Saturday, April 11, 2009

The Tax Man and Me

I finished my income tax returns early this year: 4 days before they were due. Some would say I procrastinate. I say I'm just cheap. I hate to give the Feds a dollar before it's due, even if I'm only going to make a few cents on it by waiting.

This year, I used TaxCut, H & R Block's tax software. It lets you compare yourself to other taxpayers in a very wide income range. Based on those numbers, I'm either an idiot, a cheap S.O.B., or a fool. Maybe all three.

It seems that most in my bracket pay a hell of alot more in deductible mortgage interest and donate a considerably greater amount to charity. Of course, I've lived in my house for a quarter century and a good deal of what we have to share with others goes in directions that aren't deductible. I gotta say, I can't imagine life with a mortgage that results in a $29,000 annual interest deduction. Or giving hundreds or thousands of dollars a year to any church. (Drove by one of those mega-churches last week; they had cops directing traffic miles away. Amazing.)

Yesterday, I paid my second half property taxes. Paying them directly keeps you in touch with exactly how much you're paying, to whom and for what. For the record, my total tax bill for 2009 was $3600, or about 1.5% of the value of my house, according to Ramsey County. One quarter of that goes to the City of Saint Paul, one-third each to the county and school district. The rest to miscellaneous things I'm not sure I've ever heard of. It's an archaic system, but I'm not sure that there's any better way to pay for local government. (I would love, however, to see the property tax exemption for churches and charitable non-profits eliminated. I'm not too crazy about being required to subsidize the operations of any organizations I haven't chosen myself.)

My mortgage payment will end soon, allowing me to put it toward my kid's college costs, if he goes and we pay for it. By the time he's done, I'll be fully retired, bagging groceries at the local market or doing anything but what I now do for a living to keep myself occupied. My little 1926 bungalow will continue to function just fine, although it will bug me no end to pay $300 / month (or more) in property taxes. (How is it that the value has increased by a factor of 5 while the taxes have increased by a factor of 9 since 1984?)

Like most people, I don't enjoy being faced with the amount of money I earn and the portion of it that's paid out to the Feds, State, County, City, etc. It comes to about 30% of our total income, not counting sales and other taxes that are paid a dollar here, a dollar there. But I don't really mind paying it, to tell the truth.

Why? Because I live in a reasonably safe community, in which I can count on certain services being available (even though I might quibble with the quality of some of those services). Because I know that my money helps pay for many necessary things, for many people (even though I know that not all that is needed by all who cannot provide for themselves is available). Because, by and large, the systems we have in place work and accomplish what it is we ask of them (despite the fact that some of us are never going to be satisfied with what is done or how well it is done).

Can it all be done better? No doubt. It's all done by human beings. Can it all be done cheaper? Ditto. Will it? Probably not so we'll ever really notice, for the same reason.

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