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The Truth About Taxes
The Truth About Taxes
USA Today did a wonderful job of "not telling the whole truth" about income taxes in an article designed specifically for one purpose. The purpose was to make the American people believe that Mitt Romney pays less taxes than the average American. I beg to differ on several points.
But first, I must tell you that I have personally prepared over 20,000 returns in my career. I have seen a pretty good cross section of American taxes. So, I did not gather my statistics from some company that I have paid to give me what I want to spin!
Secondly, at the end of the day, I could care less what other people pay.
Third, percentages can be misleading. The man still paid millions of dollars.
Now, did USA Today tell a lie? Well. They just didn't tell the whole truth. They made a nice table showing a family that makes $50,000 per year. They showed the average itemized deductions and taxable income. Then they showed the tax and the applicable tax rate. Of course, Romneys was lower.
However, they failed to point out that after you deduct itemized deductions, the average family has over $10,000 in exemptions, plus over $2,000 in tax CREDITS. All of which bring down their effective tax rate.
Notice I said "effective" tax rate. The article figured the rate of tax by dividing the tax by the taxable income. That is literally a joke. It has no meaning whatsoever. To get the effective rate, tha is what percentage of tax do I pay based on my income, you must divide the tax by the total income. This gives, for most people, a far lower tax rate.
In fact, nearly half of Americans pay NO federal tax. A great majority pay NO state tax, and to top it all off, a great numberof people actually get money BACK from the government in the form of the earned income credit. Which is the IRS's way of saying that you should be making more money than you do, so we will give you some of other people's money to balance the scales!
The director of the IRS was in the news last week and she pointed out that Pennsylvania residents received 1.8 BILLION ($1,800,000) dollars in earned income credits in 2010. Where did all this money come from?! It came from other people's taxes. Maybe some of it came from Mitt Romney's 6 million dollars he paid. When questioned on other deductions people could take, she discounted that and got right back on the free money wagon!
The truth is this. Not every American pays more than Mitt Romey. Not every American pays taxes. Every American should pay an amount that is fair. The problem is that Americans cannot come up with what fair means. It is a relative term. Fair when compared to what?
What I would encorage people to do is do what Mitt Romney has done. Look at the tax code. Educate yourself or find someone who is educated. Maximize it for you and your family. Look out for your own economy. I guarantee you that Obama, Romney, Newt or any other politician does not have your best interest at heart.
If you have an interest in lowering your taxes, just email me! It's your money!