Almost a full four months since my last net worth analysis, a lot has happened:

• I left my job;
• I attempted to start blogging, stopped, and am trying to start again;
• I entered a funk…and haven’t got out; and,
• I lost a finger.

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Shucks!

Yes!

Yeshucks! My payment has been received by the IRS. My check cleared. Happy. Sad. It’s left me feeling, well relieved but not. Oh well, I guess I should be happy I got a couple extra days of interests on my cash…oh wait! It’s not in an interest bearing checkings. Ah, forget it. In case your payment hasn’t cleared yet, and you’re worried but not, check the status of it by calling (800) 829-1040. Read more about in my previous post. Just a word of caution, you will have to go through about 5 levels of phone menus before you reach someone. Tax payer money well spent :).

My IRS check hasn’t cleared. Odd. My state one did already. So I called them, and they couldn’t find my payment, but they did notate my account so that they know I sent payment. She said to wait until the end of this month, and then call back to check again.

Errr, why hasn’t it cleared? Because I forgot to put my SSN on my check! I can’t believe I didn’t do that. The state cashed my check already though…and they didn’t have my SSN. Come on IRS! Just because there are 250+ million people compared to my tiny state. You can match my address and name up, there are no excuses! Hah.

Anyway, in case you’re having the same problem:

IRS FAQ document
Keyword: Payment Voucher (1040-ES)

1.1 IRS Procedures: General Procedural Questions

I’m concerned because my check payment to the IRS has not been cashed yet. What should I do?

You can call (800) 829-1040 and ask an IRS representative if the payment has been credited to your account. If it has not and the check has not cleared your financial institution, you may choose to place a stop-payment on the original check and send another payment.

So this morning, as I was reading my local Sunday newspaper, I found an interesting article titled “Would you want IRS doing your taxes?” I thought to myself, “Heck yeah! Wouldn’t that be awesome?”

I wrote a series on a National Sales Tax becoming the preferred tax system over the current US income tax system. One of the main reasons I would like to see something like that is because of the amount of time and, in my opinion, wasted resources going into figuring out how much you owe.

The article was written by Robert Guy Matthews of the Wall Street Journal. In it he writes:

Imagine that filing your tax return was as simple as receiving a completed form from the Internal Revenue Service, signing it, then waiting for a refund of writing a check. 

I definitely could!

The proposed “Automatic 1040″ system takes into consideration that the government already has 1) Your W-2 Forms, 2) 1099 Forms, 3) 1098 Forms, and 4) Your previous tax returns. Of course more complex taxes would require more data.

California actually ran a pilot project called “Ready Return,” which did states taxes for 11,500 people. Seems pretty cool.

Guess who’s against this proposal? Not suprisingly, the tax preparation industry. President Bush is also against this proposal because of the costs involved, but heck I’d be happy if a portion of what I’m already paying the government went to paying for this service. Of course, I don’t want the government to raise taxes…I’m sure they can find some cash out of the $29 billion set aside for special projects by our government.

Unfortunately, I couldn’t find an online copy of the article. Sorry, but if you have a WSJ id, maybe you can find it. Anyway, with the 2005 tax season behind us, well the majority of us, I guess we can take solice in knowing it’s over until next April.

Well, Happy Easter Sunday! Hope this week turns out awesome!

There goes $2,300.00! Bye bye. Sayoonara. Adios. Aloha.

Mailed off my remaining taxes that were due for 2005 yesterday. It kind of sucks, and I got to start thinking about ways to reduce my taxes next year. What to do, what to do. 17% could be improved upon…

Don’t forget to mail yours if you haven’t already…I believe the latest it can be postmarked is Monday, April 17th, since April 15th is a Saturday. But double check! I wouldn’t want you to get penalized because of my post.

I know I wrote about this once, but no one commented…Just trying again. With IRS audits, do they ever audit and find you overpaid? I would think it could…but has it ever really happened? Anyone?

Well, I finished my taxes a couple days ago. I have to make payments in April…Well, I guess that means a temporary dip in the net worth chart.

Here are the tax percentages I paid in 2005:

Federal: 17.3%
State: 6.7%

Dang, I wish I could my tax rate under 10%…I need to have kids or go to school!

I’ve been feeling a little under the weather as of late, so I’m not sure how much blogging I’ll do. Thanks for reading!

Continuing on part 2…

Imagine no income tax, no more waiting for W2s and trying to figure out how many allowable exemptions to take this year, no more giving the government an interest free loan, and imagine saving tax free…That’s what started this series, but now it’s time for a deeper look.

What would be a reasonable “tax rate”? I’m thinking about 10-20% would be a ballpark figure of what I would expect to pay. I did some digging to try and find out, what if we really switched to a national sales tax? Well, I found some info at www.taxpolicycenter.org that listed Total US Income tax collected in 2003.

Total US Income Tax (2003): $1,683,184,679,000 (reference)

Then I needed to find some data on how much sales is done in the US that would be subject to the national sales tax. So I looked up retail sales information for 2003. On a side note, in my search I noticed everyone talks about percent increases in consumer spending, but no $$$ figure to go with it! But I finally found some data at census.gov.

Total US Retail Sales (2003, not seasonally adjusted, reference): $3,275,407,000,000.

Wait, wait, wait…If you noticed and said, “OMG, I have to pay 50% tax??!?!” Hold on for a sec. Be sure you consider the whole picture…

1. You no longer have federal income tax being witheld from your paychecks! That’s a big boost each pay period.
2. Tax credits would still be given depending on your exemptions.
3. Retail sales data above might not be complete.
4. Government can always get more budget conscious. (ha!)

So if the US Census Retail Sales data is accurate, then $3.3 trillion would be taxed, which would mean a fifty percent tax! Could you imagine?? Is it worth it? I don’t know. It would definitely get me spending less and saving more.

Some odditities I found while searching for total US Retail Sales data…This other site reported annual retail sales in 2003 in the US of $59 trillion! That’s a huge difference compared to the $3.2 trillion reported by the census. Although, $59 trillion sounds a little un-realistic. That would mean a national sales tax rate of 3%. So what’s the real number? Beats me! But it would make a huge difference in whether people would support a drastic change like national sales tax.

Another issue, what would happen to retirement accounts? Tax free would certainly lose its appeal.

When I first started this series on national sales tax, I was all for it. After seeing the possible $$$ figures, I still am. It would get tourists, tax evaders, and immigrants all contributing to the country they are visiting or living in, and that sounds fair to me. I do have some concerns, but when you look at the concept in its fundamental state, it makes sense. This is the reason I believe it would work…Not to mention all the lost productivity due to hours of brain mangling tax work can now be spent freely. How do you put a monetary value on that?

Thanks for all the comments to my original post.

I knew when I wrote the post that there are tons of fine details that need to be taken into consideration, but the bottom line in my opinion is that a national sales tax in replacement of our current income tax would be pretty awesome. Of course fine tuning would be required.

PROs
- Encourage savings.
- Simple, reduce time required, improve producitivity (because people will do other things).
- Reduce government costs, save taxpayer money!
- Tax everyone, including tourism and non-citizens. Non-citizens (aka illegal immigrants) should pay taxes. I believe Tourists should as well, especially since they are using our resources while visiting.

Important Considerations
- Rebate system. There would should be some sort of “rebate” system, which would allow credit for certain income brackets, and other credits.
- What would the “tax rate” be?
- Is everything taxable?
- Is everything taxable at the same rate?
- Industries would virtually be eliminated…Block heads no more…IRS minimized…what type of actions would be done to help evolve these industries? Real lives will be affected.

It seems like the one prevalent belief is that this would not happen anytime soon. It would really be well worth a national discussion on this. Maybe we (pf bloggers and readers) could make it happen? Now THAT would be something to blog.

I hate doing taxes. Imagine if we all didn’t have to “do taxes”! Am I living in a dream world? Of course not paying taxes is definitely dreaming, but is not having to fill out tiny boxes or guessing how much I’m going to owe the government next year a possibility or just a crazy idea? What’s that addage? Something like “There are 2 things guaranteed in life…taxes and death.” So getting rid of taxes completely is not an option, but a national sales tax?

Maybe not so crazy if you look at some “almost radical” ideas being brought up by our politicians. One of them I really like, and it’s the idea of a national sales tax. Instead of being taken out of wages, taxes would be taken out of everything we buy. Read more about it here. The “flat-tax system” is another idea out there, but I’m not so sure I agree with that.

I hope this is an issue that becomes more prominent in the future. I think the US tax system is really a waste of time and energy, and should be made much simpler. It would definitely encourage saving! And of course change is always scary, but in many cases well worth it. What do you think? This is US specific…but there must be some countries with better systems? I have to do some research…