If you’re getting a big bite taken out of your bank account today, well, you’re hardly alone. Millions of Americans face their tax reckoning today, and none of them will be particularly happy about it. This year may be even worse than usual, thanks to ObamaCare, but take heart — it’s better than it will be next year, National Journal reminds us:
Among this year’s changes: a 0.9 percent increase in Medicare taxes and a 3.8 percent surtax on investment income. Both are limited to high-income taxpayers, and both took effect for the first time in the tax season that just ended.
Most people won’t notice the extra Medicare tax because it was automatically deducted from their paychecks, but some could face a tax bill they did not expect, said Jackie Perlman, principal tax research analyst at the H&R Block Tax Institute.
The Affordable Care Act also raises the bar for writing off medical expenses. Previously, a tax deduction was available if medical expenses reached 7.5 percent of your income. Obamacare moved the cutoff to 10 percent for taxpayers younger than 65.
Next year will be worse, not just because of the full enforcement of the individual mandate, but because of the open-enrollment deadline:
Tax-preparation services are helping their customers figure out where they stand and what their options are, but there’s a wrinkle: The next open-enrollment window ends in February, well before most people file their taxes.
Uninsured people who file their taxes on the later end might not realize they owe a penalty until after the enrollment deadline—too late to sign up for coverage next year.
This is a concern particularly for low-income individuals who may need their tax refunds to afford insurance at all, Haile said.
So if you think this year stinks, just wait. Reason’s Remy reworks Pharrell’s “Happy” to remind us to cheer up — or just to validate the fact that we feel “crappy”:
Bill Whittle offers a more serious take as the Virtual President. We shouldn’t be happy with a system based on the politics of envy, Whittle argues, and a flat tax is the only real solution to both an overreaching government and the need for fairness in taxation. It provides equality and “forces everyone to have skin in the game”:
Rep. Michael Burgess makes the flat-tax case in Business Insider:
If one looks at other countries in which a flat tax was instituted, not only is adequate revenue generated, but there is a vast increase in both revenue and economic growth. The theory is that by lowering the tax rate, taxpayers become more productive and create more economic growth, which in turn, provides more tax revenue because businesses are more successful and the economy is operating at a higher level.
Believe it or not, around the world, Russia is a considered a prime case of the success of a flat tax. After the first year of its introduction in the country, the real revenues from its personal income tax rose by 25% followed by a 24% increase in the second year and a 15% increase in the third year.
Likewise, several U.S. states have also implemented a single flat tax. Americans from Utah to Massachusetts have realized the benefits of switching to a flat rate of tax as applied to their income. State revenues have increased because of a flat tax as well.
There is a clear trend developing here. As evidenced by the recent actions by Chairmen Ryan and Camp, more and more budget and tax experts are supporting a flat rate of tax. I am very encouraged by this sign. For far too long, our tax system has been one of complexity, confusion and disenfranchisement. A flatter and simpler tax where all taxpayers are equal is the answer to the ills of the present tax code.
Bake more pies. If you have any cash left to buy the ingredients after today, that is.