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Rites of Spring

Columnist: Mike Martini
April, 2015 Issue
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Mike Martini
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The day should be recognized as the Full Employment Act for Accountants.

 
Spring has sprung in Sonoma County. Grapevines have returned to life; jonquils have bloomed; and baseball’s had its opening day—the only time when everyone’s team is in first place. It's also time to file your taxes.
 
I’m reminded that the filing deadline used to fall on the Ides of March. This Roman inference gave gravity to the day. It was the day Julius Caesar was stabbed in the Senate. Shakespeare memorialized the phrase “Beware the Ides of March” as a warning to Caesar from the Soothsayer. Wanting to be a kinder, gentler IRS, it moved the deadline to April 15. This, by the way, is not the Ides of April. That would be the April 13, but this is about taxes and not the Roman calendar.
 
The day should be recognized as the Full Employment Act for Accountants. Certainly, without this complicated and lengthy tax code, the goal to be a CPA wouldn’t be a wise career move. But they’re the only professionals who begin to understand the law and, more important, the intricacies and implications of the code on taxpayers. Their advice can save thousands, their errors can cost even more.
 
I don’t for one moment believe I can even begin to understand the tax code, but I learned an important lesson early on in business: The IRS won’t give you a deduction if you don’t claim it. This led to the second lesson, this one a little more cynical: Your tax return is only your first offer.
 
I also learned early on that it’s not a good thing to get a refund. A refund means you gave the government too much money. It doesn’t pay interest and you can’t use it until you get it back. I spend a considerable effort to owe  $5 with each return although I confess I rarely hit it. I think I did have one year at $25.
 
I get to work with a lot of young, entry-level employees, and I love to witness one of the great lessons of employment, which is the receipt of the first paycheck and the obligatory question, “Who is FICA and why does it get my money?”
 
I think withholding should be optional. I know it would never work, but wouldn’t it be cool when the majority opts out of withholding to be faced with a big bill every year? Elected officials would have even more difficulty raising money if it was a one-time payment of considerable size. Somehow, we accept the bill if paid in smaller amounts over time.
 
Government has long struggled with an equitable method to raise money to pay for services. I’ve yet to meet someone who felt his or her tax burden was fair. It matters little what tax class you’re in. It’s always the other guy who should pay a greater share.
 
But you have to admire Congress for adopting of the 16th Amendment. Added to the Constitution in 1913, this wasn’t the first attempt to collect federal income tax. An income tax was in place in 1861 to pay for the Civil War. It was found to be unconstitutional as it didn’t apportion revenue among the states based on population. The 16th Amendment fixed that and was part of an interesting perfect storm of issues.
 
Prior to the adoption of a federal income tax, the majority of federal revenue came from tariffs on goods and excise taxes on alcoholic beverages. A great read is Daniel Okrent’s Last Call—The Rise & Fall of Prohibition. In this well written, easy-to-read story of the great American experiment, he points out that banning the sale of alcohol was the result of a confluence of women’s suffrage, temperance leagues, mistrust of Germans and Jews, and the adoption of a federal income tax. The adoption of the tax allowed government to go on in the face of drastically reduced revenues.
 
Note that with the repeal of prohibition, income taxes didn’t go away. This should be another cautionary tale when we’re told any tax is temporary.
 
But as I get ready to file my taxes, I’m reminded that we do reap great benefit from living in the United States. Yes, I know we don’t all agree on priorities, but none can deny they receive benefits. We need to be vigilant and watch how the dollars are spent. We need to be engaged in the debate on priorities. And we do need to file our returns.
 
So I collect W2s, K1s and 1099s and sharpen my pencil. I pour a glass of Sauvignon Blanc because its higher acidity compliments tax preparation as I join millions of others in this rite of spring.


 

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