The documentary America – From Freedom To Fascism can be viewed on youtube.com and has been viewed over 785,000 times. The question, Aaron Russo, a well known producer and director, inquired about should be a top priority for every citizen of the United States.
The tax in question is solely the income tax on wages. The following list (taken directly from the film) are the many types of taxes we maybe be required to pay depending on our wants and/or needs:
Automobile Registration Tax | Building Permit Tax | Capital Gains Tax | CDL License Tax | Cigarette Tax | Corporate Income Tax | Dog License Tax | Estate Tax | Federal Unemployment Tax | Fishing License Tax | Food License Tax | Fuel Permit Tax | Gasoline Tax | hunting License Tax | Inheritance Tax | IRS Interest and Penalties | Liquor Tax | Local Income Tax | Luxury Tax | Marriage License Tax | Medicare Tax | Property Tax| Parking Meters?| Real Estate Tax | Septic Permit Tax | Service Charge Taxes | Social Security Tax | Road Usage Tax | Sales Tax | Recreational Vehicle Tax| Road Toll Booth Taxes | State Income Tax | State Unemployment Tax | Telephone Federal Excise Tax | Telephone Federal Universal Service Fee Tax | Telephone Federal, State and Local Surcharges Taxes | Telephone Recurring and non Recurring Charges Tax | Telephone State and Local Tax | Telephone Usage Tax | Toll Bridge Tax | Toll Tunnel Tax | Trailer Registration Tax | Utility Tax | Vehicle License Registration Tax | Vehicle Sales Tax | Watercraft Registration Tax | Well Permit Tax | Workers Compensations Tax | ….
And once you’ve paid all that, then there’s this: the Tax Rate Schedule for individuals.
(Picture taken from the text Concepts in Federal Taxation 2018 Edition)
Keep in mind the term TAXABLE INCOME is imperative because it’s the base amount to determine what your tax will be according to the tax rate schedule. It already accounts for most of those prior taxes listed above that you’ve paid and then some.
*Yes, there “credits and deductions” available to help lower that taxable income, but they will be covered in a different post.
Two concepts to notice with the tax rate schedule are:
- There is the tax + the percentage over “the next dollar (S)” of income.
- You are either paying half (employee) or the full (self-employed) cost of your SOCIAL SECURITY TAX AND MEDICARE taxes throughout the year.
I had a client call me after I prepared her returns one time asking why she doesnt get a refund of boxes 4 and 6 on form W2. Well ma’am, those are non-refundable taxes paid on your wages (employment taxes). Box 2 is somewhat of a refundable tax meaning if you chose to withhold more than what’s due, you’ll get the difference back.
Corporate Fascism is another film that I found fascinating.
There is so much more to discuss here, but this is just my intro into the topic of tax reform. It’s a touchy subject, I know, but it should be on the minds of everyone who earns a living and spends their hard earned cash. I encourage you to pull out last years copy of your W2’s and your 1040 (just 2 pages) and scrutinize it a little bit. Know what your taxable income was last year. You have a tax adviser/preparer, yes, but it will benefit you to also have an understanding of this very important information. You have a stake in you!
Currently, I try to use the Internal Revenue Code to my advantage to maximize after tax wealth; but that doesn’t mean that I don’t fantasize about what a world the less stress on the implications of income taxes would be like. Anyway. More to come.