Tax Day

The Kula blog normally covers the local job market for accounting talent, plus some “how to” tips on hiring or finding a job.  But, today is April 15^th.  Tax Day!  So, I’m taking this opportunity to offer my thoughts on current events.  I will admit up front this blog is editorial, so skip it if you could care less about my thoughts on issues outside of the recruiting business.  Or, please share your views and opinions on what I have to say.

Federal Taxes

98% of US tax payers will pay less tax for 2009 than they did for 2008.  A family of four making less than $50,000 a year will pay no income tax at all. Plus personal income tax rates are the lowest they have been in sixty years.  Good news, right?  Apparently not if today’s and last year’s tax day protests are an indicator.  I’m having trouble understanding why people are protesting paying taxes.  Having to pay taxes means you have income; and, if you are part of a family of at least four, you are earning over $50,000.  Of course, two of the major reasons for the current low tax rates are the tax breaks contained in the economic recovery programs and the lower incomes earned by most of us due to the Great Recession.  Why tax protests?  Our big corporations are doing even better on US tax day – - – hardly any of them are actually paying any federal income tax.  Probably due to their having hired our great tax accounting candidates!

I don’t see how federal taxes are the problem. They are lower than they have ever been in most of our lifetimes.  I think people are protesting because they are angry and frustrated with how things are going (or not going) in their personal lives, and taxes are easy to get off about. A group called Realty Trac is reporting that one million homes will be repossessed by banks this year. Others report that over a quarter of all mortgages are underwater.  And, unemployment is still very high and not supposed to get better for at least the next two years.  Throw in the rage over bailed out bankers getting new bonuses that exceed the average person’s lifetime earnings and we can all see why people are angry.  But, I don’t see how it has anything to do with taxes.

The Federal Deficit

Another media stated reason for the angry public discourse is the size of our federal deficit.  Hello?  Did anyone take a basic economics class in college?  The way to stop a recession from becoming a depression is for the federal government to spend more money.  In effect:  Be the employer of last resort.  We have been accumulating a deficit for a long time.  Why are we just noticing this?  We spend more than we take in (low tax rates plus spend lots on two wars, etc.).  This action leads to deficits.  Back in the day, the fear was Japan would soon own us because of all the debt we owed them.  Now we are supposed to be afraid of the amount of debt held by China.  Does anyone remember the old financing maxim:  When you owe the bank a little bit the bank owns you, and when you owe the bank a lot, you own them?  It seems to me to be about the same situation.  When the recovery picks up some more juice and the Bush tax cuts lapse in 2011, we will start to see a reduction in the deficit.  When we have the political will to close some of the tax loopholes and, heaven forbid, reduce our spending (drop a couple of wars?), we could potentially start paying down the debt.  If we don’t do any of these things, my three grand kids will get to show how smart they are when it’s their turn to run the country.

Healthcare

I’ve saved this one for last to let my heart rate slow down a bit.  Three weeks ago we received a premium increase notice for our group medical insurance.  Our friends at Blue Shield of California raised our premium by almost 60%.  And they changed the terms of our coverage as well by upping our maximum out of pocket costs by 50%.  Our new insurance premium would now be greater than what we pay for rent, utilities, phones and liability insurance premiums combined.  This is life in a small company.  It’s no wonder that most small businesses do not offer health insurance to their employees.  Now, I’m not sure if the insurance reform laws that were recently passed will help us and other small businesses, but something needed to be done to reform our health care system.

Prior to becoming a recruiter, I worked for companies with international operations.  The health care systems in each of the countries I worked with were much better for our employees than what we offered to our US employees.  And, our benefit plans were competitive here in the USA.  I never received any health care complaints from our Swiss, French, German, Japanese, or Singaporean employees.  But, I sure heard them about our US health insurance providers.  None of these other countries was communist, socialist, or Marxist, or totalitarian, but their health care systems all had a strong government role.

I know from personal experience(s) that our health care system was broken, unfair and too expensive.  I don’t know if the recent health care reforms will solve all of our problems.  But, I do believe the savings to accrue from the changes will help reduce the deficit in the future and will fix some of the issues we have all had with health insurance providers.  By the way, we have been able to reduce our rate increase to “just” 45% by picking a different plan.  Now our medical insurance premiums only equals the total costs of the items noted above!  Such a deal!

That’s it for my, I hope, mild rant on the issues of the day.  I promise to write about the job market next time.  Thanks for listening.

Tagged as: "Health care", Mortgage Crisis, Taxes, Tea Party, Unemployment