Tax Collector Secrets

<body topmargin=0 leftmargin=0 marginheight=0 marginwidth=0> <table cellpadding=0 cellspacing=0 border=0 height="100%"><tr> <td valign="top" width=200 BGCOLOR="#888888" TEXT="#080000" background="c8fc8393.jpg"> <div> <IMG BORDER="0" SRC="1x1.gif" HEIGHT="12" ALIGN="BOTTOM" HSPACE="0" VSPACE="0" WIDTH="12">     <A HREF="protesters_in_the_us_senate.htm" TARGET="_top" TITLE="Protesters in the US Senate"><IMG SRC="c8b0c0c0.png" border=0 width="12" height="12" ALT="previous" ALIGN="BOTTOM" HSPACE="0" VSPACE="0"></A>      <A HREF="invset_like_a_republican.htm" TARGET="_top" TITLE="How to Invest in Oil Like a Republican"><IMG SRC="c8d0c0c0.png" border=0 width="12" height="12" ALT="next" ALIGN="BOTTOM" HSPACE="0" VSPACE="0"></A>     <A HREF="hot_news.htm" TARGET="_top" TITLE="Hot News Index"><IMG SRC="c8e0c0c0.png" border=0 width="12" height="12" ALT="up" ALIGN="BOTTOM" HSPACE="0" VSPACE="0"></A></div> <bR> </td> <td valign="top" width="100%" BGCOLOR="#FFFFFF" TEXT="#080000"> <div> <FONT SIZE="5" COLOR="#000000" FACE="Arial" ><B>News and Music Free Radio Stations RadioZX</B></FONT>     |     <A HREF="index.htm" TARGET="_top" TITLE="News and Music Free Radio Stations Radio">home</A></div> <div> back to  <A HREF="hot_news.htm" TARGET="_top" TITLE="Hot News Index"><B>Hot News Index</B></A></div> <div> Tax Collector Secrets</div> <div> <B>Washington's Hidden Taxes</B></div> <div> Brian Wingfield</div> <div> Culled from Netscape.com</div> <div>  07.25.2007</div> <div> Washington, D.C. -</div> <div> <B>Also See:</B></div> <div> <A HREF="world_news_03_16_07.htm" TARGET="_top" TITLE="World News 03 16 07"><B>Tax Havens Of The World</B></A></div> <bR> <div> <IMG SRC="4cd5f8c0.jpg" border=0 width="95" height="140" ALT="Uncle Sam Shake-Down of Americans" ALIGN="LEFT" HSPACE="6" VSPACE="0">There is an old joke--attributed, of course, to Mark Twain--about the difference between a taxidermist and a tax collector: The taxidermist takes only your skin.</div> <bR> <div> But of all the fees levied by the notorious taxman, the most unpopular are those that are hidden.</div> <bR> <div> We don't mean the frustrating taxes you see added to the end of your cellphone bill at the end of each month (though those can be maddening). We're talking about those that are simply not apparent to the average consumer.</div> <bR> <div> Take, for example, the gasoline tax. Ever scratched your head wondering how much Uncle Sam is taking when gas prices spike? The answer (regardless of price fluctuations): 18.4 cents on every gallon that you purchase.</div> <bR> <div> When coupled with state and local taxes and fees, the average American pays 45.8 cents per gallon in gas taxes alone, according to the American Petroleum Institute, the industry group that represents big oil companies. That's about 15% of the current nationwide average price of gas, $3.06 per gallon.</div> <bR> <div> But excise taxes like the gas tax aren't the only place for taxes to be secreted away. A favorite hiding place is the tax code itself. In fact, in her annual report to Congress last year, IRS National Taxpayer Advocate Nina Olson said lack of transparency in the tax system was among the most serious problems encountered by taxpayers.</div> <bR> <div> "[T]he IRS sometimes updates its procedures and guidance without [in a timely manner] making them available to the public," her report said. No wonder so many people are confused about how much they owe.</div> <bR> <div> At the top of Olson's list of concerns was perhaps the nation's most famous hidden tax--the alternative minimum tax (AMT). Nearly four decades ago, it was put in place to make sure the rich paid their share to the system. But because it's not indexed for inflation, it has ensnared a growing slice of the middle class.</div> <bR> <div> In testimony before Congress last month, Leonard Burman, director of the Tax Policy Center, a nonpartisan think tank here, said that by 2010, half of all tax filers making between $75,000 and $100,000 will be subject to the AMT. In the past, Congress has applied temporary fixes to rein in this expanding tax, but it has not done so this year.</div> <bR> <div> "The big theme of hidden taxes is that in the end, consumers pay all taxes," says Tom Giovanetti, president of the Institute for Policy Innovation, a Texas-based advocate of tax transparency.</div> <bR> <div> The group has argued that that corporate taxes, payroll taxes and so-called "bracket creep"--where taxpayers are bumped into a higher tax bracket because of inflation--are all examples of hidden taxes.</div> <bR> <div> Is Congress doing anything to lighten the load on consumers and wage earners? Hardly!</div> <bR> <div> The Senate is now considering a bill that would raise the federal tax on cigarettes from 39 cents to $1 to help pay for the Children's Health Insurance Program. President Bush has threatened to veto the measure, but the House is also considering a health care bill that would raise the price of cigarettes.</div> <bR> <div> Planning a trip to Las Vegas soon? You might want to brush up on tax rules as well as your poker skills. Even if you have a net loss at the table, you're still taxed on your winnings.</div> <div> Yes, you can list your losses as a miscellaneous itemized deduction--but you can't deduct more than the total amount of your winnings.</div> <bR> <div> And if you're subject to the AMT, you lose these deductions anyway. Gambling, by the way, is not just limited to casinos. It includes lotteries, racetrack betting, raffles and prizes (like a trip or a car).</div> <bR> <div> And few lawmakers are reluctant to abolish the AMT completely because it is expected to bring in $800 billion in government revenue over the next 10 years.</div> <bR> <div> Even Steve Forbes has argued that one way to clean up the tax code and expose hidden taxes is through the adoption of a federal "flat" tax, a single rate for individuals and business that would eliminate most of the deductions and exemptions now in place. In some parts of the world, particularly in Eastern Europe and the Baltic states, flat taxes have been cited as a spark for economic growth.</div> <bR> <div> Shining a light on the current system would likely reveal that people actually pay more taxes than they think they do, says Sam Batkins, a spokesman for the National Taxpayers Union, a Washington-based group has supported the flat tax.</div> <bR> <div> And nobody on Capitol Hill is willing to make that claim. "If you're a politician, obviously you don't want to be labeled as a tax hiker," he adds</div> <div> <IMG SRC="3c218540.png" border=0 width="280" height="340" ALIGN="BOTTOM" HSPACE="0" VSPACE="0"></div> <div> <B>Gasoline Tax</B></div> <div> Fuel taxes always raise eyebrows because consumers generally have no idea what factors make up out-of-control gas prices. (Hint: refining capacity usually causes the price fluctuations.)</div> <bR> <div> Still, for every gallon of gas you buy, you fork over 18.4 cents in tax to Uncle Sam. When various state and local taxes and fees are applied, the total amount of the tax on gasoline is 45.8 cents per gallon, on average.</div> <bR> <div> That's about 15% of the current gas price, $3.06 per gallon.</div> <div> Sources: American Petroleum Institute, Energy Information Administration </div> <div> <IMG SRC="3c318540.png" border=0 width="280" height="340" ALIGN="BOTTOM" HSPACE="0" VSPACE="0"></div> <div> <B>Cigarette Tax</B></div> <div> Like other vices, tobacco products are a popular target for excise taxes.</div> <div> They could also become a lot more expensive very soon. The U.S. Senate is poised to consider a bill that will raise federal taxes on cigarettes from 39 cents to $1 to help fund the Children's Health Insurance Program.</div> <bR> <div> State taxes on cigarettes vary dramatically, from 7 cents per pack in South Carolina to $2.575 per pack in New Jersey. Within the last year, 10 states raised their cigarette taxes, and a growing number of localities are doing the same. </div> <div> Source: CCH</div> <div> <IMG SRC="3c418540.png" border=0 width="280" height="340" ALIGN="BOTTOM" HSPACE="0" VSPACE="0"></div> <div> <B>Sugar "Tax"</B></div> <div> Technically it's not a tax, but abnormally high prices for cereal and candy are due to a complex system of price supports and import tariffs designed to help the powerful sugar-producing lobby.</div> <bR> <div> According to a U.S. Commerce Department study last year, the 2004 U.S. price of refined sugar was 23.5 cents/pound, compared with the world price of 10.9 cents/pound.</div> <bR> <div> As a result, many manufacturers of sugar-containing products have left for Canada and Mexico, where costs are significantly lower. The government says that if sugar were allowed to enter the U.S. duty-free, the result would be taxpayer savings, gains for consumers and job growth.</div> <div> Source: U.S. Commerce Department</div> <div> <IMG SRC="3c518540.png" border=0 width="280" height="340" ALIGN="BOTTOM" HSPACE="0" VSPACE="0"></div> <div> <B>Payroll Tax</B></div> <div> Employers and employees split the cost of payroll taxes--the Social Security, Medicare and miscellaneous taxes you see listed as "FICA" on your paycheck.</div> <div> But many economists argue that you're paid less so that your employer can compensate for tax it pays just to keep you on the payroll. If you earn $97,500 or less, this could mean a 15.3% reduction in your take-home pay.</div> <div> (Half in the payroll tax you pay, half in your employer's share.) According to the Tax Policy Center, about two-thirds of all wage earners fork over more to Uncle Sam in payroll taxes (including the employer's share) than in income taxes.</div> <bR> <div> <B>Alternative Minimum Tax</B></div> <div> The IRS' National Taxpayer Advocate calls the AMT "the poster child for tax law complexity." And because it's not indexed to inflation, it's ensnaring more of the middle class--particularly families with lots of kids and second mortgages.</div> <bR> <div> The AMT affected 4 million taxpayers in 2006, but this number could balloon to 23 million this year if Congress does not fix the problem, as it has done in years past. Why don't lawmakers just eliminate the AMT?</div> <bR> <div> Because it's expected to bring in about $800 billion in government revenue over the next 10 years. </div> <div> Sources: Tax Policy Center, Internal Revenue Service</div> <div> <IMG SRC="3c718540.png" border=0 width="280" height="340" ALIGN="BOTTOM" HSPACE="0" VSPACE="0"></div> <div> <B>Gambling "Phantom Winnings" Tax</B></div> <div> Planning a trip to Las Vegas soon?</div> <div> You might want to brush up on tax rules as well as your poker skills.</div> <bR> <div> Even if you have a net loss at the table, you're still taxed on your winnings.</div> <bR> <div> Yes, you can list your losses as a miscellaneous itemized deduction--but you can't deduct more than the total amount of your winnings.</div> <bR> <div> And if you're subject to the AMT, you lose these deductions anyway. Gambling, by the way, is not just limited to casinos. It includes lotteries, racetrack betting, raffles and prizes (like a trip or a car).</div> <div> Sources: CCH, Internal Revenue Service</div> <div> <IMG SRC="3c818540.png" border=0 width="280" height="340" ALIGN="BOTTOM" HSPACE="0" VSPACE="0"></div> <div> <B>Social Security Tax</B></div> <div> For your entire working life, Uncle Sam takes a chunk of your pay to help pay for Social Security.</div> <bR> <div> But when you start receiving a Social Security paycheck, you still may be taxed on some of this income--sometimes as much as 85% of it.</div> <bR> <div> If your total income plus half of your Social Security benefits exceeds $34,000 ($44,000 for couples filing jointly), you get stuck paying the 85% rate.</div> <bR> <div> Others, who earn less, either have 50% or 0% of their Social Security taxed. Like the AMT, these figures aren't adjusted for inflation, meaning an increasing number of people are being ensnared by the tax. Some price for retiring!</div> <div> Sources: IRS, Tax Policy Center</div> <div> <IMG SRC="3c918540.png" border=0 width="280" height="340" ALIGN="BOTTOM" HSPACE="0" VSPACE="0"></div> <div> <B>Employer-Provided Life Insurance Tax</B></div> <div> Does your job provide you with life insurance?</div> <div> If so, watch out--any amount of that life insurance policy in excess of $50,000 is considered taxable income, meaning that you pay income, Social Security and Medicare taxes on this amount.</div> <bR> <div> The rule applies if your employer pays for any of your life insurance policy. And if you're married? If your employer pays for more than $2,000 in life insurance on your spouse, the entire amount is taxed. </div> <div> Source: Internal Revenue Service </div> <div> <IMG SRC="3ca18540.png" border=0 width="280" height="340" ALIGN="BOTTOM" HSPACE="0" VSPACE="0"></div> <div> <B>Airline Ticket Sales</B></div> <div> Ever wonder why the price of an airline ticket jumps by $50 or so when taxes and fees are applied? Under current law, you pay a 7.5% ticket tax, a $3.40 segment tax (which increases by about a dime every year) for every leg of your trip, and an airport fee of up to $4.50 per ticket.</div> <bR> <div> Fly overseas and you can be charged as much as $30.20 for an international arrival and departure tax. All money goes to fund the Federal Aviation Administration.</div> <bR> <div> And these amounts don't even include various Homeland Security Department taxes, such as the $2.50 per ticket "Sept. 11" fee that goes to pay for airport security.</div> <div> Sources: FAA, Air Transport Association</div> <div> <IMG SRC="3cb18540.png" border=0 width="280" height="340" ALIGN="BOTTOM" HSPACE="0" VSPACE="0"></div> <div> <B>Personal Exemption "Tax"</B></div> <div> f you reach a certain income level ($156,400 for single filers, $234,600 for couples filing jointly), your personal exemption and the exemptions you claim for your kids and other dependents begin to phase out.</div> <bR> <div> At a certain income level they are completely eliminated--meaning that more of your earnings are subject to taxes.</div> <bR> <div> But there's good news for those hoping to hold on to their personal exemption, which in 2007 was $3,400 per person. The phase-outs will be reduced in 2008 and 2009 and completely eliminated starting in 2010. </div> <div> Sources: CCH, Internal Revenue Service</div> </td> </tr></table></body>