Taxes and a disturbing trend

I have never filed a late tax return.

Ever.

It is not uncommon for state, local and federal tax departments to send my corporation a letter, asking for some explanation or asserting that I had not filed correctly or filed and paid on time, etc. I run a very tight ship and these matters usually get cleared up with a prompt letter and excessive documentation proving the date of filing, the date the check cleared and whatever else is needed to satisfy the anomaly.

I hire very good people. They have never been wrong.

It used to be that we would get a random letter every other year or so. It happens. Tax departments are very complicated with a lot of gears and levers and people pushing and pulling those levers. But lately, I’ve noticed that we are receiving letters almost quarterly from every tax department; from Ohio Department of Taxation to Ohio’s Health and Human Services to The City of Vandalia to the Internal Revenue Service. As of today, we have five outstanding tax issues.

FIVE!!!

I have no doubt that all of these will be resolved, but I have to ask: What the hell is going on here? Are these tax departments understaffed? I’d like to think that is the problem because the other alternatives is they are either stupid or malicious. That is not a road I’m willing to go down.

I have noticed, though, that no matter the outcome, the tax department always insists on assessing a late filing fee, even though the return was not late. Yes, we fight that but it is one more step in the process.

Maybe public sector cuts are not the answer. Small government may just mean that critical services gets rushed and too many mistakes happen. Mistakes like this cost private business a lot of money in extra payroll, time away from development, paranoid documentation practices and just needless pain-in-the-ass. All of this is real money.

As a private business, you can’t just ignore a tax letter. Really, not wise. It doesn’t matter how small you are, it has to be attended to right away.

This isn’t a “I hate paying taxes” rant. I get why we pay taxes. Like everyone else (except Warren Buffet) I would like to pay less. But mostly, I would like to not be on the crap end of these letters that seem to come in without rhyme or reason. If that means we should be increasing taxes to hire a few more people to make sure these mistakes don’t happen, I’m for that.

But this random “wheel of fortune” game we seem to now be on ticks me off more than higher taxes. This makes me feel like a sitting duck.

What Barack Obama is doing right or how he is navigating a room full of teenagers

I listened to President Obama’s press conference yesterday. I watched Chuck Todd ask questions and look really confused as he was getting a pretty straight-forward response from the president. Then, I watched as Todd was asked about the press conference later by the afternoon and evening “MSNBC Dog and Pony Show” hosts and how he went into editorial-hyperbole mode and got everything all wrong like he always does. Let’s remember, I watched the same press conference. I know what I saw and heard.

Then I watched the late night MSNBC hosts Olbermann, Shultz, O’Donnell and Maddow rip President Obama a new one for capitulating to the Republicans. Olbermann may have a point, but Maddow kinda glossed over some facts, like not every Democrat is on Obama’s team. Most are on their own “I have to get re-elected in 2 years” team so they are not really thinking clearly.

And I’m trying to figure out what the heck is going on that these otherwise really smart people just are not seeing. And here is how I can best explain it.

It is like being in a family of teenagers. The GOP is the teenager who is defiantly against anything mom and dad do. It doesn’t matter what it is, they are going to say “no” if mom and dad say “yes.” Just as simple as that.

The “professional left” is like an “entitlement” teenager who just found out that mom and dad are not really her best friends but her parents. And sometimes parents say “no” to things. Entitlement teens lash out at their parents by saying things like “you don’t love me” or “I hate you,” etc. Their “love” for mom and dad is rooted in what they can manipulate them into doing.

Now here is the kicker: The teenager is not capable of seeing past the end of their nose. They are not responsible for making the mortgage payment, keeping the water and heat on, making sure the gutters don’t leak, making sure the tuition is paid and there is food on the table. For most teenagers, food is magically produced when they open the fridge door. In short, they can afford to have me-centric opinions of the world. Someone else is paying their bills.

Parents can’t afford a me-centric view.

The GOP absolutely, positively, without a doubt would have blocked all unemployment benefits to over 5 million unemployed citizens with impunity. They are incapable of seeing beyond their own noses and view themselves as defiant for a cause, just like the defiant teenager sees his actions as noble and principled.

The Left wants it all right now and is really pissed off at her defiant brother whom she sees as manipulating mom and dad more effectively than she can, even though she is just as manipulative and devious with her false love.

Someone had to be the responsible parent, even if it meant that the defiant teen would gloat in victory and the entitled teen would be screaming “I hate you!” at the top of her lungs. And I think that is what we saw; a parent trying to do the best thing from a crappy list of options, who would risk the scorn of one teen and the vilification of another to keep the lights on for the family. At least for one more month.

Or not. You decide and comment below. I assume you care.

.

Some common sense tax math

Hey, everybody, listen up to some common sense tax math that the Republicans are hoping you are too scared or stupid to do. After listening to John Boehner and every other right-wing pundit out there, it is time to just come clean about what the expiration of the Bush tax cuts really mean.

Allowing tax cuts to expire will hurt job growth
Nope. The tax cuts were not designed to stimulate job growth, only to give back tax money that was “over-collected” or what was then called a surplus. If the tax cuts were designed to create jobs, we would not be in the recession we are in as they have been in effect throughout 2007-2010. Really. You can check this out for yourself.

Capitalists don’t create jobs with tax credits. They put the money away so they are in a better cash position when the economy starts improving and they see customers on the horizon. Then, they invest. Machines first, people second.

Allowing tax cuts to expire will hurt small business
Think about this for a second. The top tax rate is applied to the PROFIT over the $250,000 mark. I don’t know of any small businessperson who pays tax on revenue, but I could be wrong. If you find one, let me know.

For a small business to generate $250,000 in profit that slides over as personal income on an S-corp, assuming a very generous 20% margin, the revenue from activity must be $1,250,000.00 That’s $1.2 million folks. Raise your hand if you have a small business making $1.2M at 20% net profit.

If you own a restaurant and are open 365 days a year, that means you have to serve 171 meals at an average of $20.00 per to hit that revenue mark. I’m not aware of many restaurants operating at 20% net margin, so let’s say at 10%, you have to serve an average of 343 meals at $20.00 to hit that number. And that is being open every day. If you are open for 12 hours, that means 14 meals every hour at 20% or 29 meals every hour at 10%. That is one very busy restaurant.

When you start breaking down the amount of effort it takes to generate a net income of $250,000 in most small businesses, it is a bit unrealistic. Even if you take a look at freelancing businesses and start breaking the numbers down for someone like Chris Brogan who claims to get $22,000/day for onsite work, he still has to work 57 events a year to hit that magic $250,000 number at 20%. (I don’t know what his margin is. Maybe it’s higher.) When you look at the detail of what is takes to generate $250,000 of net in a business, the claim that many small mom and pop small businesses will be hurt by the tax cuts expiring just doesn’t add up.

Am I wrong? What am I missing?

.

The most offensive Tea Party sign ever

The Huffington Post ran a story with some slide shows, showing the most offensive signs at the recent tea parties. As I was looking through the slide show, I found the sign that was the absolute, most offensive one of all. And, if the words on the sign weren’t enough to get you steaming mad, consider the fact that it was put up by our own government!

Anyway, here is the most offensive tea party sign, outlined in green.

The most offensive Tea Party sign
The most offensive Tea Party sign

What’s next, no peeing on the fire plugs? Who’s with me, Pee Parties April 15, 2010! 🙂