"Taxmageddon" Day in America

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"Taxmageddon" Day in America

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Tax Day in America, normally April 15, has been extend this year to April 17—the day all tax returns are due to the IRS. My household returns are filed and I'm waiting for a refund. In fact quite a number of American households are waiting for a refund, and likely we have designs on just how to use the money.

Tax policy is a complicated maze that most Americans don't focus on. I doubt most people anywhere understand their nation's tax codes. Governments have perfected a Byzantine approach to taxation that keeps legions of tax lawyers and accountants in business. Despite the billions collected each year national governments still run deficits and cannot produce balanced budgets. America's current public debt is over $15 trillion. Does anyone really understand how much money $15 trillion is?

The old saying, "everybody talks about taxes but nobody does anything about them", is alive and well in this year's presidential campaigning. Just last week there was a lot of talk about the tax rate for wealthy Americans, whether or not the wealthiest pay their share of taxes. If you don't know the intricacies of the tax code it is easy to get caught in a spirit of anger and accusation when it comes to this subject. How wealth is created and distributed is a complicated issue. In a modern complex world, the explanation does not always go in straight lines. But something could be changing in a few months to change the old saying about taxes. 

On January 13, 2013 a number of tax cuts, some dating back more than ten years, are set to expire. In addition, taxes connected with President Obama's health care initiative are set to kick in. If all goes as planned it will be the largest single tax hike in U.S, history. Most Americans will begin paying more taxes. The Washington Post aptly called the unprecedented $494 billion tax hike "Taxmageddon," and Federal Reserve Chairman Ben Bernanke described it as a "massive fiscal cliff." I think we are talking serious money here!

A simple explanation of this large tax increase can be found at Taxmageddon: Massive Tax Increase Coming in 2013 

Raising taxes during an economic recovery is risky business. There is no guarantee that increased taxes will lower an already high debt or generate needed growth in the economy. There is plenty to argue that increased taxes will create bigger economic problems. This article also points out that uncertainty about this one issue is causing business to pull back on hiring and expansion since they do not know what impact these tax changes, if they are allowed to stand, will have on an already uncertain economy. This is important. 

Like I said, most people really don't spend much time trying to understand the tax code. We have lives to live and we leave this messy business to others. But the advice the prophet Samuel gave to the elders of Israel when the desired a king sounds wiser than ever. 

Israel wanted a human king like all the other nations on the block. Samuel warned a king would begin to take more and more of their resources. Their young men and women would be brought in to serve the state. An ever increasing administrative structure would develop. The best of their capital would be appropriated. Increasing percentages of taxation would be developed. In the end the people would complain and ask God for relief. God, Samuel explained, "will not hear you in that day". (1 Samuel 8:11-18). 

God did not hear them in that day and looking around at the present economic mess we have created I don't think He hears today.

Compared to today's tax complexities the "flat tax" ten percent God had in place (aka tithing) sounds better all the time.