Death and Taxes

Of the twin inevitabilities of death and taxes, I choose taxes.

I spent an afternoon filling out boxes such as “Form 1120S, Schedule M-1, Reconciliation of Income (Loss) per Books with Income (Loss) per Return. Note: Schedule M-3 required instead of Schedule M-1 if total assets are $10 million or more.”

Trust me, I’m not in danger of having to use Schedule M-3 any time soon.

I’ve spent too much time at http://www.irs.gov. I’ve spent too much time reading instructions like:
“Enter the amount from Form 1120S, page 1, line 21. Enter the income (loss) without reference to the shareholder’s:
* Basis in the stock of the corporation and in any indebtedness of the corporation to the shareholders (section 1366(d)),
* At-risk limitations, and
* Passive activity limitations.
These limitations, if applicable, are determined at the shareholder level.
Line 1 should not include rental activity income (loss) or portfolio income (loss).”

I realize that we all need to pay our taxes to hold up our end of the social contract. I don’t have a problem with that. On balance, the federal, state, local, school, water district, sewer district, cemetery districts, and all the other taxing authorities we are in hock to use the money wisely on projects and services that add to the collective good.

We get our communal panties in a bunch – and rightfully so – when we read about taxes paying for $900 hammers, $1500 toilet seats or $10 trillion on the Iraq War.

But think about, they generally get it right: most streets are repaired, the schools teach our kids, the trash is picked up, the subways run on time, the bad guys are kept in jail, the sewers carry out the icky stuff and clean water comes out of the tap.

If the economy continues to tank and governments cut their budgets are deeply as anticipated, we’ll soon find out what it’s like to live with unrepaired streets, closed schools and legions of unemployed workers who need government-funded social services that can’t be funded.

Taxes aren’t fun, but given the alternatives, they are necessary.

F. Scott Fitzgerald was right

“The rich are different from you and me.”

Wall Street bonuses of $18.4 billion – billion with a B – while the companies were losing zillions of dollars – zillion with a Z – and getting crajillions of dollars – crajillions with a capital C – in taxpayer bailout funds.

The Secretary of the Treasury (if this country still has any treasure) forgot to pay about $34,000 in self-employment taxes. This man will oversee the IRS. Now the nominee for Secretary of Health and Human Services didn’t pay about $128,000 in taxes for using a car and driver given to him by a prominent donor.

Remember Leona Helmsley? Owned a chain of hotels, husband owned the Empire State Building. “We don’t pay taxes. Only little people pay taxes.”

The average tax rate paid by the richest 400 Americans fell by a third to 17.2 percent through the first six years of the Bush administration and their average income doubled to $263.3 million. The 17.2 percent tax rate in 2006 was the lowest since the IRS began tracking the 400 largest taxpayers in 1992, although the richest 400 Americans paid more tax on an inflation-adjusted basis than any year since 2000.

All this brings to mind the old joke: How do you make a million dollars? Start with $900,000 and invest wisely.

Does wealth make you stupid? Forgetful? Arrogant? Or does wealth – especially long-term or inherited wealth – put a person out of touch with the great unwashed? Does a sense of entitlement kick in when your bank balance exceeds a certain point? (That point has several zeros between the dollar sign and the decimal point.) Or don’t they care?

I wish, I dream, I hope, I fantasize about having the opportunity to be this stupid!