registration Tax

Well Permit Tax and in some places, Septic Tank Taxes
Water Tax (mostly in some suburban and urban settings)

Workers Compensation Tax

(The taxes listed above, were all instituted within the last 100 years)

and I haven't even touched on the taxes Mr. Obama's plan collects, long before anyone gets health care through his program.

            My point is that the money we receive in our paychecks has been taxed, and then when we do anything else, it is also taxed. We are therefore being taxed multiple times on the same money. No wonder our salaries as Americans are badly eroded.

            I realize that other nations pay higher taxes, and have additional taxes. I am thinking about Britain's television tax, for example.  Layered and generous taxation is one of the factors which make it difficult for us to save for an adequate retirement.  It is also one of the things which makes it difficult for young families to feed their children.  Excessive taxation makes it hard for people to save, invest, start new small businesses, and avoid asking their governments for money for needs which could probably be best met by the families themselves, once the government gets its hand out of their wallets.    Perhaps a dial down on some of the interventions and wanton spending on the part of the politicians, and allowing the people who earned the money to determine how it is spent, would be beneficial in terms of the general direction of the nation overall.  Perhaps the nation should stack the deck in favor of its citizens, rather than against them.  Excessive taxation from all sides may reach a point where larger amounts of citizens decide that they do not consider their local government to be a lawful entity and they do not intend to pay their taxes.  Does anyone know where the tipping point is ?  Perhaps refusal to pay taxes, or an inability to do so, will be a factor in an impending financial crash, in the US, or even elsewhere.


Gorges Smythe said...

OR, it could be the tipping point for civil war. Apparently the DHS is afraid of that scenario.

russell1200 said...

There are some taxes that are hard not to pay unless you go completely black market economy.

There are some assesssments out there of how much overall each state taxes its citizens. If I recall correctly, resource extraction States (Texas, Alaska, etc,) tend to be a little bit lower as they have other sources that are cannot move away from the taxes.

To my mind what is really different is how the States tax. They all get their pound of flesh, but some of them have very high property taxes, others haver very high income taxes, others have high sales tax, some have no sales tax.

Most people who are able to find work can deal with their local tax structure. It all balances out in the end. The group I think that has to be careful is people living on limitied fix incomes. The high property tax areas should be avoided like the plague. Correspondingly a place like Deleware that has a high income tax, but no sales tax, might look more attractive. Sometimes you have to stay where you are, and I wouldn't move away from friends and family to get a better tax deal. But there are times when people do have a reasonably open decision as to where to live.

JaneofVirginia said...

Thanks. I actually don't oppose taxes, per se. I understand that in order to have roads and schools that taxes need to be paid. My problem is wanton disregard of the sacrifices made by the public in order to earn this money, by the people who are supposed to be safeguarding it for us. In my own rural county, so many antique styled lamps were placed on the main street, that no one who lives down there can sleep in the bright light. Those lights not only cost a fortune to buy and install, but to keep lit as well. Half of them would have done the job, even better.
Taxes don't always balance out place to place. In NJ, we paid 20K a year for property tax on an ordinary home. We have owned much larger and more expensive homes in other states, and paid 2K-2500. annually tops. For that though,in NJ there were excellent social services for the retarded, the autistic, the mentally ill, and for the elderly. There was public transportation sometimes in rural places. Of course in the South, we don't clear the snow, we just think it melts ! There is no help for anyone, other than condemning your home if it needs something deemed essential. I think the best course of action is to research places you choose to live, and to know about all of their hidden and not so hidden taxes. Know also that in places with low taxes, there may well not be services. Where we are now, there is no mail delivery, no services, and a volunteer ambulance that is usually on a lengthy transportation when you need them. I have been prepared to pay a fortune for a helicopter critical care for transport in the past.

JaneofVirginia said...

Just a few years ago, a US civil war sounded like a plot for a science fiction summer replacement series. Now, the government is making such bizarre choices, and saying such ill advised things, that a civil war, though a dreadful thing, sounds more possible. It is still my prayer that our federal government works toward responsible and reasonable solutions rather than the removal of our rights, and the potential confiscation of citizen assets.

russell1200 said...

Yes research is key. One method would be to find someone in similar circumstances (presumably online) and ask them about it.

I have heard horror stories about NJ property taxes. And when my father moved from upstate NY to NC many years ago, he thought that the annual NC property tax bill was a little higher than he expected: he thought it was a monthly bill.

JaneofVirginia said...

Yes, there is certainly a striking difference between property taxes in NJ and NY and in the South. Even if you adjust for snow removal, the taxes are incredibly high in the Northeast. Having lived in both places a long time, it depends on what you want. I would rather pay very low taxes and get nothing other than roads. I do have friends from college who prefer the high taxes of NJ, but then they make it their business to know about all of the available services and they use them whenever they can. I have an entire farm in the South, for fewer annual property taxes than I paid on my very first house in NJ. I'll bet your Dad was both amused, and relieved !