By Pat Orr
Apple Valley Review
The English Crown passed a number of taxes for the colonists to pay; the Stamp Act in 1765 and the Tea Act in 1773 were two of the more outrageous. The reaction to the Tea Act literally started the Revolutionary War.
Americans hate taxes and always have.
In 1791, Alexander Hamilton convinced Congress to pass a 7-cent per gallon whiskey tax to clean up war debt from the Revolution. Five hundred angry armed farmers and distillers marched on Tax Inspector General John Neville’s home in Western Pennsylvania and the militia had to be called out to quell the “Whiskey Rebellion.” They never did convince the moonshiners in Kentucky to pay the tax.
From 1790 to World War I, most of the federal government’s operating budget was funded by tariffs on foreign goods and excise taxes here and there. Income tax became legal when in 1913 the 16th Amendment to the US Constitution was enacted. The initial tax rate called for 1 percent over $3,000 of income with a 6-percent surcharge for those making $500,000 or more. By 1918 it rose to a 77-percent tax rate if you made more than $1,000,000. Democrats had found their forever target: rich guys.
When Franklin Roosevelt came to office in 1933 he realized the country would never raise enough revenue to keep pace with his spending programs; the Great Depression was a stumbling block to new taxes. His patience paid off after 13 years of huge deficit spending when in 1945 Congress lifted the marginal tax rate for those making $200,000 or more to 94 percent and enacted payroll withholding and quarterly tax payments.
Since World War II, tax rates have risen and fallen and so many new taxes and tax deductions have been enacted until even tax professionals have a tough time understanding the tax code. Here in California we are almost immune to tax talk because we know we will get them all no matter how punitive or outrageous.
As the 2016 presidential race starts to heat up you will hear the usual “babble” about tax reform but the truth is both parties are locked into a “tax and spend” cycle. Flat tax, Value Added Tax (VAT) — whatever — let's just do something to make everyone pay something to support the country we all take so much from.
You can’t deduct that
It may be too late for you this year, but here are a few dos and don’ts for future tax filings.
— You can write off child care if used while you are doing charity work but you cannot write off the cost of boarding your dog when you are on a business trip. Hey, that’s not fair.
— You can deduct your child’s music lessons for the clarinet because playing the clarinet reduces overbite. It’s a medical deduction.
— If your doctor agrees, you can write off your therapy pool in the back yard, your gym membership or smoking cessation classes and patches, gum etc. These are potential medical deductions.
— In 1988 a stripper was successful in obtaining a deduction for breast augmentation surgery because the procedure enhances her ability to increase her income. If you are considering a career in the porn industry, this could be good news for you too.
— Listing one of your children as an employee of your business and paying them salary and benefits is OK unless the IRS discovers they are too young to actually perform the work in the job description.
— When it comes to Fido, you may be able to write off his dog food and veterinarian bills if he is a full-time guard dog at your business. If you move to a new city for a better job you can write off the cost of transporting “pet” Fido to your new home — just don’t fly him first class.
All of these items come directly from my certified public accounting firm, Cheatem, Swindle & Lyon, LLC. Use these at your own risk and have a wonderful tax day on Wednesday.
— Pat Orr is a local business owner, community volunteer and political junkie.