What if your company where you worked were bought out by another company and in that acquisition you were offered $100,000.00 as a bonus for the acquisition?  Would you take it?  In the state of Colorado where I live taxes on that money, including federal taxes on that money would put you at having 40% taken in taxes (without itemized deductions and what not).  That would be like actually getting 60,000.00.  Would you still take it?  Oops, I forgot something.  The Federal Government actually takes a bonus 20% on top of that for them because the money is a lump sum.  That would leave you with $40,000.00 out of an original $100,000.00.  Would you still take it?

Sure, you’d still want the money, but I think that the recent hullabaloo that I’ve heard recently about taxing the wealthy (AKA ‘rich’) to distribute the wealth is not as forthright as it sounds.  There are two (or more) areas that concern me about this.  The first is that recent numbers show that just under 40% of the entire nation’s federal income tax is generated by the top 1% of America’s earners.  That’s right, the ration is that askew [see: http://www.taxfoundation.org/taxdata/show/23440.html].   The second is that in my own household if I am strapped for cash: I have to either go into deeper debt (which I’m digging out of) or I have to cut spending.  I can only go so far deep into debt, so we cut spending.  If the Federal government wants to get their budget together, they too, should have to cut spending and not raise billions or trillions of dollars in debt.

Here’s the kicker: if you add on sales tax which there is the potential of the $40,000.00 being spent ‘in state’ you could see up to 10% MORE tax being taken at the register depending where you go shopping.  That means that out of the original $100,000.00 the person who was rewarded by their company has now had 70% taken in the form of taxes.  That would make me want to throw another tea party.

I know that as a country we’re all trying to see equitable charity, the furtherance of our families and the general well being of the population, but if we can’t afford wellfare programs because we don’t have enough money, if we can’t afford to pay for a massive military (which is a hot topic and I won’t attempt to address it in this post), if we can’t afford to watch our airports with a crack squad of TSA agents (who fail to find my pocket knife every time I forget I have it with me) then we need to cut things.  This hurts.  This could impact jobs, this could impact the entire nation.

Here’s an opportunity for Americans to be innovative again.  This nation had a time of prosperity that was unbelievable.  We had brilliant thinkers making brilliant products brilliantly.  But we’ve passed that and now we’re all hoping to be lucky enough to make it with the next e-business, dot com super-story, or sue someone else for their money.  But what if brilliant people worked together to make new brilliant products that we then sold to the rest of the world just like the ‘good old days’ only it was now?

Well, if that were to happen we’d tax the snot out of those brilliant people and punish them for their productivity.  I think I’d prefer to just shuffle along and make moderate wages and not be taxed up to 70%.  This isn’t Bill Gates’ problem.  This isn’t Warren Buffet’s problem.  This is your problem.  It’s my problem.  It’s our problem.  Lets vote next month (not too many days away, now) with a conscience.  Lets send a message to our representatives that we’re not going to take it any more.  We, as a people, have a right to the fruits of our labor and at present we’re not looking out for one another, and it makes me sad.  The good news is that there are ways out of where we’re at.  It will take determination, and it might hurt a bit, but if we can make a united effort, we might just be the United People of the United States.

This week we’ll explore three more links that caught my eyes. Sorry if my eyes are tired in this one, I was up late because we’re heading out camping this weekend!

The Wiles of Walmart
The Difference Between Tax Credits and Tax Deductions
Four Benefits of not Blowing Up Your Money

Check out last week’s episode if you missed it

The government’s attempt to give you an early tax refund (even if you don’t need one) which they’re calling ‘economic stimulation’ is a farce for the most part: I may get $600.00 for my family, but I’ll be paying it back in my quarterly taxes. Oh, boy! Here’s a list of things that will not stimulate the economy and bust the intended use for the checks:

1. Stick the check in the bank
2. Pay the check back to the government as a quarterly tax payment the following quarter
3. Pay credit card debt (and not regain that debt on the card)
4. Go on an international spending spree
5. Buy Anime on eBay… from Japan
6. Frame the check and put it on your mantle like the head of a dead dear
7. Give it to a charity that will buy goats for Haitians
8. Invest in lead testing kits for the Chinese toys your children have
9. Drive to Canada and buy cheap meds
10. Use it to move to Canada where their looney money is worth more

What are you going to do that’s financially wise, but not necessarily intended by the Gov’t.?

I’ve got quarterly taxes due soon.  Turns out that I need to have saved a bit more than I did, but we’ll have our stuff taken care of by April 15th and our future withholding (I’m self employed, so the withholding is self-inflicted).  Since getting my finances in order earlier this year I’ve learned a lot about where my taxes should be.  However, we’re recovering from earlier mistakes in the year and so more taxes are due.

What things do you do to help manage your taxes?

Do you have an accountant who helps you maximize tax savings?

What strategy do you take for yearly or quarterly tax payment?

Do you take deductions if you’re not self-employed?