Tag Archives: taxes

Your Tax Dollars at Work

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Not exactly a newsflash; just restating how the IRS wastes time and money.

I just got off the phone with the IRS. I’d called them because I needed a confirmation letter with my company name and EIN. I’d had a document like that, but it was likely among those destroyed when my wasband stored cardboard boxes of my personal and business documents, books, and software on the floor of my hangar and the hangar flooded, thus destroying everything in those boxes. If he still wonders why I threw so many of his personal items into random cardboard boxes in the garage during the 10 months I lived in our Wickenburg home last autumn/winter/spring, that should give him a clue. He should consider himself lucky that I didn’t leave those boxes outside or turn the hose on them.

Confirmation of Sin?
Searching for “confirmation of ein” results in this interesting suggestion — on the IRS website?

Anyway, I tried to get the document I needed online. I got some comic relief from the search system on the IRS website before zeroing in on a document with instructions that I thought would help.

Instructions

You can read as well as I can. The third bullet point tells me to call the Business & Specialty Tax Line at a toll-free number. So I dialed it up on my cell phone, pressed 1 when prompted to get English (really?), and then pressed 3 to tell them I needed an EIN certification letter. The machine then warned me I’d have a 30 minute wait time.

I got out my bluetooth earpiece, plugged it into my ear, and turned it on. And then I went about my business while on hold.

I waited more than 30 minutes. It didn’t really bother me because my cell phone has unlimited minutes and the music they were playing was tolerable. I did some banking and wrote a few email messages. I washed the dishes. I updated my to-do list.

58 minutes after dialing, a series of beeps and clicks told me something was happening. After a moment, a woman got on the line.

I told her what I needed. She asked me questions to confirm my identity. Then she said she’d “generate a letter” and that I’d get it “in the mail in 5 to 7 business days.”

I asked if it were possible to have the letter generated as a PDF and emailed to me. She said they didn’t have the ability to do that. That didn’t surprise me in the least. An organization that takes nearly an hour to answer a phone call isn’t one that’s likely to be too technologically savvy.

We talked briefly about my hour-long wait on a toll-free number. It didn’t cost me a dime — directly. But as a taxpayer, it cost me money. If you pay taxes in the U.S., it cost you money, too. After all, toll-free numbers might be free to people who dial them, but they’re not free to the people who answer them. I don’t know what the going rate is, but even if it’s only 5¢/minute, the IRS spent $3 to make me wait on hold. Assuming I wasn’t the only one with an hour-long wait today, that’s $3 for every call they take.

We also talked about the cost of generating that letter, stuffing it into an envelope, putting a stamp on it, and sending it to me. That’s another buck or two in materials cost and labor, no?

Of course, she doesn’t care. She’s got a job and she’d doing it. I understand that and told her I didn’t blame her in the least. I just told her I wished our government could step up into the 21st century with the rest of us.

They could do that, of course, by giving business owners access to the database. Have a front end that asks me the same questions she asked to give me the ability to generate the document onscreen or as a PDF for immediate access. The phone call wouldn’t be necessary, the wait wouldn’t be necessary. I’d have my document now instead of having to wait a week to get it.

Why do I need this particular document? Ironically, so I can upload it to a website as documentation for opening a new account. At least someone is using technology right.

Congress Has the Whole Tax Thing Wrong

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According to Warren Buffett, higher taxes for the super rich doesn’t kill jobs.

This morning, I was very pleased to read the words written by a voice of reason: Warren Buffett. Buffett is one of the richest men in the world, a man who built his fortune through investing. This article in the New York Times, “Stop Coddling the Super-Rich,” is his attempt to talk reason to the U.S. Congress using facts.

He writes:

While the poor and middle class fight for us in Afghanistan, and while most Americans struggle to make ends meet, we mega-rich continue to get our extraordinary tax breaks.

While this isn’t news, what’s refreshing about it is that it’s being stated by one of the “mega-rich,” a man who paid $6.9 million (not a typo) in taxes last year. He points out that while his 2010 tax bill was 17.4 percent of his taxable income, other people in his office paid 33% to 41% (with an average of 36%) of theirs.

Tax PictureIt’s the percentages that are important here. Imagine a taxable income of $100K. 17.4% is $17,400. But 36% is more than double that: $36,000. Is it fair that someone with a taxable income of $40 million like Mr. Buffett, who gets to keep about $33 million of that after taxes, should be paying a lower tax rate than someone making $100K who only gets to keep $64K after taxes?

If you don’t know the answer to that question, maybe the picture I provided here for you will help?

(By the way, I’m all for a flat tax and still can’t figure out why we can’t have one. The rate would likely be low enough that folks earning under $200K would save money. And wouldn’t it be nice to figure out your taxes by yourself in an hour instead of paying someone else to do it for you?)

Mr. Buffett goes on to tear apart the argument that higher taxes for the super-rich prevent them from investing or kill jobs:

I have worked with investors for 60 years and I have yet to see anyone — not even when capital gains rates were 39.9 percent in 1976-77 — shy away from a sensible investment because of the tax rate on the potential gain. People invest to make money, and potential taxes have never scared them off. And to those who argue that higher rates hurt job creation, I would note that a net of nearly 40 million jobs were added between 1980 and 2000. You know what’s happened since then: lower tax rates and far lower job creation.

These are facts from history, not vague guesses based on economic theories. And since Mr. Buffett has a reputation as someone with financial prowess, I’d tend to take his word on the situation before the word of the self-serving morons we’ve elected to Congress — career politicians who would rather lie to the American people than do what’s right for all of us.

Of course, all this makes me wonder why Congress is so insistent that taxes not be raised, even for the wealthiest Americans — people like Buffett who wouldn’t mind a tax increase if it helped the country out of its financial woes. Whose bank accounts are the members of Congress protecting? Their own? Their friends in major corporations who fund their campaigns?

They’re obviously not interested in protecting the bank accounts of the majority of the American people. With unemployment hovering around 9% nationwide, millions of people are tapping into savings, losing their homes, and giving up on the “American Dream.” Yet the government continues to subsidize the oil industry, which continues to reap record profits, offer tax breaks to companies that send American jobs overseas, and enforce a tax code that gives tax breaks to the mega-rich. (By the way, is it a coincidence that the oil industry donates generously to political campaigns? I think not.)

As the Debt Ceiling debates of July 2011 proved, the American Congress is dysfunctional. I really believe that all incumbents should be voted out of office in the next few elections. Start again with a clean slate, hopefully with people who care about their constituents.

But what can we do until then? Contact your Representatives and Senators. Tell them that you think Warren Buffett is right: that the mega rich should be paying the same percentage of taxes as the rest of Americans. If you email them, link to the New York Times piece I quoted here. Tell them to read it and learn. Remind them that they’re working for all of the American people — not the corporations who fund their campaigns.

We need to turn this country around and it’s obviously not going to happen if we wait for our dysfunctional Congress to do it for us.

And in November 2012, remember to vote for someone who has the American people at the top of his or her agenda — not partisan politics.

Three Charities You Can Help by Helping Yourself

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It’s the time of year for giving, so give!

At the end of the year, many non-profit organizations make their year-end plea for funds. They know the same thing deduction-savvy taxpayers know: a donation before year-end can get you a write-off on April 15th.

In general, I prefer educational charities over other types. (For obvious reasons, I don’t give to religious charities, although I did donate to Non-Believers Giving Aid right after the disaster in Haiti.) I think it’s important to keep quality information flowing from the folks who can create it to the folks who can benefit from it. That’s why I suggest the following three charitable organizations if you’re interested in making year-end contributions to charities that directly benefit you and your family:

  • NPR LogoNPR (National Public Radio) had its semiannual pledge drive last week. I caught the tail end of it while driving to do errands, but never got around to picking up the phone. That’s a shame because they often have matching funds during fund drives, so my $50 donation can get my local NPR affiliate $100. Still, I’ll send my contribution by visiting the Support Public Radio page on its Web site. NPR, if you’re not aware, airs a wide variety of radio programming, from talk shows about current events and science to comedy and music. Even if you don’t listen in on the radio, you can subscribe to podcasts for most shows. And if you listen in more than one listening area — for example, I listen in Washington State during the summer months and Phoenix in the winter months — consider splitting your contribution between both of the radio stations you listen to.
  • PBS LogoPBS (Public Broadcasting Service) is similar to NPR in that it airs a lot of educational and thought-provoking content. From Sesame Street to NOVA, from FRONTLINE to Masterpiece, these are the folks who teach and entertain us with something more substantial than the latest incarnation of CSI and Dancing with the Stars. Although you can donate during a pledge drive and receive a “gift,” you don’t need to wait for a pledge drive to donate. (Seriously: do you really need another tote bag?)
  • Wikipedia LogoWikipedia is the online encyclopedia. Say what you will about its accuracy, but you can’t deny that it’s one of the best free sources around for general information about any subject at all. These days, you can’t visit a Wikipedia page without seeing “an urgent appeal” from Jimmy Wales. That’s because it costs a ton of money to run those Web servers. If you use Wikipedia — and who doesn’t? — why not send a little cash their way? Yes, it is tax-deductible in the U.S.

These are the ones on my list. If you think about it, you’ll probably come up with others that might be more meaningful to you and your family. These are organizations that enhance your life and help round out your knowledge. Don’t they deserve your support?

Take a moment and send a little cash their way. It doesn’t matter how much or how little — even $20 can help, especially when hundreds of people just like you send the same.

And remember the added bonus of a tax deduction in April.