Is it possible that the idea of a flat rate income tax is really a good idea? Some persons claim that everyone paying at the same tax rate, with no deductions or exemptions, is far fairer than the present system where the wealthy can presumably avoid their obligations with clever accounting tricks. Over the years the idea has been promoted by such public figures as presidential aspirant Steve Forbes and one-time California Governor Jerry Brown.

Arguments against the flat tax come from representatives of all classes. Those who claim to speak for the poor maintain that the anticipated flat tax rate, generally estimated to be no more than 15-20%, will put money in the pockets of the rich by lowering the top brackets in which they currently reside. Members of the upper end of the income scale vehemently denounce the flat tax, contending that the loss of legitimate deductions and credits will penalize them, resulting in their bearing an even greater share of the nation’s tax load. And of course many in the great middle class are equally hostile to the idea, fearing that the loss of such benefits as family exemptions and mortgage interest deductions will work to their ultimate disadvantage. For every enthusiastic supporter of the flat tax you can find an equally vocal opponent.

It cannot be denied that the world of taxation is hostile, and the government’s appetite for the citizens’ dollars is insatiable. It’s likely that whatever flat tax compromise might ever be reached, the bureaucrats’ take will be at least what it currently is—and quite possibly larger. This is because there’s no way to tell what laws will eventually come to pass after the political infighting ends. The lobbying activities will be intense while the charges and countercharges hurled will exceed anything in recent memory. Without a doubt, one thing can be counted upon: Fairness will not be a major consideration in whatever legislation is finally enacted.Perhaps a final comment is in order. Most taxpayers resent having their money taken, so the politicians must regularly genuflect to the concept of tax relief, and an endless variety of proposals are periodically floated to convince the citizens that their best interests are uppermost in the minds of their leaders. The flat tax is but one such contrivance.

A concluding thought:
Although I entertain some preconceived biases on this matter, I recognize that there are valid arguments both pro and con. For those of you with strong opinions on this subject, I’d be pleased if you’d share them with us.

With income tax filing day now past, how much money do you have left? As each year passes it’s likely to be less, thanks to a law enacted back in 1969 to collect taxes from 155 rich tax dodgers called Alternative Minimum Tax (AMT). Exactly how it happened that by 2005 about 3.6 million taxpayers got caught in this web is a tribute to Uncle Sam’s ingenuity. But the real question is whether that number will soar, as predicted, to 31 million by 2010.

If announced intentions mean anything, the beleaguered taxpayer might expect relief, as politicians of all stripes call for doing away with the unfair assessment. On record are numerous legislators, among them Senator John Sununu (R-NH), who in May 2005 announced his co-sponsorship of a bipartisan effort for repeal. And last November the President’s Advisory Panel on Federal Tax Reform flatly recommended that AMT be eliminated in 2006. Even as recently as April 7, 2006, two New Jersey Democrats, Senator Bob Menendez and Congressman Rob Andrews endorsed its rollback or elimination. With all this political horsepower, is it reasonable to anticipate that AMT will soon be a thing of the past?

I have a prediction. Treatment of AMT will parallel that of another levy: FICA, the social security payroll tax that the President attempted last year to reduce through partial privatization. That effort died an ignominious death, as will any attempt to eliminate this taxpayer burden—and for the same reason. The simple fact is that these tax devices deliver tremendous sums into the U.S. treasury. Regardless of political posturing, government officials at all levels want your money.

A concluding thought:
Regardless of political philosophy or party affiliation, everyone who enters government service sooner or later comes to share the attitude that the citizens’ pockets are there to be picked. In short: Uncle Sam wants yours!

Welcome to income tax time. If you planned ahead, you’ll not owe Uncle Sam anything by the filing deadline on April 15th. In fact, if you overpaid the tax man, you might even have money coming back. If so, it’s time to beware of what’s lurking out there to snare you. It goes by the name Tax Refund Anticipation Loan.

The concept is simple, with many firms delighted to loan money secured by your coming tax refund. Just sign a few papers and cash is quickly deposited into your personal account. How can you beat that?

There is, of course, a fly in the ointment. The loans offered will cost you an arm and a leg. This is because up-front fees charged, when figured over the very short periods of the loan, often no more than a week or so, work out to astronomical numbers. Credit card companies that specialize in soaking unfortunate cardholders at annual interest rates up to 30% are philanthropists by comparison. Refund anticipation loans that carry rates starting at about 50% can easily exceed 200%.

Where are these fast-cash opportunities found? You needn’t look far. The major marketer is America’s foremost tax preparer, H&R Block, which proudly offers this service through its 12,000 nationwide offices. Another is Jackson Hewitt, Tax Service, second in the business with 5400 franchised outlets. And not to be excluded from such a lucrative enterprise are many banks that operate through online facilitators such as TaxEngine.com. To the list you may add car dealers, check-cashing services, and others.

A concluding thought:
Even if you need money quickly, there’s rarely any reason for such a loan. A taxpayer that files electronically may expect a refund from the IRS within a couple of weeks. Nothing short of a pending catastrophe should lead you take such a beating.