Is Paying Taxes A Form of Charity?

Sleepy Old ManI just got done with two things: 1) Writing a check for another $1,000 more in taxes to the Federal Government for 2011, and 2) Re-reading the article, “The Average Percent Of Income Donated To Charity Can Improve“.  Hopefully all of you are on pace to finish doing your taxes before the April 17th deadline.

Forget about filing an extension and putting off paying your taxes.  Do it now!

Several things I’ve learned from doing my taxes:

* I paid almost as much in taxes as I’ve saved.  In fact, most of my friends, and probably most of you have paid MORE in taxes than what you’ve saved, since most people don’t save more than 20% of their gross income, let alone 55% of their after-tax income.  Go ahead, make the calculation and start vomiting.

* The amount of total taxes I paid in 2011 could buy a nice 4 bedroom McMansion in the MidWest or a Lamborghini Gallardo.  With the money left over from the Lambo, I could pay for five friends to go to Vegas for a week.  We’d stay in suites at the Aria Hotel and reserve a private booth each night at Tao with an endless flow of Crystal, Ron Zacapa, and Goose.  And here I am, a total fool trying to keep my credit card spending below $1,500 a month so I can save more for retirement and build more financial security.  I might as well live it up since the government is living it up with my money!

Disadvantages Of The ROTH IRA: Not All Is What It Seems

Passed Out Drunk Vomit Oozing From Mouth For years I’ve been an opponent of the ROTH IRA after the government came out with its tricky dick way to let us all do a “one-time” conversion from our traditional IRAs. The government was so successful in getting people to pay huge sums of taxes on their IRAs during the financial crisis that I just shook my head in disbelief.

As a personal finance blogger who wants to help you achieve financial freedom sooner, rather than later, it’s my duty to write this post to help you see the error in contributing or converting to a ROTH IRA if you have not maxed out your 401(k).

Of course if the choice is between NOT SAVING and saving via a ROTH IRA for your future, then the answer is that one should open up a ROTH IRA rather than piss their money away on stupid stuff that depreciates in value. However, do know that you are still pissing money away by giving some of your money to the government. And if the choice is between choosing a traditional IRA over a ROTH IRA, choosing the traditional IRA is hands down the way to go.

Please read the reasons why a ROTH IRA is not a good idea for the large majority of you. I really hope this article will wake you up to the tremendous government brainwashing that is being conducted to get you to part more with your hard earned money. If you’re still in favor, at least you know the other side of the story and Uncle Sam thanks you!

DISADVANTAGES OF A ROTH IRA – NOT ALL MILK AND COOKIES

What Is The Average Audit Rate By Income Level?

In a great display of public income profiling, the IRS recently highlighted they are increasing their audit rates for income levels above $200,000.  If you study the chart carefully, you will see that after $200,000, your audit rate percentage goes up anywhere from 3X to 30X the average audit rate for those making less!

I’ve said this before, and I’ll say this again, the average income for maximum happiness is $200,000 a year per person because $200,000 is the income level which provides maximum financial reward without drawing discrimination from the government or general public.  Any income above $200,000 gets assaulted like a rabid pit-bull against a defenseless baby bunny!

Average Audit Rates By Income In America

IS INCOME PROFILING OK?

We all can agree that racial profiling is not OK.  Therefore, is income profiling OK?  Are we really going to allow the government to try and make the lives of the wealthier incrementally more miserable?  By doing so, we are saying that those who make more in our free country are more likely to cheat on their tax returns.  Wouldn’t those who have more money feel less of a need to cheat on their taxes since they already have enough?  Maybe.

However, if you are super rich, you’ve got the finest accountants money can buy who know these stats and who will ensure that in case of an audit, they will do everything possible to make sure things are clean because too much is at stake, including their own jobs!

From a rational point of view, given our tax code is 10,000+ pages long, we can assume that errors will be made across the entire income spectrum.  The flat tax above a certain income level is clearly the most efficient way to go.  Given limited resources at the IRS, it is rational for IRS agents to go after bigger fish to descale, slaughter, and eat vs the little minnows.  Better bang for the buck.  However, once again, is this right?

Recommendation: I’ve been using H&R Block’s Premium Tax Software to do my own taxes for the past 11 years. It’s inexpensive and very easy to use for novice to advanced tax filers. The software always updates with the latest tax rules so you’re never behind. They also have audit protection service as well.

Regards,

Uncle Sam

Tax Rates Based On Work Ethic Shall Fix The World

Light Bulb FluroescentI want to fix America and make things better for our children.  We cannot fix anything through complaining.  Instead, solutions must be made and implemented.  Of course no solution will be perfect, as there will always be a group of people who feel unduly hurt by new proposals.  That said, during tough times, tough choices must be made!

One of the best ideas proposed to help improve our country’s fiscal health and our personal finances is limiting what consumers can buy based on their high school grades.  Since high school is mandatory, we use high school as a barometer.

Let’s use the car as an example of how we can use grades as a way of controlling consumption to protect our fiscal health.  The car is one of the great personal finance killers of our generation and our attitude towards what our car spending habits needs to change!

The assumptions in this article are namely: 1) Big government is good, otherwise, we would not allow such massive federal government spending and ballooning budget deficit, 2) We are all patriots and want to help America, and 3) Despite allowing big government, we are still a meritocracy.

Please keep an open mind while reading as we look towards controlling our overconsumption habits and healing our nation!

THE “GRADES AND CONSUMPTION PLAN”

Is Discrimination OK If You Aren’t Being Discriminated Against?

Iguana In TijuanaOn Wednesday, January 18th large internet companies such as Wikipedia blacked out their sites in protest of the Stop Piracy Act Bill (SOPA).  The nice-sounding bill threatens to destroy creativity and freedom of speech on the Internet by allowing the US Department of Justice and copyright holders authority to attack sites who enable or facilitate copyright infringement.

Imagine Financial Samurai sharing a piece of useful information on how to prevent credit card theft online, and the original creator is from some giant corporation who has a propensity to sue despite linking back and giving credit.  I will probably never bother to share this useful content in fear of having some overly paranoid lawyer sue me for SOPA infringement if this bill passes.  Our society is already litigious enough!

I’m proud of the Internet community for speaking out against SOPA.  The government, despite all its “good intentions” should not be in the business of regulating what we can share and say online.  Sure, there is a limit to what we can and should do, especially if someone is being untruthful, but for the government to get involved with what I can and cannot say on my own site is wrong and I am fiercely against SOPA and more government regulation!

You would think that those who are against big government would also be against big government who discriminates based on income, gender, and sexual preference, but you’d be mistaken.  To many, discrimination is OK, so long as they aren’t being discriminated against.

THE HYPOCRISY OF INCONSISTENCY

No New Taxes Before Pension Reform Dumbass

Wages And Pensions Public vs. PrivateIn my fiscally irresponsible state of California, Governor Jerry Brown (D) is proposing raising taxes on people making over $250,000 a year.  According to the SF Chronicle, 65% of those polled believe this is a great idea.  Well No Duh useless poll and uninsightful newspaper.  Most people or households don’t make more than $250,000 a year so of course they’d be for raising taxes on those income earners!

In fact, less than 5% of the population makes more than $250,000 a year, so why don’t 95%+ believe this is a great idea?  The reason is because Jerry Brown has also proposed raising the sales tax by another 0.5%!  Uh oh, suddenly since everybody has to pay for an increased sales tax, not everybody is for it!

Hey, what’s a 10.5% sales tax rate from the 10% now?  At least you have a choice in paying taxes, whereas if you are making above a certain income level, you don’t.  Let’s just raise sales taxes to 20% since rich people have a lot of money and buy way more things they don’t need anyway!

WHY ISN’T THERE PENSION REFORM?

Understand Why A Temporary Payroll Tax Cut Extension Is A Mistake

A temporary payroll tax cut extension or a temporary tax cut anything is a mistake.  The important issue to understand is what people do with their money during a temporary tax cut. If you know that a tax cut is temporary, you aren’t going to spend your tax savings because you know a tax hike is coming.

Given you aren’t spending your extra income, you are doing nothing to stimulate the economy. In fact, not spending your income is hurting the economy more than if there were no tax cut since we are robbing from Social Security in the future.  Giving tax revenue to the government would at least be wasted on some social programs.

A non-reaction to temporary benefits is as clear as day. We are taught this phenomena in high school economics, college economics, business school economics and observe our own actions in the work force.  Here are some examples to help illustrate:

Example 1: You won’t stop training your hardest if your next opponent after Peewee Herman is Mike Tyson.

Example 2: You won’t stop studying after your open book mid-term if your final exam is closed-book and accounts for 30% of your grade.

Example 3: Samsung Electronics won’t stop innovating its smartphones just because Apple didn’t release its iPhone 5.

Given you agree with the three examples, why would you ever spend your payroll tax cut income when you know you’ll have to pay more payroll taxes in 2013?

WHAT ABOUT THE REALLY POOR?