If you are like me you were awoken this morning by a loud evil laugh that sounded like it came straight from one of those 1950s Horror Movies. The Smartfella is here to identify that laugh for you. That was the Internal Revenue Service.
Yesterday was Tax Day and all the barrooms around IRS Offices all over the Good Ole USofA where overflowing during Happy Hour with IRS Public Servants toasting a job well done.
When Individual Retirement Accounts (IRAs) were first considered by Congress they intended to allow us Taxpaying Minions to set aside some of our income and not pay taxes on those annual set asides. It was a great idea. It would have been a super way to allow us to supplement our future Social Security Income and have a more comfortable retirement.
Congress realized that what they were about to do was to create a Dastardly Tax Loophole so they “fixed” it. With a wave of their collective fiscal wands they made IRA Savings not a vehicle for Tax Avoidance but only Tax Deferred until we took the money out.
A member of Congress upon being questioned about the change reacted in a very aggressive way by saying, “We did it because that’s our money!”
Then they went one step further and dictated that the money had to start being taken out when and if any of us lived to 70.5 years. I only recently became age eligible for this Minimum Required Distribution (MRD).
I knew it was coming and, silly me, I looked at it from the point of view of... Well they got me. Just accept the fact that you are going to have your taxable income bumped up every year and you are going to have to pay taxes on that bump.
With this year’s tax return I heard the other shoe drop and it was a very loud drop.
Our MRD added enough taxable income to put us over an IRS Got Ya Point and we had to pay taxes on our Social Security Income.
If you are thinking to yourself that I am just not being very patriotic by not wanting Congress to get back Their Money, try this on for Patriotic Giving...
We had to pay taxes on 64% of our social security income.
If you are not old enough yet to experience the sheer pleasure of paying taxes on 64% of your Social Security Income, be sure to write and tell me how you like it when you get old enough to be as Patriotic as I am.
Would I kid u?
Smartfella
Lagniappe:
A Tax History Lesson…
The Income Tax established in 1913 was sort of an afterthought tax. The major piece of legislation it was part of was a Tariff Reform Bill. The income tax was put in there to compensate for anticipated loss of revenue due to the tariffs being lowered.
It was not much of a burden on us taxpayers…
Less than 1% of the population paid federal income tax at the time.
Next time you hear your 9% Approval Rate Congress tell you not to worry about this or that because it is so small you will never notice it you better start worrying. That is known as a Congressional Foot in the Door.
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