{"id":5756,"date":"2011-04-08T00:47:01","date_gmt":"2011-04-08T06:47:01","guid":{"rendered":"http:\/\/www.andybox.com\/?p=5756"},"modified":"2011-04-09T04:35:52","modified_gmt":"2011-04-09T10:35:52","slug":"one-reason-we-have-a-budget-crisis-me","status":"publish","type":"post","link":"http:\/\/www.andybox.com\/?p=5756","title":{"rendered":"One Reason We Have a Budget Crisis: Me"},"content":{"rendered":"

Last summer I blogged about how much we really pay in income tax versus our official tax rates<\/a>. Now that I’ve finished our 2010 taxes, I was curious to see our effective tax rate for the year. <\/p>\n

For 2009, thanks to our many deductions, our effective tax rate was only 11.3 percent, less than half of our official rate of 25 percent. <\/p>\n

For 2010, we got to add a $1000 child tax credit (thanks, Jonathan!). As in the previous year, we claimed a large deduction for home energy improvements (a solar water heater this time, which saved us about $1500 in taxes). Plus we had the usual deductions for charitable contributions, mortgage interest, property taxes, and student loan interest. As a result, our effective rate for last year was only 8.6 percent<\/strong>, about a third of our official rate.<\/p>\n

I am certainly grateful to keep so much of my paycheck. As a full-time worker supporting a family of four, I would have a much harder time if we actually paid 25 percent of my income to Uncle Sam. It would force us to make some very difficult and unpleasant decisions. In other words, I have no plans to turn down any of my deductions in a noble effort to save the government from its poor financial planning.<\/p>\n

However, I can’t help but wonder whether it makes sense for the government to provide so many deductions. I’m certainly no economist or expert in tax policy, but it seems weird that Uncle Sam rewards people for taking on massive amounts of debt just to buy a house (remember that whole housing crisis thing?). And for having children (is there a shortage of them here?). And for giving money to charitable organizations, which themselves pay little or no taxes. And even for losing money on bad stock picks<\/em>. (trust me, I know from experience) The tax breaks certainly benefit the people who do these things, but should it be the government’s place to encourage them?<\/p>\n

There are two tools to solve a budget deficit: increase revenue and\/or decrease spending. Neither is pleasant or easy. In our current situation, both are necessary, but few of our political leaders seem willing to do either. (yes, I’ll admit it – including Obama) However, budget committee chairman Paul Ryan finally stepped up with a real plan for both<\/a>, which is nice to see even if I don’t agree with all the details. It includes significant cuts and changes for Medicare as well as provisions to eliminate some tax loopholes and deductions in order to increase tax revenue. I’m curious to see whether any of these ideas go anywhere.<\/p>\n

I’ll enjoy the results of the current, horribly convoluted tax code while it lasts, but I’ll try not to whine too much if Congress decides to simplify the code and eliminate some of our deductions.<\/p>\n","protected":false},"excerpt":{"rendered":"

Last summer I blogged about how much we really pay in income tax versus our official tax rates. Now that I’ve finished our 2010 taxes, I was curious to see our effective tax rate for the year. For 2009, thanks … Continue reading →<\/span><\/a><\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"open","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[20],"tags":[],"_links":{"self":[{"href":"http:\/\/www.andybox.com\/index.php?rest_route=\/wp\/v2\/posts\/5756"}],"collection":[{"href":"http:\/\/www.andybox.com\/index.php?rest_route=\/wp\/v2\/posts"}],"about":[{"href":"http:\/\/www.andybox.com\/index.php?rest_route=\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"http:\/\/www.andybox.com\/index.php?rest_route=\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"http:\/\/www.andybox.com\/index.php?rest_route=%2Fwp%2Fv2%2Fcomments&post=5756"}],"version-history":[{"count":10,"href":"http:\/\/www.andybox.com\/index.php?rest_route=\/wp\/v2\/posts\/5756\/revisions"}],"predecessor-version":[{"id":5764,"href":"http:\/\/www.andybox.com\/index.php?rest_route=\/wp\/v2\/posts\/5756\/revisions\/5764"}],"wp:attachment":[{"href":"http:\/\/www.andybox.com\/index.php?rest_route=%2Fwp%2Fv2%2Fmedia&parent=5756"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"http:\/\/www.andybox.com\/index.php?rest_route=%2Fwp%2Fv2%2Fcategories&post=5756"},{"taxonomy":"post_tag","embeddable":true,"href":"http:\/\/www.andybox.com\/index.php?rest_route=%2Fwp%2Fv2%2Ftags&post=5756"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}