How To Earn Extra Money

I just got done reading the 110 page EESA that passed the U.S. House today. I highly encourage people to read it themselves, rather than listen to the B.S. and hype from the media. Perhaps more important than the EESA itself is the 320+ pages of PORK attached to it. Congress at it's finest. I haven't read the pork yet, but I'm going to write this blog post as I skim the pork, and will report on what gems I find within.

First, the entire bill is here:

http://financialservices.house.gov/essa/essabill.pdf

The government's own summation of the sections, in only 6 pages (worth reading if you're not going to read the whole thing):

http://financialservices.house.gov/essa/eesabill_section-by-section.pdf

To start, let's go over the gist of what the EESA does.

Read more »

Personally, I'm appalled by the entire bailout idea, since my personal political belief is that the government has no business bailing out private firms. Anybody that starts a business or participates in the business as a stakeholder of any sort assumes a certain amount of risk by doing so.

In particular, the little odds and ends of pork that have now been attached to an already overly bloated "economic stabilization" package are disturbing. Ultimately, the taxpayers of America still have to foot the bill for this. As a tax professional working in the IRS collections representation side of things, I see every day how hard a tax bill is on American families and businesses. Tacking an extra $10,000 to $12,000 per person to the federal debt isn't going to help.

To quote a political pundit, "Of course, that's just my opinion, I could be wrong."

-Jassen

There are a lot of common misconceptions surrounding the abatement (removal) of IRS penalties and interest.

First of all, it is important for anybody that owes the IRS money to understand that you will not have interest charges removed. If somebody is trying to sell you on their tax relief services and they tell you that they can have the amount of interest on your tax account reduced or eliminated, they're lying. The provisions within the U.S. tax code for eliminating interest charges on back taxes are extremely limited and extremely specific, and if you owe the money but just simply couldn't or didn't pay it, you DO NOT qualify.

Read more »

Being a tax wonk and a statistics junkie, I'm highly intrigued by data such as this:

New data released by the IRS today offers interesting insights into the distributional spread of the federal income tax burden, new analysis by the Tax Foundation shows. The new data shows that the top-earning 25% of taxpayers (AGI over $62,068) earned 67.5% of the nation's income, but they paid more than four out of every five dollars collected by the federal income tax (86%). The top 1% of taxpayers (AGI over $364,657) earned approximately 21.2% of the nation's income (as defined by AGI), yet paid 39.4% of all federal income taxes. That means the top 1% of tax returns paid about the same amount of federal individual income taxes as the bottom 95% of tax returns.

So, what does that mean? In short, it means that rich people are the one that support the vast majority of all federal programs. The top 1% of all income earners paid in 95% of all total taxes collected by the federal government.

The reason I like to point this out is because, as a tax preparer and tax consultant, I hear a lot of people complain about the tax breaks that rich people get. However, it really just isn't so. A huge example is that the Earned Income Credit that lower income families receive, which is the credit that enables them to receive thousands of dollars in tax refunds every year beyond the tax liablility they had had, is actually PAID FOR BY RICH PEOPLE. Yes, the money has to come from somewhere in the IRS system, and it comes from other taxpayers.

The other thing I like to point out is that rich people are usually the folks that own the businesses that the rest of us work for. In other words, the wealthy, evil rich people and evil, wealthy corporations are the ones that provide the rest of us with a job. Working that job is a voluntary arrangement, so if we don't like it, we're welcome to leave.

That right there is the reality of our economic and tax situation. So, the next time you hear somebody complaining about how unfair the system is, keep these things in mind. Particularly with the earned income credit, the IRS is acting as a wealth distribution service to GIVE FREE MONEY to lower income families that was taken from higher income families that actually EARNED that money.

There's the old saying, "Don't steal, the government hates competition," and I personally believe it's true. The system will never be fair, but it's actually quite balanced. Lower income earners get free money they never earned, and higher income earners, through their businesses, get significant tax write-offs that not everybody does.

Thus ends my rant for the day.

Be happy, be great!

-Jassen