Wednesday, April 6, 2011

Tax Truths

For most of us, April 15th is a day filled with dread. Why? It's the deadline for filling out and sending in your federal income tax papers.

Exactly why it has never been set up that in lieu of withholding and all the assorted financial gymnastics that take place when it comes to income tax a set percentage is taken out of your paycheck and that's the end of it has oft been discussed. There's no doubt a perfectly good reason, although other than keeping a lot of people on the government payroll while working for the Internal Revenue System quite possibly has something to do with the matter. However, we're getting off track here; back to the significance of April 15th. More precisely, two days after April 15th.

If you live and work in California, should you take your yearly salary starting January 1st and pay every penny of it as tax until you had paid all of the taxes you will owe during the year, April 17th would be the first day of the year you would actually start keeping what you earned. Another way to look at it is this: if you were to be paid every day of a non-leap year -- 365 days -- everything you earned in 106 of those days would be taken away from you in the form of one tax or another. In Arizona and Nevada the first day you's start keeping what you earned would be April 3rd, while in Utah it would be April 11th.

There are states with even higher tax burdens than California. The first day working for themselves for anyone living in New York is April 25th. In New Jersey, it's April 30th. The, uh, "champion" in this category is Connecticut. The first day its residents keep what they earn? May 3rd.

Ah, but it gets better.

If the above formula was applied to paying what the government actually spends, the first day we would keep what we earn would be May 24th.

Makes you wonder about where it's all going, doesn't it?

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