SOB! Today *IS* Tax Day

Well, we all got a reprieve, but today is Tax Day. Tax forms must be eFiled or mailed today in order to avoid penalties (or you must apply for an automatic extension). But the good news is plenty of experts have tips to help you get the most back from the tax man. And even if you are filing last-minute, there are always online options to avoid the lines at the post office.

Dee Leicht E.A. preparer at H & R Block at 4530 Lemay Ferry Road suggests:

- If you are preparing your own taxes, make sure that you file Schedule M, Making Work Pay, to receive up to a $400 credit.
- Check your deductions for education. They are very good this year and include books and supplies.
- Make sure you take exemptions for any persons (earning less than $3600) that you supported in 2010.

And remember, even if you do file for the automatic extension, you still have to pay what you EXPECT to owe to avoid paying interest and penalties.

President Obama's solution the the Oil Spill: More Taxes

There is a truism of government - you don't tax businesses, you tax their customers. Every tax placed on a business is passed along to customers in higher prices. So when a politician both claims "taxpayers will not pay for the BP cleanup" and that it will be paid with by higher taxes, be skeptical. Be very skeptical.

Lawmakers want to increase the current 8-cent-a-barrel tax on oil to make sure there is enough money available to respond to oil spills. At least 6 million gallons of crude have spewed into the Gulf of Mexico since a drilling rig exploded April 20 off the Louisiana coast.

President Barack Obama and congressional leaders have said they expect BP to foot the bill for the cleanup.

"Taxpayers will not pick up the tab," Senate Majority Leader Harry Reid, D-Nev., said Monday.

BP executives told Congress last week they would pay "all legitimate claims" for damages. But the government needs upfront money to respond to spills, as well as money to pay for cleanups when the responsible party is unable to pay, or is unknown. Money spent from the fund can later be recovered from the company responsible for the spill.

It is a good point that funds are needed for immediate work on the current spill. But we should all be aware this will mean higher prices at the pump for all of us. Especially heading into summer. Which will cause people to travel less, and depress the economy even more.

"Happy" Tax Day

Today is "Tax Deadline Day" in America - the day when tax payments are due to the IRS and state taxation agencies. Hopefully, wise Mod-Blog readers have already filed, but if not, there is hope. The Federal government provides links to a number of free online tax preparation tools.

And if you need help staying awake thru the "excitement" of filling out endless forms, Starbucks is offering tax filers free coffee today. So, the day might not be a complete loss.

Do as I say, not as I do

Senate explores taxes, taxes, and more taxes to pay for Health Care Reform

The Obama administration keeps pledging that Health Care Reform will wind up saving Americans money. But every time we hear back from Congress, the tax bill for it keeps going up. Now, the Senate is exploring new and interesting ways to tax hiring in the middle of the Great Recession.

The versions leaked so far would add as much as 0.5% on workers who earn more than $200,000. If assessed on both the worker and employer, this would increase the Medicare tax rate to 3.9% from 2.9% today. It would also create the first progressive payroll tax in American history, with wealthier workers paying a higher Medicare payroll tax rate than lower income workers...

In another trial balloon, Mr. Reid would impose the payroll tax on all income, not just wages and salaries. This means applying the tax to capital gains, dividends and other investment income. This would convert the Medicare levy into a de facto version of the income tax.

For those keeping score at home, that includes both taxes that punish investing (which creates jobs) and hiring (which gets people into jobs). Anyone out there think that will have a positive effect on Unemployment?

I am still amazed that the Democrats seem to think Unemployment is unimportant compared to all of their other priorities.

So True it Hurts

From Speed Bump

Tax Day Cometh

Today is the day that the Federal and State governmentds demand their pound of flesh. They are saying that the economic downturn is causing more taxpayers than ever to be delinquent, but if you have the money to pay, you are better off paying your taxes now or at least filing for an automatic extension. If you have not yet paid and need help figuring out your burden, remember that Intuit offers a free TurboTax edition online for those with simple returns.

Obama breaks pledge by taxing tobacco?

I am not fan of smoking, but I have always wondered about sin taxes like the tobacco taxes. If you are taxing something, hoping it will make folks stop buying it, shouldn't you plan for that revenue stream to go away? Anyway, it seems a number of people are furious about the president's plan to increase taxes on cigarettes because it breaks a campaign promise that was prominent.

The largest increase in tobacco taxes took effect despite Obama's promise not to raise taxes of any kind on families earning under $250,000 or individuals under $200,000.

This is one tax that disproportionately affects the poor, who are more likely to smoke than the rich.

"I can make a firm pledge," he said in Dover, N.H., on Sept. 12. "Under my plan, no family making less than $250,000 a year will see any form of tax increase. Not your income tax, not your payroll tax, not your capital gains taxes, not any of your taxes."

I don't see this as being a major point that can be scored by Conservatives against Obama, but I do see it as potentially undermining him among his Liberal supporters.

Taxing the rich has no effect on revenues?

One of the ongoing debates in American politics is whether the rich pay their fair share. Republicans tend towards supply-side economics which says by freeing up the money of the rich, you ensure they have an incentive to reinvest in the economy which creates jobs for poor, middle class, and rich. Democrats tend to go the other way by saying by taxing the rich you free up additional money for the government to use in helping the poor. An interesting article on WSJ.Com claims that both sides are missing the point and no matter what the tax rate, the amount of money gathered by the IRS has stayed at about the same level.

Mr. Hauser uncovered the means to answer these questions definitively. On this page in 1993, he stated that "No matter what the tax rates have been, in postwar America tax revenues have remained at about 19.5% of GDP." What a pity that his discovery has not been more widely disseminated...The data show that the tax yield has been independent of marginal tax rates over this period, but tax revenue is directly proportional to GDP. So if we want to increase tax revenue, we need to increase GDP.

What happens if we instead raise tax rates? Economists of all persuasions accept that a tax rate hike will reduce GDP, in which case Hauser's Law says it will also lower tax revenue. That's a highly inconvenient truth for redistributive tax policy, and it flies in the face of deeply felt beliefs about social justice.

What does this mean for the next President? Perhaps that they need to rethink the standard politics of tax policy.

Edited 4:22 PM on 5/26 to correct spelling of "IRS" as per Ron's note.

Not ready for Tax Time?

I plan to break out the trusty TurboTax later today, but if you are stuck without the ability to complete your taxes by Tuesday, don't forget the option of an automatic extension to October 15. You are still required to PAY by April 15, but if you are someone who was only expecting a refund, that is not a problem. Also be aware that an extension will delay your stimulus check.

Tax Rebate Checks Considered

President Bush and Congress, concerned about the potential cost of government assistant programs should a deep recession hit, are considering offering $800 rebate checks for singles and $1,600 rebate checks for married couples. The idea is that people will spend that money which will boost the economy. The rebate program could cost $150 billion, but the government estimates that spending $150 billion could save them $500 billion. Will it work? It could, so long as people spend the money, but with everyone feeling a crunch, many may use it just to pay bills and save, leaving the government in a potentially worse situation.