Thread: America's tax system is screwy

It's no wonder we've reached a point where we need to throw out the entire system and put another one in place. Here's an example of why we're going broke and it has absolutely nothing to do with not taxing the wealthy enough.

Today's my day off and a friend asked me to help him file his taxes. Figured it would be a piece of cake because he really didn't work much in 2011 since his small employer was struggling to survive and cut everybody back to part time.

My friend said he just wanted to get an idea whether there was any reason to file early or, if he was just gonna break even... to wait and file in April.

Here's his stats: He earned $8,769.75 and paid in $743.39 in federal tax, $368.33 in SS tax and $127.16 in Medicare tax. No dependents, standard deduction.

Thanks to an "Earned Income Credit" -- his tax refund will be $1117, $374 more than he paid in!

My friend was just hoping to break even. I'm sure he'll be thrilled. All I can say is WTF? No wonder we're going under... this makes NO sense. Our tax laws reward failure and punish success!! How crazy is that?

Yeah, it's all screwy. We've pretty much been punished for being married, ending up owing at the end of the year, when we each got refunds before we married. Then, I hear stories like this one that you posted.....grrrrr....I mean good for your friend!

Originally Posted by Kimi

Yeah, it's all screwy. We've pretty much been punished for being married, ending up owing at the end of the year, when we each got refunds before we married. Then, I hear stories like this one that you posted.....grrrrr....I mean good for your friend!

It's maddening isn't it? Why on earth are we giving single people with no dependents an extra $374 AND refunding every dime they paid in during the year?

My friend survives by living with family and helping them out when he can... just like folks have done since the beginning of time. But I know he didn't expect to get a reward from Uncle Sam.

It just makes NO sense.

It's very maddening, especially for those of us who do live paycheck to paycheck. I've had more withholding taken out, but that bites into monthly income. It really is all screwed up.

I don't see the major issue. The refund is less that the total taxes paid (about the same as the federal plus social security in fact).

If his annual income was only around $8,000, I don't think he should be paying much, if any, taxation anyway. The breakdown (or how it is presented) is often unnecessarily complicated but the raw numbers on the bottom line seem reasonable to me.

Originally Posted by HonestJoe

I don't see the major issue. The refund is less that the total taxes paid (about the same as the federal plus social security in fact).

If his annual income was only around $8,000, I don't think he should be paying much, if any, taxation anyway. The breakdown (or how it is presented) is often unnecessarily complicated but the raw numbers on the bottom line seem reasonable to me.

So you're saying my friend should get back the $$$ he paid into SS and Medicare because he didn't earn much money?

Sorry, but that makes no sense. One of these days, he'll be looking to draw his SS and the $368.33 he paid in to SS in 2011 will be listed as part of his payments and included in the calculation of his monthly benefit.

IOW, he paid into the program and the govt is refunding his money... from another fund. It's the ole hand is quicker than the eye routine.

Bottom line... our govt is doling out hard-earned tax dollars to people who neither asked for, nor expect it. Like my friend. Will he take it and be dang glad to get it? Of course he will... who wouldn't???

I'll be the first to admit this isn't a Barack Obama problem. It's a conglomoration of political wrangling that's gone on for years. Like the camel that's really a horse, designed by a group of politicians.

Flat tax has gotta be a better way to go... this is stupid.

Originally Posted by Smartmouthwoman

It's no wonder we've reached a point where we need to throw out the entire system and put another one in place. Here's an example of why we're going broke and it has absolutely nothing to do with not taxing the wealthy enough.

Today's my day off and a friend asked me to help him file his taxes. Figured it would be a piece of cake because he really didn't work much in 2011 since his small employer was struggling to survive and cut everybody back to part time.

My friend said he just wanted to get an idea whether there was any reason to file early or, if he was just gonna break even... to wait and file in April.

Here's his stats: He earned $8,769.75 and paid in $743.39 in federal tax, $368.33 in SS tax and $127.16 in Medicare tax. No dependents, standard deduction.

Thanks to an "Earned Income Credit" -- his tax refund will be $1117, $374 more than he paid in!

My friend was just hoping to break even. I'm sure he'll be thrilled. All I can say is WTF? No wonder we're going under... this makes NO sense. Our tax laws reward failure and punish success!! How crazy is that?

Is the failure that he has a job that does not pay sufficiently for his way of life, or that he might be paid more from taxation if he did not have a job at all?

Originally Posted by Beevee

Is the failure that he has a job that does not pay sufficiently for his way of life, or that he might be paid more from taxation if he did not have a job at all?

I'm not sure what you're asking. His 'way of life' has nothing to do with it -- it's the fact our govt doesn't expect him to pay ANYTHING because he doesn't make very much. In fact, they're giving him back $300 more than he actually paid in taxes!

That doesn't seem strange to you?

Originally Posted by Smartmouthwoman

It's no wonder we've reached a point where we need to throw out the entire system and put another one in place. Here's an example of why we're going broke and it has absolutely nothing to do with not taxing the wealthy enough.

Today's my day off and a friend asked me to help him file his taxes. Figured it would be a piece of cake because he really didn't work much in 2011 since his small employer was struggling to survive and cut everybody back to part time.

My friend said he just wanted to get an idea whether there was any reason to file early or, if he was just gonna break even... to wait and file in April.

Here's his stats: He earned $8,769.75 and paid in $743.39 in federal tax, $368.33 in SS tax and $127.16 in Medicare tax. No dependents, standard deduction.

Thanks to an "Earned Income Credit" -- his tax refund will be $1117, $374 more than he paid in!

My friend was just hoping to break even. I'm sure he'll be thrilled. All I can say is WTF? No wonder we're going under... this makes NO sense. Our tax laws reward failure and punish success!! How crazy is that?

Yup. It's government insanity at its best.

The tax system is designed to make stupid people feel that they are paying taxes when they aren't and to make it look like the politicians are sticking it to the rich. Once you consider all of the deductions, credits and loopholes, the reality of the tax breakdown is far different than people tend to believe.