Taxes (What else on this day?)

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There is not a better topic on this day to talk about other than taxes.

 

Yes, taxes.

 

However, this is not about those taxes due today.

 

This is about taxes that could happen here in Maine in the coming months.  Even though these are happening in Maine, some of them may apply to other parts of the country as well.

 

Some of these taxes are disguised as fees.  One such fee (tax) applies to a new one that just started today in Portland, which makes me glad that I don’t shop in Portland.  A 5 cent charge has now been implemented on every plastic and paper bag that a shopper uses also the Styrofoam cups have been banned as well.  While I don’t have a problem with the latter, I do have a problem with the bags.

 

When I go shopping, I always try to use the self-serve checkouts whenever possible.  The reason for this is that I like to have things bagged my way, which can’t be done if some rude cashier rings you up.  I always at least double bag all my purchases as the bags never seem to be strong enough to hold much of anything before they start giving way.  So on average, I would be using about 6 bags or at a cost of 30 cents per purchase.  Do this a couple of times a week every week and it adds up quickly.

 

Of course, I hear those of you say “why not just bring your own reusable bag?”.

 

As someone who worked in retail for about 25 years, I have seen that many of these reusable bags are nasty looking.  Many look like they have been rolled in a mud puddle for hours.  Do people even ever think about washing their bags?  I don’t think so which is why I use a clean new plastic bag.  It is certainly more sanitary even though it may not be environmentally friendly.

 

This is what it all boils down to.

 

That point of being environmentally friendly.

 

Don’t these people realize that much of the garbage around town may come from those people who don’t even live in town?

 

While it may make them have that “feel good feeling”, in reality the real polluters are countries like China and India, which dump thousands of pounds of garbage into the water every day.  Portland, Maine is just a small dot in the big problem.  It may be a right step, but I feel it is a step in the wrong direction and hurt more people than it helps.  I certainly would not want to be behind someone in line who is using a dirty bag, germs are spread to easily nowadays.

 

Now while this fee (tax) has been implemented, the governor of our state has decided to create his own nightmare legacy by wanting to implement some sweeping changes to the tax bases.

 

Here are just a few of them and my comments about them:

 

  • Eliminate the state income tax. While this is a great idea in concept, how he plans on making up for it will hurt more than help.
  • Putting a tax on services like plumbers, haircuts and repairmen. Consider that some of these people rely on tips; many will see their tips reduced or disappear completely because taxes will be added to their services.  End result will be less money to those who perform services and more money to the unneeded state system.
  • Expanding and raising the sales tax to between 6 and 6.5%. This would be great if it would not hurt the ordinary state resident unlike what governor thinks that tourists would pick up the bulk of this increase.  Also doesn’t he know that tax-free New Hampshire is right next door?
  • Remove the homestead exemption tax on everyone over 65 years old. This would be great except most homeowners are younger than 65 and will get no benefit from this change.
  • Eliminating sales tax exemption for non-profits. This has been abused for years by those so-called non-profits, mostly churches and charities.
  • Lowering the corporate tax rate. This only gives company’s a fatter bottom line and unfortunately the money is not passed along to employees as a pay increase.

 

Overall, the governor’s plan is to shift the tax burden from business to its residents.  Is this a good idea?

 

Not if you want to live in Maine.

 

So if I was governor what would I do?

 

In the order listed above, my solutions would be:

 

  • Keep the state income tax. While it may seem like an outdated burden, it still raises revenue where it needs to.
  • No tax on services. I think that those who provide a service should get a tip and most who pay for those services take the tip from what they give the person at time of service.  Just a bad idea period.
  • I would lower the sales tax back to 5% or better yet lower it to 3%. Lowering the tax rate will allow more money in people’s pockets and will allow people to purchase more therefore.  The state needs to be more competitive in its rate.
  • Keep the homestead exemption for everyone. Since many homeowners have mortgages, giving them a break would be more than desired.
  • I support the taxing of non-profits. In my 25 years in retail, I saw this abused by those who were buying personal items and calling it a non-taxable business expense.  But since the information is submitted to the state regarding every tax exempt transaction and those rejected by the state are subject to the business to pay not only the applicable sales tax, but a fine as well.
  • Raising the corporate tax. While many may say this would be counterproductive to business, the truth is that many businesses have been given reductions in everything from real estate to employee benefits.  It is time that businesses really pay their real fair share.

 

 

While some may disagree with some of my plan, I think that it creates a much fairer playing field as I don’t cater to the special interests of businesses or any group.  Even if you live in another state, I think you will find that my suggestions would make for a more fair system.  If you agree with what I have written, let your representatives know or better yet run for political office yourself and influence the change of our tax system.

 

After all, shouldn’t taxes be fairer even though death isn’t?

 

 

 

 

 

 

 

My New Tax Prep Choice – TaxAct

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Over the years, my choice for tax preparation software has always been H&R Block tax program.  I never used TurboTax since it has been reported in the past to having spyware within it.  However, this year I decided to try something new or at least new to me.  Let’s welcome TaxAct to the corral.

I was intrigued by the fact that this program cost under $25, where the others are $40 or more.  To add more to my interest was that the program also allowed for one Free State e-file.  This was the selling point to me since all I needed was just one state filing only anyway.  So let’s take a look at the product.

When opening the box, inside you will find the disc and an actual instruction manual.  Not just an installation card, but a manual to tell you how to install, print and other basic functions.  This is certainly a welcome change from the past products that send you on your own after install.

Installing the product on Windows XP machine was quick and downloading the required product update was just as fast.  After about 15 minutes, I was up and running.  The program ran pretty much like the H&R Block program that I had been used to and the whole tax process took about an hour including the state.  Help was well written and in English unlike many others that are written with a CPA knowledge in mind.

The only problem I had was when I went to e-file the state and it didn’t like the previous year information for the federal taxes.  After getting the proper information that the program needed, both the federal and state e-files went smoothly, but could have been avoided if I was notified for the federal before I even tried to submit the state.  Unfortunately, the program submits both at the same time and results aren’t known until everything is done.

My only gripe with the program (and it is a fairly big one) is that the program is paranoid of itself and displays a constant copyright notice in the bottom of the display.  Out of all the thousands of programs I have run over the years this is the first one I have ever seen that does anything like that.  For that reason I am dropping my score by 1 point just for this annoyance.

Overall, my experience with the program was better than I expected.  It was quick and didn’t crash at any point as I have seen with previous products that I have used.  It is cheap and works well.  I highly recommend this program.

My score:  8

 

Pros:

  • Good manual with detailed instructions
  • Fast install
  • Free state e-file included
  • Help is in English not tax talk

Cons:

  • State program required to be downloaded a second time after first install didn’t seem to work.  Ok with second attempt.
  • Annoying copyright notice occupies the bottom of screen taking up precious screen space.  One point was deducted from my score because of this annoyance.

Summary:

This is a highly capable program for both seasoned users and beginners.  Don’t be fooled by the cheap price as this program is as good as the competition, if not better.  This is certainly goes to the top of my preferred tax software list.