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Saturday, January 29, 2005
I did a rough cut at my federal and CA state taxes. I think I'm "getting back" more than $6,400. The lifetime learning credit was again a $2,000 boon -- Thanks, Slick Willie!
Something that I may have done wrong is choosing to deduct CA state income tax instead of TX sales tax. In theory, I should be able to do CA state income tax for the time I lived there and TX sales tax for the time I lived here, which would make my federal taxes $60 lower. If I were allowed to take CA sales tax, too, my federal taxes would be an additional $15 lower. This only seems fair. And I promise I would pump that $75 right back into the economy.
Something else I might have done wrong is not deducting all kinds of other taxes. I did my car registration (a whole $60), but not the $9/mo (10.3%) I pay in cable/internet taxes, the $8/mo (26.7%) I pay in phone taxes, the $7/mo (14.6%) I pay in electric taxes, etc. A significant portion of every bill I pay is taxes that are never counted. This also doesn't count the $2,400+ that I "contributed" to Social Security and Medicare. This system is seriously flawed.
I'm not sure if I favor a flat tax or a national sales tax. I like the simplicity of both, but probably the individual self-control over consumption leads me to favor the latter. It would be hard to stomach a 30% tax on a $40,000 car, but that $12,000 plus the rest of the year would still probably be lower than a flat income tax, and might possibly be prorated over a few years (that's what I assume big-ticket sellers will do should it ever come about).
On the other hand, I fear that consumption will decrease if everything suddenly cost 30% more, even if there was more income to fund it. This sticker shock could cause a recession, leading to huger deficits. The alternative to spending money, though, is to save or invest it, which will drive the economy and lead to higher salaries, making the income much higher than before, possibly curing any recession. I'd like to see an economist (I never even took it in college, but think I am strong on macro theory) theorize about the impact of a national sales tax on inflation, especially as it relates to quality of life and the value of the dollar.
Posted by Gel 1:33 PM Post a Comment
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