Posts Tagged ‘Taxes’

How Should Social Security Be Improved?

April 29, 2012

First, make the social security tax be on all income, not just salary. This would add to the revenue stream immediately.

Second, eliminate the cap on the income. As income goes beyond the maximum to contribute, which is about $110,000 per year, Social Security is still collected. No matter how much income someone has, social security is taken from all of the income.  However, a person who contributes twice as much to social security doesn’t get twice as much income. He gets one and a half times the income, and further contributions would lead to a lower rate of return.  People would still get something from the additional money, but not a proportional amount. This would mean the NFL player who goes broke later in life can still look forward to a reasonable amount of income.

I have no idea as to whether this would solve the problem, but it would help.

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Refunds

April 15, 2010

I used to object to people getting refunds. If things are planned properly, that money can earn interest for the taxpayer. But two things have changed my mind.

The first is the abysmally low interest rates we’ve had in the last year.  A $1000 refund would net perhaps $10 in income. This is probably not worth worrying about from a financial point of view. From a psychological point of view the pleasure of that “extra” money is probably worth $10.

The second is more subtle. There are people who cannot save.  If the refund is their only saving or they use it to pay off debt, this can be a good thing.

If you have to pay taxes now and you put the money  into an interest bearing account, good for you.  If you are getting a refund, enjoy your refund!

Important Tax Information

April 14, 2010

It is on the envelope of many pieces of mail in early February. This is part of the system and I don’t object to it. Taxes are inevitable, and Americans are not overtaxed. I object when these envelopes come in March or even April.

My son mentioned that he received one tax form two and a half weeks before the taxes are due. It was something to do with daycare. We have investments and have received corrected statements as late as April 1.

Judging by the number of times we have received corrected forms late, there is no meaningful penalty for companies being late. How hard can it be? The information is in the computer and the computer can be programmed to spit it out automatically.

We even changed our investments due to the April 1 corrected statement. We pay an accountant to do our taxes and the additional cost of re filing made switching worthwhile.

I don’t want to see any more envelopes in April saying “Important Tax Information.” Is there unimportant tax information?