Sunday Morning: Taxes

CBS Sunday Morning did an interesting report on our tax system as we approach tomorrows filing date.

April 17, 2011 The U.S. tax code: A "huge convoluted mess"

Complaining about taxes is as old as America itself, but as the debate rages over fairness of taxes, some millionaires say, tax us more

America's turmoil over taxes {video above}

April 17, 2011 Seth Doane takes a look who actually pays most of the taxes in America, and who are the ones manipulating the system to avoid paying taxes and spoke with an IRS official who is open and honest about the fact that the U.S. tax code is, in her words--"a mess".

These are TAXING TIMES to put it mildly. Midnight tomorrow is the deadline for filing our income tax returns. And it comes in the midst of a heated debate that could shape our filing days for many years to come. Our Cover Story is reported by Seth Doane:

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With our national debt above 14 trillion dollars, has the age-old debate over taxing and spending finally reached a tipping point?

And while the two sides seem far apart, there is one thing nearly everyone agrees on:

The American tax system is "a huge convoluted mess," says Chris Edwards, who studies tax policy at the Cato Institute, a Libertarian think tank in Washington.

The American tax system is "a mess that's completely unfair, and that few Americans understand," says David Cay Johnston, who teaches tax regulation at Syracuse University Law School.

The American tax system is not only a mess, but an "extraordinarily complex" mess ... and not just for individuals, for corporate entities, businesses," says Nina Olson - of the Internal Revenue Service.

As Olson points out in the video and report there were something like 579 changes made to the tax code in the past year alone.

"All the data are overwhelmingly showing that for the last 30 years, we've been redistributing wealth upwards," said Syracuse Law School's Johnston. "It's not trickle-down economics; it's Niagara-up!"

Johnston, who is also a Pulitzer Prize-winning reporter, described the change in income tax disparity.

"The median wage worker in America makes $26,000, and if you're a single person making $500 a week, your total federal tax burden is significantly higher than someone who makes a million dollars a day," he said. "You'll pay almost 22 percent of your income in income and payroll taxes, or you did in the year 2007.

"And that year, the 400 highest income tax payers made $345 million on average, [and] only paid, by the same measure, about 17 cents out of each dollar."

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What's most daunting? The sheer complexity of it all ... with a tax code that runs 65,000 or 70,000 pages. "Yeah, it's very long!" she laughed.

"You've been here for ten years," Doane said. "The tax code has only gotten more complex. Is that frustrating?"

"Yes, and one could say I've failed," Olson said.

But before you blame Nina Olson and the IRS, hold on: They don't MAKE the rules, they just do what Congress tells them.

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Media investor Leo Hindery and the others belong to Patriotic Millionaires for Fiscal Strength, a Democratic-leaning group of 200-plus millionaires who have signed petitions asking President Obama to raise their taxes.

DENNIS MEHIEL is Chairman of a major U.S. manufacturing company. His view is that paying taxes is patriotic.

"We have things we want to do as a society - they're not free," Mehiel said.

Morris Pearl is managing director of a leading N.Y. investment house with TRILLIONS in assets. He says the wealthy are "gaming the system."

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"I think that filing taxes, even if it's a little bit painful, [is] not such a bad thing, 'cause it forces people into that moment of awareness: What kind of government do I want?" Thorndike said. "Oliver Wendell Holmes said that taxes are the price we pay for civilization. But we have to decide over and over again how much civilization we want." {continued}

With another report added to the above Sunday Morning one as well as backlinks to other reports at the site pages.

Wealthy Americans see drop in federal taxes

April 17, 2011 - High-earning Americans pay less in taxes than in previous years; nearly half of U.S. households will pay no income taxes at all

As Monday's tax filing deadline nears, ponder this: The super rich pay a lot less taxes than they did a couple of decades ago, and nearly half of U.S. households pay no income taxes at all.

The Internal Revenue Service tracks the tax returns with the 400 highest adjusted gross incomes each year. The average income on those returns in 2007, the latest year for IRS data, was nearly $345 million. Their average federal income tax rate was 17 percent, down from 26 percent in 1992.

Over the same period, the average federal income tax rate for all taxpayers declined to 9.3 percent from 9.9 percent. {continued}

And while I continually wonder why Ben Stein is still around and a main contributor on Sunday Morning he also has an interesting take on this, calling that taxes will have to be raised, but they still haven't posted that video commentary as of yet.