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1. Any tax relief you get will be begrudging, complex, limited--and not very relieving.
President Clinton recently vetoed very modest attempts at tax relief. Even these provisions were buried inside other legislation; tax relief does not have the political "legs" to get through all by itself. Sure, there are certain areas that are politically popular targets of tax relief: medical costs, small businesses, low-income wage earners. But Congress merely exposes itself as a den of hypocrites when it engages in pseudo-tax relief.
Take medical costs. Congress passed--and Clinton vetoed--legislation to increase the small employment health premium deduction to 100%. Fine. But what about the much more important idea of reducing the floor for deducting medical costs? Right now, even if you itemize, you can't deduct medical costs unless they're more than 7.5% of your adjusted gross income. Heck, if you have that many medical costs taxes will be the last thing on your mind.
Of course this monstrously unfair law is such an easy thing to fix. Simply reduce the floor. Congress won't touch it. It's too simple, it would cost the government too much--and it would be too much relief.
Consider also the FICA tax.
This is one of the most unfair taxes on the planet. That's because you pay a flat tax until you reach $72,600 in salary. AND THEN IT STOPS. No more taxes after that. You can earn $200,000, $ 2 million or $2 billion and you won't owe a penny more than someone making $72,600.
So why don't you hear Congress more actively trying to get rid of this tax--which is beyond regressive?
Because there's too much money in it! Whenever the masses are taxed, the government is most enriched. And most reluctant to change the law.
Tax relief that truly helps the "middle class" isn't feasible since so much money's involved.
But tax relief that won't bust the budget will normally mostly favor the rich, not a politically popular notion.
Thus, you generally get no tax relief of any significance.
True tax relief is rare and infrequent. But whenever there is an opportunity for getting it, taxpayers should unwaveringly support such relief.
2. Your true tax burden will become harder and harder to determine.
And that's just the way the bureaucrats like it.
As baby boomers enter into their retirement years--and stop earning big paychecks-- government will be getting proportionally less revenue from income taxes. Thus, government will have to pursue even more than it already has other means of taxation.
The litany of taxes is long and growing: Federal income taxes, state and local income taxes, general sales and use taxes, gasoline taxes, death taxes, property taxes, payroll taxes, telecom taxes, utility taxes, excise taxes, surtaxes, taxes on taxes, and taxes that are called something other than taxes, like fees.
So when you try to calculate how much of your hard-earned income you pay to the government--any government--in taxes, you find it a nearly impossible task.
Truth is, we really don't know how much we pay in taxes.
Which is fine with the government.
3. Despite its new kinder, gentler image, the IRS will become ever more aggressive.
If you believed the media's coverage of the IRS, you would envision this vicious tax collection agency as a born-again Salvation Army, earnestly collecting voluntary contributions from citizens. Yes, it's as if IRS agents have hung up their audit manuals and are now ringing bells at street corners asking for donations...
The latest image-boosting move by the IRS is to put the pictures of missing children in their publications and instruction booklets, recalling the days when milk companies plastered these pictures on the sides of milk cartons.
Truth is, the IRS is merely biding its time. It got caught acting like the Gestapo. In highly publicized hearings, the tax agency was shown to have used its position of great power to destroy the lives of many innocent taxpayers.
So the IRS is playing the public relations game. For now.
To be sure, they're still at many of their old tricks. Like giving you incorrect advice over the phone--and going after you if you take that advice; sharing your private tax information with third parties; destroying your life once they can sink their teeth into you.
Nevertheless, they are crying poor--saying they don't have the funds to audit more people. And they will claim that the various Taxpayer Bills of Rights that have been passed, toothless though they are, have tilted the playing field too much in favor of the taxpayer.
So the next news you hear will be that tax collections are down--because the IRS doesn't have enough money and isn't as aggressive as it was. In fact there was a front page lead story in the New York Times, with the headline: "IRS is Allowing More Delinquents to Avoid Tax Bills."
You can guess what happens next. Congressional hearings about how too many tax scofflaws are getting away with tax evasion. And all those revenues are being lost. So, the IRS gets more funds--more power.
And the wolf will shun forever more its sheep's clothing.
Please read on...
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