Wednesday, January 21st, 2009, 1:24 pm
Back in 2000 I sold some stock to use as the down payment on my house. I’d bought the stock as part of our employee incentive plan, and after I sold it I of course had to report the income on my taxes. I also had to do all sorts of house-related deducting and assessing on my return, something I’d never done before. So I turned to my Dad for help.
We spent about two hours frowning and swearing at the forms and statements and other paraphernalia. I should say that my Dad is extremely intelligent and that I have an MBA. And we had no clue how to report some of the stuff. I have a degree in English as well and I couldn’t parse the written instructions the IRS supplied. “If we can’t figure this out,” I remember saying, “how does the average American?”
Well, it turns out that even extremely-above-average Americans have trouble figuring out their taxes. I have watched with some amusement as Timothy Geithner, President Obama’s choice for Treasury Secretary, has been pilloried for failing to pay $34K in payroll taxes over three years. Geithner said that his failure to pay the taxes wasn’t intentional, that it was an “avoidable oversight”, and that he did eventually pay what he owed. Geithner also told Congress that he used tax-prepartion software to calculate the taxes he underpaid.
As Treasury Secretary, Geithner will be in charge of the IRS. In addition, people are describing him as perhaps the only person who can lead us through the current fiscal crisis. And this guy couldn’t figure out how to pay his fucking taxes. It sounds like his situation was a bit more complicated that most–he was working overseas for the International Money Fund, they pay half the employee’s payroll tax and the employee is supposed to turn that money over to the IRS, it looks like he didn’t understand the way that rule, worked, blah blah blah. Fine. But if anybody, anybody, should’ve been able to figure out a tricky tax situation, it’s this guy. So either he totally whiffed, meaning our tax code is indecipherable to one of the keenest financial minds of his generation, or he’s a really incompetent cheat, which means the U.S. economy is really up shit’s creek.
I’m self-employed. When I pay my quarterly taxes, I cross myself before hitting the “SEND” button on TurboTax. And my taxes ain’t hard. At least I don’t think they are. Last year I got a $2,500 refund check, I never figured out why, or what I did wrong, and chances are I made the same mistake this year. I don’t know. I pay what the calculations tell me to pay, I take reasonable deductions (and nothing more) and then I cross my fingers and hope my liability won’t bankrupt me. There’s gotta be a happy medium between today’s impenetrable system and a flat tax. Probably in a place where unicorns run free and it rains doughnuts.
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