By Simon Gonzalez
Good news! We have three additional days to file our income tax returns this year.
Traditionally, Tax Day falls on April 15, except for years that date falls on a Saturday or a Sunday. Then, it is pushed to the next business day.
But wait. Isn’t April 15 a Friday this year? What gives?
The deadline is pushed up because of the 154th anniversary of Emancipation Day, the commemoration of President Abraham Lincoln’s signing of the Compensated Emancipation Act, which ended slavery in Washington, D.C. It was made an official public holiday under Section 7503 of the Tax Code in 2005. It’s only celebrated in D.C., but that’s good enough to affect all of us.
Actually, Emancipation Day is April 16, which falls on a Saturday this year. But instead of being pushed ahead to Monday, it gets pushed back. So the holiday (in D.C.) will be observed on what would have been Tax Day, moving the deadline to Monday.
Except in Maine and Massachusetts. On Monday, the good citizens of those states celebrate Patriot’s Day, a holiday commemorating the anniversary of the Battles of Lexington and Concord, the first skirmishes of the Revolutionary War. Their tax deadline is moved to Tuesday, presumably so they can enjoy the Boston Marathon and the early first pitch of the Red Sox game without worrying about filing their taxes.
Confused? Of course we are. But it’s apt, because confusion seems to be the natural state when it comes to taxes.
Albert Einstein, who was pretty good at figuring out complex things like the theory of relativity, famously said, “The hardest thing in the world to understand is income taxes.”
Truer words have rarely been spoken.
Take the tax code. Please.
There are 73,954 pages of federal tax rules. WalletHub calculates that there are 4 million words in the U.S. tax code, or five times the number in the Bible.
Can anybody possibly understand every little nuance? No wonder the cost of tax compliance was $226 billion in 2014, the National Taxpayers Union reports. That’s $192.6 billion for the labor required — including fees for the accountants that some of us need — and $31.7 billion for tax software.
The Office of Management and Budget estimated in 2014 that it takes citizens 7 billion hours to complete the paperwork required by the Treasury Department.
The cost and the hours surely will go up this year, thanks to the horrifically misnamed Affordable Care Act. The Internal Revenue Service is administering the premium tax credits and individual mandates under the act for the first time this year. In simple language, that means reams of paper, untold amounts of chaos and confusion, and copious quantities of bitter tales. Like this one.
A couple I know moved to a new city last year for the husband’s new job. The position did not provide health insurance. The wife became unemployed when they moved, so they were forced into the government exchanges for the final four months of 2015.
The husband selected a plan with a high deductible. The website spit out an option with about a $400 monthly premium, which included a “tax credit” of several hundred dollars based on their current household.
When they did their taxes, they discovered that in its bureaucratic wisdom the federal government calculated their premiums based on total yearly income, not their income for the period when they purchased the insurance — insurance they never converted into actual health care by seeing a doctor. They were socked with a stiff penalty.
Thanks, Obama.
Of course, the money we put in the hands of various government entities hardly stops with our income taxes and health insurance costs.
For homeowners, there are real estate taxes. There are gas taxes. The feds collect 18.4 cents per gallon (24.4 cents for diesel), and the state gets 35 cents per gallon. There are sales taxes. We pay 7 percent in New Hanover County, including 4.75 percent that goes to Raleigh.
There are taxes and fees for owning a car, for buying cigarettes, newspapers, alcohol, airplane and theater tickets, for virtually every activity. Bloomberg reports that on top of individual income and payroll taxes, the federal government collects $93.4 billion in excise taxes.
If there were a way to tax the very air we breathe, politicians would have found it.
Add it all up, and Americans pay more on taxes than on food, clothing and housing combined.
Tax season coincides with the presidential election season this year, so this year we have candidates presenting their plans.
After demonizing the “rich” for not “paying their fair share,” Hillary Clinton and Bernie Sanders presented plans that would attempt to put the screws to the most wealthy. Sanders wants to add to the confusion by establishing four new tax brackets. In the most wealthy group himself, Donald Trump would lower the top tax rate on individual income.
Ted Cruz is proposing a flat rate of 10 percent on income, and replacing the corporate tax rate with a “business flat tax” that has been characterized as a 19 percent value-added tax on all business revenue, putting more of the burden on consumers.
While economists are divided on the viability of Cruz’s plan, it has one very tantalizing incentive. His campaign states it would allow us to fill out our returns on a postcard or phone app, and “abolish the IRS as we know it.”
This time of year, that sounds pretty good. Hard to believe, but good.
