Socialism American style

Sunday's column in the Las Vegas Review-Journal elicited a mighty response from readers. The column pointed out that on this Thursday, April 15, 47% of Americans will either pay no federal income tax or get more money back than they paid in.

That's a redistribution scheme that needs to change. Everyone should pay something, even if it is a token amount. And the idea that some people get back more than they paid in is little more than backhanded socialism. A tax preparer provided this real-live example of how the redistribution system can work:

"I have a young couple that are new clients. She made around $22K working in a sandwich shop. He started a small construction business in 2009 and had sales in the mid $20K but only netted a couple hundred bucks after expenses. Their total tax was $0. They got back $6600 which included the child tax credit of $1K, an earned income credit of $3.3K, the Obama "Making work pay" credit of $800 and the balance was her fed withholdings. Only in America!"

And this note comes from a newly minted attorney:

"When I was in law school I ran Volunteer Income Tax Assistance (VITA), a free tax program for low income individuals.  I learned a lot about the tax system and developed many of the same frustrations that you expressed in your article.  Admittedly, most of the low income earners still pay Social Security and Medicare taxes, but they should, both programs are designed to be pension-like, pay in while you work, receive when you retire.  That's what FDR envisioned for those programs, but the Dems have turned them into more redistributions of wealth.  Here are a few other interesting things I took away:

"We prepared a lot of returns for retired union steelworkers.  Their pensions were managed by State Street Financial Services.  I always thought it was funny that the Democrats wanted to stick it to the oil companies because at one time State Street was the second largest institutional stock holder of Exxon Mobile.  Dems think taking profits from greedy oil companies won't effect main street.  Often, the pensions were the only income these retired workers had.

"Second, there are two types of credits, non-refundable and refundable.  A refundable tax credit is welfare.  Even when a citizen doesn't have any tax liability they can still get the credit.  The Earned Income Credit is the most well known welfare refundable credit.  There were many clients that would receive as much as a $3,000 Earned Income Credit.  That means they had no liability and given $3,000.  There's nothing earned about it.  Most of these people didn't know anything about taxes, but they all knew about the Earned Income Credit.

"The tax system is way too confusing.  The Gov't should eliminate most of the deductions and credits, and just lower the tax rates.  I know that's too easy to do, and not politically popular, but that's what should be done.  Most basic taxpayers should not need to hire a tax professional to complete their tax return."

You can re-visit my Sunday column here.

Read it. Weep. Hope for change.