Taxes

My tax appointment with H & R Block is looming, and so I can’t help but be reminded of all that I find abhorrent in our tax code. I have to piece together my income as it is, and then I have to face the fact that the government simply doesn’t give a damn about how responsible I am with my earnings. Apparently I don’t deserve many tax breaks because I earn too much for the Earned Income Credit and too little for tax-deferred benefits.

”Life isn’t fair” you say. Fine, but I consider it my civic duty, in fact the very reason for my existence, to make sure that I do my best to make it more fair, more just, more equal. Please allow me to offer modest suggestions for revising basic tax code.

• We like to extol the virtue that “charity begins at home,” but you’d be hard-pressed to find that reflected in our tax laws. Apparently my definition of “dependent” is not the same as that of those who wrote that part of the code. I contribute to the welfare of my mother, even though she is not technically my dependent. What I give her helps keep the electricity on and the telephone connected (plus, I call her every Sunday on my own dime). Why don’t I get a break for the money I contribute to her physical welfare? People should be allowed to deduct financial contributions to family members provided they can prove that those dollars were applied to necessities like rent, utilities, medical bills and the like. The relative you help should not have to live under the same roof as you.
• Interest income should not be taxed for annual accumulated interest under $2,000. Don’t even get me started on how the Federal Reserve Chairman has essentially rendered savings accounts and certificates of deposit virtually worthless since lowering the interest rate to near zero. When the Internal Revenue Service then applies taxation to that interest, it really is just about zero. Meanwhile, we are encouraged to borrow more, increasing our personal debt. I am sick and tired of being punished for being fiscally responsible.
• Crank up luxury taxes, and institute some new ones. I would be all for taxes on junk foods, soda pop, pornography, and other items that arguably do not contribute to our collective welfare (or actively compromise our health and social well-being). Cities should consider instituting a “parking tax” to encourage ridership on public transit and curb the need for more parking structures. Taxes can be a major influence on human behavior, and we should take advantage of that fact in a more creative fashion.
• Taxes on “immoral” and self-destructive indulgences should be balanced with tax breaks for constructive purchases such as bicycles, memberships in health clubs, enrollment in cooking classes and other non-credit educational courses.

The largest problem, from my viewpoint, is still the legal evasion of taxation by corporations and irresponsibly wealthy individuals. I often irritate some of my more affluent friends with the latter assertion, but I truly believe that those who work hard and elevate themselves to financial success are in the minority these days. The individuals I am talking about are “trust fund babies” and others who are living chiefly on inherited wealth, and arguably doing little to contribute to the welfare of society as a whole. Unfortunately, they wield tremendous power in all the “right” places, to insure that they will continue to prosper at the highest financial pinnacles.

One man’s (or woman’s) rant is unlikely to do anything but evoke sympathy or ire, so how do we take matters into our own hands? How do we engage constructively to effect change? Even collective movements seem to quickly get labeled and become ineffective. The “Tea Party” will be dying shortly, I assure you.

Our Eco-econo Logical Survival

Last night I made sure to watch 60 Minutes because of the advertised interview with Facebook CEO Mark Zuckerberg, but it was the conversation between Scott Pelley and Federal Reserve Chairman Ben Bernanke that got my attention. Homo sapiens is perhaps unique in not only having to address its ecological survival, but also its economic survival. After hearing Bernanke’s prognostication for our immediate financial future, I’m beginning to wonder if we are not in peril on the economic front as well as the climatological one.

I have to say that I trust Ben Bernanke to not make dishonest statements about short-term and long-range economic forecasts as he perceives them. That is why it was truly sobering to learn that he does not anticipate any great decrease in the unemployment rate for a minimum of four or five years. From the perspective of our American society at large, I am confident we can weather the storm and doldrums, but on an individual level I am feeling a bit shaky.

My part-time employment will end around the first week of May, 2011, and the unemployment compensation that is supplementing that income will no doubt expire even sooner. Having only a high school diploma does not heighten my chances of re-employment at any meaningful wage, as Bernanke mentioned in his interview.

When Scott Pelley pointed out that the gap between the rich and the poor in the U.S. is the greatest it has been in some time, Bernanke laid the blame largely on a disparity in education levels. For those with a college degree, unemployment is about 5%, said Bernanke, adding that unemployment is almost double that for people with only a high school diploma. While I personally think this is mostly a sorry excuse for an explanation of inequitable distribution of wealth, the implicit message was even more disheartening and unrealistic, if not irresponsible.

Bernanke’s apparent solution for the unemployed and underemployed is to go back to school and get new skills or enhance existing ones. In other words: go into debt to get ahead. This is in part what got us into trouble in the first place: personal debt. No worries, Bernanke plans to keep the lid on low interest rates, encouraging borrowing (while rendering savings accounts, Certificates of Deposit, and other responsible financial behavior worthless).

I am by no means an economist. I didn’t even do very well in that course in college. All I know is that the current banking establishment and financial administration reigning from the Fed are *not* operating in my best interests. Literally! Interest on my savings is appallingly low. There are no products that keep my assets liquid in case of emergency, while offering any kind of return on my investment….but I digress.

Most people cannot afford to return to school in any sense of the word. They can’t afford it financially, and they can’t afford the time out of the workforce (though most adult students work at least part-time while going to school, this wears one out physically, emotionally, and intellectually). We need to resurrect an apprenticeship approach to re-employment. The “guilds” of the Renaissance sound mighty appealing about now. The idea that one could produce something meaningful and useful while accruing new skills is also what the old WPA was all about. We need a “new” New Deal.

This is where we could also address our ecological survival. Train people to produce and install solar panels, rainwater harvesting cisterns, and other sustainable technologies that lead to a more sustainable, less consumer-oriented society. Make peace profitable. Hire defense contractors to begin disarming our nuclear weapons. Start with the hair-trigger ICBMs that still loom in silos, one false-alarm away from throwing us into nuclear winter. Make community gardens a priority so that neighborhoods can take back ownership of their diet, nutrition, and food quality. Build affordable housing. We can have a bright future, but we might have to buck the system to achieve some of it. The finances will follow, though, as our collective will prevails.

Full disclosure: I am personally debt-free, have no credit cards, and do not own a private vehicle. I rent an apartment. I have an account at a bank and a credit union. Were ATMs more convenient through the credit union, I would not have an account at a commercial bank.