BEWARE THE IDES OF APRIL

Nearly half of US households escape fed income tax reads today's headline. And Easter Sunday was tax freedom day in Arizona-the date after which all the money you earn is actually yours. Ironic to me as I sit here paralyzed with fear as the clock ticks closer to April 15. We have already paid a ton of taxes but if history prevails it will turn out that it was not enough. This despite the fact that:

1. I work almost entirely for the purpose of giving my money to a state- run educational institution for which I get absolutely no tax relief.
   
2. I donate a fair amount of time each year to my local Superior Court for the purpose of helping people find ways to solve their own disputes without further burdening our court system.
   
3. I have no available nontaxable retirement options because I am for the most part self- employed and the tax ceiling is so low it is almost not worth it, I would be better off just saving it in my mattress.
   
4. Aside from getting a passport I have very little use for the services of the federal government: for example, I have no need for FDA protection-I shop local farmer's markets and use no prescription drugs, have no ability to claim unemployment compensation, that sort of thing. Obviously we benefit from infrastructure and are grateful for water, sewer, roads and the like but we also pay our monthly utility bills.
   
5. We provide substantial support to other adults in our lives for which we receive no tax considerations despite the fact that in doing so the government is not been asked to bear that burden.
   
6. We give hours of volunteer time annually to various causes for which we get no personal benefit whatsoever aside from doing our part for our community.
   
7. I recycle everything I can; turn off the lights when I leave the room and even emptied my separate freezer for a time to cut my energy use.
   
8. I am not upside down in my house and have no debt to speak of other than a mortgage.
   
9. Once I had to call the cops because someone shot me with a dart when I was walking my dog down a busy street and a few years before that had a burglary when there was a halfway house in the neighborhood but otherwise I have not accessed the services of law enforcement. ( I threw this in given the headlines yesterday about some towns imposing a fee for the privilege of calling 911.)
   

   
    

There are only two of us and we pay our way and then some. Yet I am burdened with paying the way for many others through no fault of my own. The mere thought of having a tax bill on top of everything else right now is driving me crazy. Tell me, where is the incentive to contribute when half the people get off scot-free? And this is before Obamacare and the deficit payments kick in. What have we done to ourselves?

 

I got this analysis of the cash for clunkers program (another government "benefit" that we did not qualify for, as with all these programs there is always something in the fine print that excludes us) that shows how well all this tax money gets used. It seems pertinent in the context of having to pay.

 

Just look at how the stupid Cash for Clunkers car buyers got taken to the cleaners: If you traded in a clunker worth $3,500, you got $4,500 off for an apparent "savings" of $1,000.
However, you will have to pay taxes on this $4,500 of "income" next April 15th (something no auto dealer told you). In addition, you most likely traded in a car that was already paid for. Now you have 4 or 5 years of payments on a car that you may not have needed, and costing you more per month than the averaged fuel, maintenance and upkeep you were dealing with while driving your 'clunker'.

 

But wait; it gets even worse: You also got ripped off by the dealer. For example, every dealer here in LA was selling the Ford Focus with all the goodies, including A/C, auto transmission, power windows, etc for $12,500 the month before the "Cash for Clunkers" program started. Then, when the "Cash for Clunkers" came along, they stopped discounting the cars' retail price and instead sold them at the full list price of $15,500. So, you paid $3,000 more than you would have the month before... (Honda, Toyota, and Kia played the same list price game that Ford and Chevy did).

 

So let's do the final tally here: You traded in a car worth: $3,500; You got a discount of: $4,500 --------- Net so far +$1,000.

 

But you have to pay: $1,350 in taxes on the $4,500 (if in the 30% tax bracket) ---------
Net so far: -$350.

 

And you paid: $3,000 more than the car was selling for the month before ----------Net -$3,350 loss. We could also add in the additional taxes (sales tax, state tax, etc.) on the extra $3,000 that you paid for the car, along with the 5 years of interest on the car loan, but let's just stop here.

So who actually made out on the deal? The feds collected taxes on the car along
> with your increased income tax on the $4,500 they "gave" you. The car dealers made an extra $3,000 or more on every car they sold along with the kickbacks from the manufacturers and the loan companies. The manufacturers got to dump lots of cars they could not give away the month before. And the poor, stupid consumer. . .. got saddled with even more debt that they cannot afford.