Financial Wake-Up Call 3-10-2007

Financial wake-up call $2.2 Billion Waiting To Be Claimed: There are 1.8 million people that have $2.2 billion waiting for them who failed to file a federal income tax return for 2003 and they only have until April 17 to claim it or it goes to the government. Over half the people would receive more than $600.

In cases where a return was not filed, the law provides most taxpayers with a three-year window of opportunity for claiming a refund. If no return is filed to claim the refund within three years, the money becomes property of the U.S. Treasury. For 2003 returns, the window closes on April 17, 2007. The law requires that the return be properly addressed, postmarked and mailed by that date. There is no penalty assessed by the IRS for filing a late return qualifying for a refund.

The Deceptive Appeal Of A Flat Tax: While this is a Canadian article, most of the principles put forth apply to the US, too:

Opponents may question whether the scheme would help economies, but they do agree on one thing: a flat tax would make filing your income tax a heck of a lot easier — so simple in fact that anyone earning a regular wage could file their taxes on a postcard. All you’d need to do is mark down your total earnings, multiply it by the tax rate and that would be that…

It’s not time to celebrate yet though. The chances of Canada or any other western country adopting a simple flat tax are remote. It comes down to what system is fairest. Those of a liberal bent argue that the present progressive income tax system is the only way to go because it’s the fairer of the two. By increasing the marginal rate of taxation as income rises, the idea is that the wealthiest pay the highest taxes because they can afford to do so, while the poorest in society need most of their earnings to cover the basic necessities. Flat taxers, on the other hand, say their scheme is fairest because it treats each individual in the same way, rich and poor alike.

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3 Responses to Financial Wake-Up Call 3-10-2007

  1. Steve says:

    I imagine it would be the exact same scenario in Australia as well.

  2. Dave says:

    The wealthy in society should pay more taxes because they have more to protect. They have a higher stake in society than those who are less wealthy. The tax system should encourage those without wealth to gain wealth and move into the higher tax paying brackets.

  3. Morfydd says:

    Um, have these people never filled out a 1040-EZ? It’s functionally the “postcard” people burble about. The only difference is that you look up the amount of tax owed in a table instead of doing multiplication.

    There are two reasons why people don’t do the EZ form:

    1) They can’t – they have non-trivial non-wage income. This wouldn’t fly on the “postcard” either.

    2) They don’t want to – they want to claim deductions. Go ahead – try to take away people’s homeowner deductions. Or better yet, Child credit.

    Sorry, the flat tax (aside from the smack it would be to the poor) really annoys me. Figuring the tax rate from a known income level is trivial. It’s figuring out what that imcome level *is* that’s hard.

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