Why Bother To Get Married?
By Harris R. Sherline on March 9, 2010 at 12:17 pm
Celebrities Susan Sarandon and Tim Robbins split after living together for twenty-three years. They never married, even though they had two sons together. And, Goldie Hawn and Kurt Russell have lived together for over twenty-five years, raised two children and appear to have maintained a very successful relationship.
However, a few questions do come to mind:
- If couples like these can live together successfully for many years, what’s the point of getting married?
- Is the commitment to one another as strong without the so-called “piece of paper?”
- What happens when such couples do decide to split – to the man, the woman, the children?
For one thing, presumably, celebrity couples are financially independent and, generally speaking, can end their relationships anytime without either of them having to be concerned about earning a living.
But, when Joe Six Pack and his “girlfriend” decide to break-up after living together for many years, what happens? Who owns the home and furnishings, bank accounts, cars, retirement accounts and other assets? Who is responsible for their debts? How about child support if there are young children involved?
Without the resources and the financial independence of the rich and famous, the result is often a disaster, especially when children are involved.
We sometimes hear the argument, “My parents got a divorce, and it was so devastating that I just don’t want to risk it.” However, I don’t see how living together avoids the risks of a failed marriage. As a matter of fact, dissolving a live-in relationship can be more difficult and costly to resolve than getting a divorce.
Writing in the Jewish World Review (October 3, 2006), Dennis Prager offered the following reasons why people should get married rather than just live together:
“First, no matter what you think when living together, your relationship with your significant other changes the moment you marry. You have now made a commitment to each other as husband and wife in front of almost everyone significant in your life. You now see each other in a different and more serious light.”
“Second, words matter. They deeply affect us and others. Living with your “boyfriend” is not the same as living with your ‘husband.’ And living with your “girlfriend” or any other title you give her is not the same as making a home with your ‘wife.’ Likewise when you introduce that person as your wife or husband to people, you are making a far more important statement of that person’s role in your life than you are with any other title.”
“Third, legality matters. Being legally bound to and responsible for another person matters. It is an announcement to him/her and to yourself that you take this relationship with the utmost seriousness. No words of affection or promises of commitment, no matter how sincere, can match the seriousness of legal commitment.”
“Fourth, to better appreciate just how important marriage is to the vast majority of people in your life, consider this: There is no event, no occasion, no moment in your life when so many of the people who matter to you will convene in one place as they will at your wedding. Not the birth of any of your children, not any milestone birthday you may celebrate, not your child’s bar-mitzvah or confirmation…”
“Fifth, only with marriage will your man’s or your woman’s family ever become your family. The two weddings transformed the woman in my son’s life into my daughter-in-law and transformed the man in my daughter’s life into my son-in-law. And I was instantly transformed from the father of their boyfriend or girlfriend into their father-in-law…I was now related to my children’s partners. Their siblings and parents became family. Nothing comparable happens when two people live together without getting married.”
“Many women callers to my radio show have told me that the man in their life sees no reason to marry. ‘It’s only a piece of paper,’ these men (and now some women) argue.”
“There are two answers to this argument…One is that if in fact ‘it is only a piece of paper,’ what exactly is he so afraid of? Why does he fear a mere piece of paper? Either he is lying to himself and to his woman or lying only to her because he knows this piece of paper is far more than ‘only a piece of paper.’”
“The other response is all that is written above. Getting married means I am now your wife, not your live-in; I am now your husband, not your significant other…It means we have legal obligations to one another. It means my family becomes yours and yours becomes mine.”
“When you realize all that is attainable by marrying and unattainable by living together without marrying, you have to wonder why anyone would voluntarily choose not to marry the person he or she wishes to live with forever…Unless, of course, one of you really isn’t planning on forever.”
In the final analysis, the question is: Who really benefits from living together?
© 2010 Harris R. Sherline, All Rights Reserved
We Have Met The Enemy and He Is Us
By Harris R. Sherline on March 5, 2010 at 3:25 pm
One of the most valuable lessons about negotiating that I learned in over 50 years as an accounting professional and businessman was to always leave something for the other side. Successful negotiating is not about winning everything and leaving nothing for the other party. That’s one of the biggest mistaken assumptions made by many people and can sometimes lead to undesirable and unintended consequences.
Negotiating is not dictating. It’s a give and take process that, hopefully, can be a win-win for both parties. Otherwise, it becomes an exercise in power, where one side simply dictates to the other.
That said, the example of the day is the unions that represent government employees vs the government entities that employ them and indirectly the taxpayers who ultimately pay the bill. Think about it. What is the long-term outcome likely to be when unions obtain wages and benefits from the government that cannot be sustained over time?
Pogo’s well known quote comes to mind: “We have met the enemy and he is us.” That seems to be the case with government employee unions, which have negotiated wage and benefit packages that are generally better than those of most the taxpayers who are forced to pay the bill.
The argument is sometimes made that government employees are also taxpayers. True enough. However, that would only be appropriate if they were paying the major share of the bill for their own compensation.
The problem has been a combination of government revenue streams that grew steadily for many years, coupled with compliant politicians who responded to the political muscle of the unions that have actively supported their campaigns for election. A particularly egregious example of this was the Santa Barbara City Council election a few years ago, in which the employees’ union asked candidates for City Council a series of questions but would not release their responses to the public.
Not only do the government employee unions have the power to strike but they also vote and, given the percentage of the workforce that now work for government, they represent a major portion of the voting population.
We, that is, our political leaders can resist, but they don’t. Ronald Reagan demonstrated the value of pushing back against the excessive demands of government employees when he fired 11,345 air traffic controllers in 1981, when they attempted what was then an illegal strike.
The result has been the steady growth of government employee costs, to the point that they can no longer be sustained. This is clearly demonstrated by the current plight of Santa Barbara County, which is currently grappling with a projected budget deficit of some $39 million.
The percentage of government budgets that is allocated to employee retirement has been steadily increasing. At some point, those government entities that fail to stop approving expenditures they do not have the money to pay them will eventually go broke. When that happens, whatever retirement benefits they may be contractually bound to pay to their employees will be drastically reduced, of necessity, possibly by a bankruptcy court, if no other way.
But, both the unions and the various government entities seem to keep trying to “soldier on” as if there’s no tomorrow. One gets the impression that if no one looks, the problem will just go away. But, it won’t. There will be a day of reckoning, which appears to be approaching fast.
Writing in the Santa Maria Times, Julian J. Ramos noted (March 3, 2010): “Faced with the unenviable task of closing an overall $40 million budget gap, the Santa Barbara County Board of Supervisors agreed Tuesday to hold off giving direction to county staff on how to narrow that deficit… Most of the budget gap is linked to skyrocketing county employee retirement costs and shrinking property tax revenues, which makes up the majority of the board’s discretionary funding and supports most public-safety programs.”
Fifth District Supervisor Joe Centeno of Santa Maria said he would rather see cuts to non-essential services than see reductions in services to children and adults who need mental-health care. “We have to find a way to accommodate their needs,” he said.
It all sounds good, but no one has the slightest idea how to stretch the available funds to accomplish that without going broke in the process. Ultimately, Santa Barbara County will not be able to meet its commitments to pay the retirement benefits the unions have negotiated for their members. The County will be forced to default, and the unions will have turned out to be their own worst enemy.
It’s time for people in government (at every level) to get real.
© 2010 Harris R. Sherljne, All Rights Reserved
Should California Return To A Part-Time Legislature?
By Harris R. Sherline on March 3, 2010 at 3:27 pm
On August 21, 2009, the Orange County Register ran the following editorial:
Time to return to a part-time Legislature?
Ballot measure effort begins; public mood seems inclined to punish lawmakers.
“With so many special interests deeply invested in pulling the levers and turning the wheels of California state government, scaling back to a part-time Legislature may seem a pipe dream. Still, some dreams come true.
“Three decades ago the odds seemed similarly long for a radical reform of the way California governments were having their way with taxpayers. But outrage from homeowners and businesses financially overwhelmed by soaring property taxes built to a crescendo in 1978.
“The dream of a handful of tax reformers was realized with Proposition 13’s lopsided victory at the polls, rolling back property taxes and imposing a 2 percent limit on annual increases.
Prop. 13 sent a jolt through every property-tax collecting agency in the nation.
“We’re just encouraged enough by recent events to think lightning could strike twice.
“This week Gov. Arnold Schwarzenegger met with a new reform group that intends to put on the November 2010 ballot a measure to abolish California’s year-round state Legislature and replace it with a part-time body to meet 90 days a year. California is one of only six states with full-time legislatures.
“In more placid times, which is to say before the governor’s favorability ratings fell to all-time lows and the Legislature’s even lower, even considering such a proposal would have been
unthinkable for a governor. These are not placid times.
“The Legislature has operated full-time since 1966. But lawmakers were forced to reconvene repeatedly in special sessions to adopt three successive budgets for this year, largely due to their own mismanagement. A fourth session to revise the current budget is possible before year’s end.
“Gov. Schwarzenegger met Wednesday with Gabriella Holt, head of the Citizens for California Reform, a nonpartisan group seeking “more limited and more transparent government.” A spokesman for the governor said that while Mr. Schwarzenegger hasn’t endorsed the idea, he considers a part-time Legislature to be one answer to state government’s mess.
“While that’s a good sign, even more promising was pollster Mark Baldassare, of the Public Policy Institute of California, saying 80 percent of state voters disapprove of the Legislature’s performance.
“The public is in a very angry mood about state government, in particular the Legislature,” Mr. Baldassare told the San Francisco Chronicle. “So anything that comes with making life harder for the Legislature comes with public support — because they’re frustrated with the lack of action on things they think are important.”
“Bringing Sacramento under control just might begin by shrinking the role of those pulling the levers and turning the wheels. Could this be next year’s Prop. 13?”
The Citizens for California Reform website notes: “The Citizen Legislature Act is a constitutional amendment initiative which outlines a legislative session, which will convene in regular session on the first Monday in January of each year for a period not to exceed 30 calendar days. The Legislature will then reconvene in regular session on the first Monday in May for a period not to exceed 60 calendar days thereafter to consider bills vetoed by the Governor. The Act also reduces legislative pay by at least 50% and can only be increased through cost of living adjustments.”
Given that Californian has the highest paid state legislators in the U.S., it’s likely that this initiative will be aggressively opposed by the current officeholders.
Petitions in support of this initiative to place it on the ballot in November of this year are currently being circulated. It has been endorsed by Steve Poizner, a Republican candidate for governor,” who commented: “In the early ‘70s we began the tailspin, I think, when the Legislature became full-time.”
Supporters must obtain almost 700,000 signatures within 150 days following the date a title and summary are prepared by the California Attorney General. That’s a tall order, so it remains to be seen if this measure will make it to the November ballot. If it does, it promises to be a hotly contested issue.
For my part, I’m in favor of a part-time legislature in California. We have allowed our elected officials to become professional politicians, with compensation and benefits that far exceed those of most of their constituents. Term limits have helped, however, it does not prevent politicians from running for a succession of offices, such as the state Assembly, then the state Senate, then state Treasurer, Attorney General, Lt. Governor, etc.
It’s time to eliminate the incentive that makes the life-time pursuit of public office an attractive goal in California and make it necessary for politicians to return to their communities to make a living.
© 2010 Harris R. Sherline, All Rights Reserved
Should The Income Tax And The IRS Be Scrapped? – Part I
By Harris R. Sherline on February 25, 2010 at 7:24 pm
American politicians and tax bureaucrats often say that the United States has the most effective income tax system in the world - because the extent of voluntary compliance by American taxpayers far exceeds that of any other nation. Many societies view taxation as a contest between tax collectors and citizens, with payment or avoiding payment of taxes as the prize. But we are different, they say, because Americans voluntarily, that is, willingly, file tax returns and pay their taxes.
In a pig’s eye!
If that’s true, why do we hear so much about the taxes that are not being paid by people who work or do business in the “underground economy”? Wikipedia observes that estimates of the unreported commercial activity in the U.S. amount to as much as one trillion dollars a year. And, the IRS Oversight Board report for fiscal year 2007 notes that the tax gap, “the difference between what is owed and what is collected . . . is estimated at $345 billion of lost revenue annually.”
Would you file a tax return if you were not afraid of the consequences of not filing?
Putting aside the government’s hype and PR efforts, the reason our income tax system is so successful is FEAR. Fear of being audited, fear of being assessed, fear of tactics employed to collect unpaid taxes, fear of intrusion into our personal affairs, fear of not being able to defend ourselves against the unlimited power of the government in general and the IRS in particular.
I believe the Internal Revenue Service (IRS) has carefully cultivated this image over a period of many years. Who can say that they don’t have a sudden, albeit perhaps brief, fearful reaction when they find a letter or notice from the IRS in their mail? I know I do, and I’m a retired CPA. I don’t want to hear from them, ever! When I get some sort of notice from my friendly tax agency I just know it’s going to cost me time, money and aggravation. Perhaps you’ve noticed over the years that around tax time it’s common to see a spate of media stories about prosecutions for tax fraud. In my opinion, that’s no accident.
Beyond that, the IRS has a reputation for harassing and intimidating taxpayers, often seizing their assets, otherwise destroying them financially and hounding them into bankruptcy. Stories about IRS abuses of power have been legion for years, many of which are well founded.
In the late 90s, Congressional hearings that were held to look into IRS abuses produced a flood of testimony about the agency’s mistreatment of taxpayers, some of which was given by witnesses who were so fearful of testifying against the IRS that their identities were hidden.
Jeff Schnepper, a former professor of taxation, accounting and finance and author of Inside the IRS, How it Works (You Over), details many examples of IRS abuses of the rights of taxpayers. “What is frightening about these stories,” he said, “is that in no case did the agents of the Internal Revenue Service exceed their legitimate authority. In each instance, the then-current revenue statutes shielded their actions.”
Schnepper also noted that many tax professionals feel that the powers of the IRS exceed constitutional limits and that, at times, they “even violate due process provisions and the Fifth Amendment protection against self-incrimination.”
The Internal Revenue Service has more power over the nation’s citizens than any other government agency. Perhaps the most widely abused aspect of IRS power is the “Jeopardy Assessment,” a device that was created by the IRS itself, through its own administrative orders.
Jeopardy assessments enable the agency to bypass its own rules to collect whatever money an IRS auditor claims may be owed by a taxpayer. The initial “jeopardy” determination is made by an IRS district director’s administrative decree, without any judicial review.
The theory behind these assessments is that they merely accelerate the date taxes are due, making taxes that would normally be payable in the future due today. It results in an immediate lien on all property owned by the taxpayer upon notice and demand for payment. In some cases, such as employment and wagering taxes, the IRS doesn’t even need to send a “notice of deficiency” to the taxpayer before seizing his property.
You may wonder how they can do this when they don’t know how much is owed? The answer is quite simple. They make it up. It’s called an estimate.
One incident reported to a subcommittee of the Senate Finance Committee in 1975 illustrates how it works: A French citizen, who was a passenger on a flight to Switzerland, was carrying $247,500 with him, which was discovered when the plane landed in New York. An IRS agent, who did not know whether the Frenchman had earned any income in the United States, nonetheless levied a Jeopardy Assessment of $247,500 against the man when he refused to answer certain questions. The agent testified that he had been instructed to prepare a return showing a tax due of approximately $247,500 and that he had done so. He admitted that the cost of living figure he had used was a pure fiction.
Why was the $247,500 figure picked? Because that’s how much cash the Frenchman was carrying with him on the airplane.
Once the IRS issues a Jeopardy Assessment, it gives the agency broad powers over the property of the taxpayer. In many cases, these summary proceedings can deprive the taxpayer of the ability to continue in business, pay living expenses, or even hire an attorney for defense purposes.
Jeopardy assessments are intended for cases in which the IRS believes a taxpayer might leave the country, remove or transfer his property, conceal himself or his possessions, or do anything else that might “frustrate (or jeopardize) collection of the tax.” Traditionally, they have been used as major weapons in the fight against organized crime, specifically gambling and narcotics. But they have been misused.
There has been a lot of talk over the years about drastically revamping or eliminating the nation’s income tax system, including getting rid of the Internal Revenue Service. Many people feel this is long overdue, while others believe such a dramatic change is far too drastic and favor a general overhaul of the existing tax laws. Putting aside the issue of how much money is realistically needed to operate the government and its many and varied programs, the basic question seems to be whether the current tax system can be sufficiently reformed to better serve our society’s needs or if it should simply be scrapped altogether and replaced with another form of taxation.
What say you?
(c) 2009 Harris R. Sherline, All Rights Reserved
Why Can’t We All Just Get Along? – Part II
By Harris R. Sherline on February 21, 2010 at 3:06 pm
Contrary to the commonly held view that political discourse today is more unpleasant and ugly than ever, the roots of nasty politics date back to the earliest campaigns in American history.
Joseph Cummins book “Anything for a Vote: Dirty Tricks, Cheap Shots, and October Surprises,” chronicles the history of nasty politics since George Washington’s election in 1789. A 2007 New York Times interview of Mr. Cummins noted the following observations about dirty political campaigns, among others:
“I think the mudslinging definitely is still a big part of our election process, but it’s less broad and vulgar. For instance, there is less aimed at other people’s physical attributes. The 19th century was big on that…Martin Van Buren was accused of wearing women’s corsets (by Davy Crockett, no less) and James Buchanan (who had a congenital condition that caused his head to tilt to the left) was accused of have unsuccessfully tried to hang himself. Oh, and Abraham Lincoln reportedly had stinky feet.”
In response to the question, “What was the ugliest campaign in history?, Cummins commented: “So many dirty elections, so little time…There have been stolen elections (the Rutherford Hayes – Samuel Tilden contest in 1876 was certainly stolen by Republicans in the South…I would say that 1964 was the ugliest presidential contest I have researched. President Lyndon Johnson, seeking his first elective term after taking over for the assassinated JFK, set out not just to defeat Goldwater, but to destroy him and create a huge mandate for himself…They put out a Goldwater joke book, in which your little one could happily color pictures of Goldwater dressed in the robes of the Ku Klux Klan…This committee also wrote letters to columnist Ann Landers purporting to be from ordinary citizens terrified of the prospect of a Goldwater presidency…But perhaps the ugliest things about the 1964 election was Johnson’s treatment of the press. He remarked to an aide that ‘reporters are puppets,’ and had his people feed them misleading information about the Goldwater campaign.”
After the 19th Amendment was passed, “there was an immediate attempt to pander to women voters in 1920, the first year that women began casting their votes for president in large numbers.”
“Both parties at different times in American history have been guilty of mind-boggling attempts to influence elections. In the 1880s, one of the worst decades in terms of dirty tricks, Republicans sent bagmen to Indiana – then a pivotal state – with hundreds of thousands of dollars in two dollar bills (dubbed ‘Soapy Sams’ for their ability to grease palms) in order to purchase votes.”
Totallytop10.com, noting that negative political campaign ads and smears go back many decades, lists the following 10 most negative political campaign ads in U.S. and Canadian history. Whether these are the most negative ads may be arguable, but they are instructive as examples:
- During the presidential primaries in 2007, the three a.m. White House Phone Call ad, in which a Hillary Clinton TV ad portrayed her as being more qualified on military and defense matters than Barack Obama.
- The Willie Horton political ad in 1988, which implied that Michael Dukakis was soft on crime. Horton assaulted a couple and severely raped a woman during one of several weekend passes he received while in prison.
- During the presidential primaries in 2007, John McCain compared Obama with Paris Hilton and Britney Spears, claiming that Obama appeared to be more interested in international fame than serving the country as president.
- In 1980, when he was running for governor of Ohio, Jerry Springer admitted that he had paid prostitutes for sex some years earlier.
- The campaign ad “The wrong kind – congressman Ron Kind.”
- In Canada, the Conservative Progressive party ran an ad that attacked Prime Minister Jean Chretien by focusing on physical defects he was said to have.
- In the Canadian federal election, candidate Stephanie Dion was shown being pooped on by an animated puffin.
- In the 1964 American presidential election, the “daisy girl” commercial warned that if Barry Goldwater were elected he would use the H-bomb and start a war that would destroy America.
- The political ad in the 1800 presidential campaign, Jefferson vs John Adams, arguing that “If Jefferson would be president today we could expect pure evil.”
Dating back to the 1840s, dirty tricks have also played an important role in American politics. Following the Civil War, they became nastier, when, in 1880, a New York scandal sheet published a letter that was purported to have been written by James Garfield to the head of the employers Union of Lynn, Massachusetts, endorsing the right of corporations to hire the cheapest labor available, including Chinese workers. The letter was a forgery, but it almost derailed Garfield’s campaign until he was able to prove that he had not written it.
It’s not unusual to think that nasty political discourse is worse today than ever before, but the record clearly demonstrates that dirty politics has been with us since the beginning of the nation.
As with all things, in political campaigning, the more things change the more they stay the same.
© 2010 Harris R. Sherline, All Rights Reserved
Why Can’t We All Just Get Along?
By Harris R. Sherline on February 18, 2010 at 3:50 pm
A friend recently told me that he can’t stand listening to or watching the news on T.V. any longer, because discussions about politics have become so unpleasant. The constant bickering, name calling and argumentative exchanges have turned him off. He also made the observation that he couldn’t understand the apparent hostility about political issues today, that he doesn’t remember it ever being so extreme. To give you a sense of his perspective, he is a Vietnam veteran in his early sixties.
His complaint set me to thinking about the tone of political discourse in general and whether it is really any worse today than it has been at other times in our history.
A little research turned up some interesting but perhaps not surprising information about ugly political campaigns throughout America’s history. For example, neatorama.com, cites five examples of nasty politics took place in the following presidential contests: Thomas Jefferson vs John Adams in 1800, Andrew Jackson vs John Quincy Adams in 1828, Abraham Lincoln vs Stephen Douglas in 1860, Grover Cleveland vs James G. Blaine in 1884 and Herbert Hoover vs Al Smith in 1928.
In 1800, Jefferson hired someone to write insults about John Adams, one of which was that Adams was a “hideous hermaphroditical character which has neither the force and firmness of a man, nor the gentleness and sensibility of a woman.” This may seem tame compared to political insults today, but it was extremely insulting in its time.
Adams responded with “Are you prepared to see your dwellings in flames…female chastity violated…children writhing on the pike? Great God of compassion and justice, shield my country from destruction.” Sounds a little like the political volleying about national security that’s taking place today between Obama and his opponents, doesn’t it?
In the campaign of 1828, John Quincy Adams and his handlers accused Andrew Jackson of having the personality of a dictator, claimed that he was too uneducated (misspelled Europe), and leveled terrible insults at Jackson’s wife, who had been in an abusive marriage with a man who divorced her, which was considered a scandal at the time. She was called a “dirty black wench,” “a convicted adulteress” who engaged in “open and notorious lewdness.”
Jackson’s supporters responded that Adams had sold his wife’s maid as a concubine to the Czar of Russia.
In 1860, Stephen Douglas said that Abe Lincoln was a “horrid-looking wretch, sooty and scoundrelly in aspect, a cross between the nutmeg dealer, the horse-swapper and the nightman.” He also stated, “Lincoln is the leanest, lankiest, most ungainly mass of legs and arms and hatchet face ever strung on a single frame.”
Lincoln’s campaign responded with taunts about Douglas’ height, referring to him as Little Giant (he was only 5’4”)…said “to be five feet nothing in height and about the same in diameter the other way.”
Grover Cleveland was characterized as lecherous during his 1884 campaign against James G. Blaine. In fact, Cleveland had fathered a child with a widow, which probably wouldn’t amount to much by today’s political standards, however, the chant, “Ma! Ma! Where’s my pa?” was used to taunt candidate Cleveland at the time.
On the other side, Blaine was accused of corruption in his dealings with a railroad, which was confirmed in a letter he wrote, admitting that he knew about the dishonesty and instructing the person to whom the letter was written to “Burn this letter! Burn this letter!”
Democrat Al Smith lost to Herbert Hoover in 1928 largely due to an attack on Smith’s Catholic religious affiliation, which asserted that he had commissioned a 3,500 mile tunnel from the Holland Tunnel in New York to the Vatican in Rome and that the Pope would influence all presidential decisions if Smith were elected.
This concern resurfaced during the 1960 presidential campaign, in which a generally unspoken but widespread fear circulated that if John Fitzgerald Kennedy were elected he would allow his policies to be dictated by the Vatican.
In addition to nasty political discourse dating back to 1800, dirty political tricks in America first appeared as early as 1844, when a phony newspaper story was planted by the head of the Whigs, claiming that James Polk’s salves were branded with his initials, allegedly proving that the candidate sold slaves to finance his campaign. The Whigs also printed phony ballots that confused the names of Democratic and Whig electors, which was intended to mislead voters.
We tend to view current events through the prism of today’s standards, but as ugly as we may think political contests are today, it’s worth noting that they are not regulated by Marquis of Queensbury Rules, that, in politics, anything goes, always has and always will.
As the saying goes, “All’s fair in love and war.” I would modify this adage to read: “All’s fair in love, war and politics.”
© 2010 Harris R. Sherline, All Rights Reserved
Tax Facts 2010 – Part II
By Harris R. Sherline on February 13, 2010 at 10:47 am
Continuing with my annual tax season observations about taxation in America, following are some additional random facts (in no particular order), along with some of my conclusions about our income tax laws, who pays, who doesn’t, and the impacts our system of taxation have on the nation’s productivity:
- Households in the lowest 20% of income received about $8.21 in federal, state and local government spending for every dollar of taxes paid (in 2004), while those in the top 20% received only 41 cents in benefits. (Tax Foundation Working Paper No. 1, March 2007).
- There are 1,890 forms files are available on the IRS website, IRS.gov. The easiest federal income tax form, the 1040EZ, has 33 pages of instructions.
- The IRS distributes 8 billion pages of forms and instructions annually. End-to-end, they would encompass the earth 28 times.
- Approximately 60% of taxpayers hire a professional to have their tax returns prepared each year.
- Income taxes consume over 38% of the average family’s income, which is more than they spend for food, shelter and clothing combined.
- The top ten states that have the highest percentage of people who do not pay taxes are (in descending order): Mississippi (43%), Louisiana (43%), Arkansas (40%), New Mexico (38%), Alabama (37%), Texas (37%), Montana (36%), Oklahoma (36%), South Carolina (36%) and Georgia (36%).
Our tax laws have become so complex and contradictory that no one, not even the most brilliant tax professionals, including IRS experts, fully understand them.
It’s worth noting, I think, that when I started practicing public accounting in the early 1960s, the filing deadline was March 15, not April 15, and only one 90-day extension was permitted. Today, the due date for filing is April 15, and it is possible to obtain a six-month extension - to October 15 - primarily because of the increased difficulty of obtaining the necessary information and the complexity of preparing and filing tax returns.
Many societies view taxation as a contest between tax collectors and citizens, with payment or avoiding payment of taxes as the prize. But we are different we are told, because Americans voluntarily, that is, willingly, file tax returns and pay their taxes.
Baloney! If that’s true, why do we hear so much about taxes not being paid by people who work or do business in the “underground economy”? Would you file a tax return if you were not afraid of the consequences of not filing?
Putting aside the government’s hype and PR initiatives, the reason our income tax system is so successful is FEAR. Fear of being audited, fear of being assessed, fear of tactics employed to collect unpaid taxes, fear of intrusion into our personal affairs, fear of not being able to defend ourselves against the unlimited power of government in general and the IRS in particular.
I believe the IRS has carefully cultivated this image over a period of many years. Who can say that they don’t have a sudden, albeit perhaps brief, fearful reaction when they find a letter or notice from the IRS in their mail? I know I do, and I’m a retired CPA. I don’t want to hear from them, ever! When I do get some sort of communication from my friendly tax agency (federal or state), I just know it’s going to cost me time, money and aggravation. Perhaps you’ve noticed over the years that around tax time it’s common to see a spate of media stories about prosecutions for tax fraud. In my opinion, that’s no accident.
One of Ronald Reagan’s many sage observations sums up the situation rather neatly: “The taxpayer: That’s someone who works for the federal government but doesn’t have to take the civil service examination.” For my part, I believe Americans are over-taxed and under served by their government, while our politicians are constantly looking for ways to impose new taxes under the radar of public scrutiny and awareness. Will it ever end? Probably not, until we have allowed ourselves to be taxed into near or complete oblivion.
© 2010 Harris R. Sherline, All Rights Reserved
Tax Facts 2010 – Part I
By Harris R. Sherline on February 10, 2010 at 11:23 am
Another year of tax season agony has begun, and it’s time to make my annual observations about taxation in America.
Following are some random facts (in no particular order) about our income tax laws, who pays, who doesn’t, and the impacts our system of taxation has on the nation’s productivity:
- When the 16th Amendment to the Constitution established the federal income tax in 1913, the intent was to tax only the very rich. Rates began at 1% and increased to 7% for taxpayers with income in excess of $500,000. Less than 1% of the population paid any income tax at all, compared with almost 50% of taxpayers paying as much as 35% of their taxable income today.
- The federal tax code grew from 14 pages in 1913 to over 9,000 pages today, and it now requires some 66,000 pages to document all the IRS regulations and other source material.
- The Tax Foundation’s 2007 survey reported that 83 percent of Americans felt the income tax code was too complex. While the average American paid 32.4 percent of their income on taxes, they believed the total of federal, state and local taxes should not exceed 14.7 percent.
- It’s almost impossible to accurately comply with the federal tax law, no matter how honest and well-intentioned taxpayers may be. In 1998 there were 34 million civil penalties assessed by the IRS.
- Today, the top 5% of wage earners pay a little over 54% of total individual income taxes, while the top 10% pay about 60%, and the top 50% pay approximately 97%. Translation: Just half of all taxpayers pay almost 100% (96.54%) of all income taxes, while almost 50% pay no income taxes at all.
- The Internal Revenue Service (IRS) has approximately 94,000 employees (FTEs or full-time equivalents) and a total 2010 budget of $12.4 billion.
- Estimates of unreported commercial activity in the U.S. amount to between $2.0 and $2.25 trillion dollars a year, and the IRS Oversight Board report for fiscal 2007 notes that the tax gap, “the difference between what is owed and what is collected…is estimated at $600 billion of lost revenue annually.” Question: If it’s an underground economy, how does anyone know how much income is not reported?
- The Tax Foundation reported that businesses and individuals now waste over 6.6 billion hours on federal tax compliance activities each year, at an estimated cost to taxpayers of $368.4 billion in 2010. That amounts to a 22.8% surcharge on the total amount collected through the tax system and is equivalent to over three million people working full time, just to deal with tax compliance.
- In 1913, when the sixteenth amendment was passed, the federal tax code was comprised of 1,337 words. Today, according to the Tax Lawyers Blog, it now requires over seven million words to document.
- When the General Electric Co. filed the corporation’s tax return electronically, it took 24,000 pages to document. The Associated Press (June 1, 2006) noted, “If GE had sent paper forms, the return would have staked up eight feet high…”
- In 1993, the General Accounting Office (GAO) audited the IRS for the first time in its history and found widespread evidence of financial malfeasance and gross negligence, including the fact that the agency was not able to account for 64% of its congressional appropriation.
- The Alternative Minimum Tax (AMT) “was created in 1969 to target 21 – yes, 21 – millionaires who had managed to avoid paying any taxes at all.” (Wall Street Journal, April 14, 2007). “… more than three million taxpayers (were)…hit by the Alternative Minimum Tax on the(ir) 2006 income. The next year (2007) that number could have increased to 23 million except that Congress passed a so-called “patch” to prevent it.
- The federal income tax, currently as high as 35% of taxable income, is increased by as much as 11% in state and local income taxes, plus another 6.20% and 1.45% in social security and Medicare taxes, which makes the total tax burden for some taxpayers almost 54%, not including excise, sales and property taxes, along with a host of other taxes, assessments and fees to numerous to mention. Medieval serfs were required to give only one-third of their production to the lord of the manor, and they were considered slaves.
© 2010 Harris R. Sherline, All Rights Reserved
Should We Declare War on Terrorism?
By Harris R. Sherline on February 2, 2010 at 8:25 pm
The latest question being debated in the media is, “Can we kill an American who is working for al Qaeda overseas?” It may be rhetorical, but it clearly demonstrates the confusion in America today about our status, that is, whether we are at war or not?
The nation is divided over the issue. If we are at war, why aren’t we trying war criminals in military tribunals as opposed to giving them the same rights that our citizens enjoy in civilian courts?
The Bush administration seemed to be clear that we are at war, and that enemy combatants should be tried in military courts. However, although Guantanamo Bay was established as the place to hold people who were picked up on the battlefield or otherwise captured and known to be terrorists, such as Khalid Sheikh Mohammad, in the eight years following the World Trade Center attack, the government never completed the job of updating our laws to deal with such prisoners.
Most of the public seems to believe we are at war and that it is a war on terrorism. However, the Obama administration apparently does not agree.
This leads to confusion and weakens our nation’s defenses. Obama’s position that the word “terrorism” is not to be used by his administration and being unwilling to acknowledge that we are at war is directly at odds with his authorization to send an additional 30,000 troops to Afghanistan and his approval of attacks by military drones in both Afghanistan and Pakistan.
The confusion is further exemplified by the administration’s handling of incidents like the Fort Hood shooting, promising to close Gitmo without thoroughly considering the consequences, and moving the trials of Khalid Sheik Mohammad and the Christmas Day bomber to civilian courts. For the most part, the reasoning behind these decisions is not clear and the public appears to strongly object to them.
Article One, Section Eight of the U.S. Constitution says, “Congress shall have power to…declare War,” so perhaps the question should be, “Why not declare war al Qaeda and any other group that attacks us?”
We seem to be overlooking the fact that Osama bin Laden declared war on the United States in August 1996. His declaration was published in a London based Arabic language newspaper and followed a long list of attacks on U.S. properties and personnel overseas dating back to 1979, when Iran took U.S. embassy employees hostage. It continued from there with the 1983 attack on the Marine barracks in Lebanon and a succession of other attacks thereafter, the most notable of which were the attacks on the World Trade Center in September 2001 and the attempt to bomb a Northwest Airlines flight from Copenhagen to Detroit on Christmas day 2009.
So, what’s the problem? Are we at war or not? And, if we are, why don’t we formally declare war and move on from there? The obvious question is, “against whom?” There is no easy answer to this, but how about starting with al Qaeda and any nation or group that gives them support or allows them to use their territory for training and staging attacks on other nations?
As for declaring war, that’s the province of Congress, not the president, so why not move the process directly to the legislature where the issue can be openly debated, regardless of what the president may want? Ultimately, the decision is up to them, not him.
My guess is that the American people would strongly favor debating and settling this issue once and for all. We should eliminate any confusion about holding enemy combatants until the war ends and trying them in military tribunals or civilian courts, or killing an American who is openly waging war against his own country.
I know it’s a complicated and confusing issue, but no more than many others that are taken up by Congress. Let them get everything out on the table for all to see and discuss, then decide – so we can go forward with a clear understanding of the alternatives, good and bad, which hopefully would unify the nation behind a single, clear-cut policy.
The problem with the current situation is that it allows our enemies, al Qaeda, Muslim fundamentalists and others, such as Iran, to capitalize on our confusion and adapt their strategy accordingly, while we can’t seem to agree on how to respond.
As long as we continue to allow our enemies to exploit our vacillation and indecision, there are sure to be more attempts to attack our homeland, some of which are bound to succeed. To succeed, they only have to be right once, while to prevent them we must be right 100% of the time.
I believe we should push Congress to debate the issue and vote up or down for an open declaration of war on our enemies.
© 2010 Harris R. Sherline, All Rights Reserved
Obama’s State of the Union Lecture
By Harris R. Sherline on January 28, 2010 at 5:03 pm
Forgive me if I appear to be skeptical, but after his first year in office, I am just not able to take anything our president says at face value.
The annual state of the union message that he presented to Congress on January 27 is required by the Constitution, albeit not necessarily in the manner and form that are employed today. Article II, Section 3 of the U.S. Constitution says: “He (the president) shall from time to time give to Congress information of the State of the Union and recommend to their Consideration such measures as he shall judge necessary and expedient.”
In 1913 Woodrow Wilson initiated the practice of delivering the State of the Union message in person. Prior to that time, it was a written report that was sent to Congress to be read by a clerk.
I had a number of reactions to Obama’s January 27 State of The Union address: It was more of a campaign speech than a message to Congress on the status of the nation. It was also overly long and boring, and Obama was combative much of the time, rather than unifying, the prime examples being a direct insult to the Supreme Court about their recent decision on campaign finance and his frequent references to the fact that he had inherited most if not all of the nation’s current problems from the Bush administration.
The speech was riddled with self-serving “facts,” many of which were either distortions or downright lies, but perhaps most of all, typical of the president’s style, it was not so much a speech as a lecture, which I found insulting.
A Fox News fact check noted seven instances where Obama’s statements did not square with the facts, including the following:
OBAMA: “Starting in 2011, we are prepared to freeze government spending for three years. Spending related to our national security, Medicare, Medicaid and Social Security will not be affected…” FACT: Obama failed to point out that this amounts to less than one percent of the deficit.
Regarding his health care initiative, OBAMA said: “Our approach would preserve the right of Americans who have insurance to keep their doctor and their plan.” FACT: There is no way to guarantee this and it most certainly cannot be the case with the type of single-payer plan he envisions.
The president also took his “share of the blame” for “not explaining” health care better, but he failed to acknowledge “that 61% of voters nationwide want Congress to drop the health care plan.” (Rasmussen Reports). Translation: He intends to stuff it down the throats of those who disagree, like it or not.
OBAMA: called for action by the White House and Congress “to do our work openly, and to give our people the government they deserve.” FACT: This is an astounding claim, considering that the entire process related to the health care proposal has been done behind closed doors, without including any Republicans, who were literally locked out.
OBAMA: “We will continue to go through the budget line by line to eliminate programs that we can’t afford and don’t work. We’ve already identified $20 billion for in savings for next year.” FACT: Pay attention to Obama’s words. He may have identified savings but that doesn’t mean any have been or will be realized.
OBAMA: “The United States and Russia are completing negotiations on the farthest-reaching arms control treaty in nearly two decades.” FACT: The U.S. and Russia have not reached any agreement, yet the president unilaterally abandoned the anti-missile system that was intended to protect Poland and the Czech Republic without getting anything from the Russians in return.
OBAMA said that lobbyists have “outsized influence” over the government, claiming that his administration has “excluded lobbyists from policymaking jobs” and that they should be required “to disclose each contact they make on behalf of a client with my administration or Congress” and “to put strict limits on the contributions that lobbyists give to candidates for federal office.” FACT: The White House obtained seven waivers from the ban against lobbyists, including Eric Holder (Attorney General), Tom Vilsak (Secretary of Agriculture), William Lynn (Deputy Defense Secretary), Will Corr (Deputy Health and Human Service Secretary), David Hayes (Deputy Interior Secretary), Mark Patterson (Chief of Staff to Treasury Secretary), Ron Klain, (Chief of Staff to Vice President Joe Biden), Mona Sutphen (Deputy White House Chief of Staff), and Melody Barnes (Domestic Policy Council Director).
There’s more, much more, that could be said about Obama’s State of The Union speech, however, suffice it to say that more of the same probably won’t change anyone’s opinion about him. The bottom line is that I don’t like the man, don’t trust him, and believe his policies are bad for the country. I found his speech more of the usual self-aggrandizing, self-righteous posturing we have come to expect of him.
Those on the other side of the political divide obviously disagree. So be it.
© 2010 Harris R. Sherline, All Rights Reserved
Read more of Harris Sherline’s commentaries on his blog at www.opinionfest.com
-
Publisher/Editor
-
Spread the Word!
Help us spread the word about our site by bookmarking OPINIONFEST with your favorite social bookmarking application.
-
Sponsors & Partners
Interested in sponsoring or partnering with Opinionfest? Get in touch with Harris to let us know how you can help!
