April 15th marks a national springtime ritual that has nothing to do with April flowers. It's the official due date to file our federal returns for taxes we know about and those we never see coming until after they hit us.
Sneak-a-taxes are taxes buried in the 9-million-word tax code mess.
Some of these sneak-a-taxes start out as temporary, but Congress conveniently forgets to end them. Or maybe they just pretend to forget.
Consider the withholding of income taxes. Congress enacted automatic withholding in 1943 as a way to fill the U.S. Treasury coffers each month and mask the true cost of federal spending. Congress explained to the public that, since the United States was busy fighting World War II, automatic withholding was necessary to fund the war effort in a timely fashion.
Congress also promised that withholding would end as soon as the war was over. That war ended 60 years ago.
Automatic withholding is a sneak-a-tax. When you receive a refund check, it means yougave the government an interest-free loan. Many workers have more taxes withheldthroughout the year than they will owe on April 15th to avoid writing Uncle Sam a check or incurring an underpayment penalty. They then seem overjoyed that theyreceive a big refund check from the U.S. Treasury. We are so conditioned to celebrateour sudden windfall from the government that we forget that it is our money in thefirst place. [Ed note: and money you would have earned interest on had you placed it in a savings account.]
The alternative minimum tax is another sneak-a-tax that should have been repealed years ago. The AMT laws were enacted in 1969 by a Democratic-controlled Congress to sock it to the so-called rich. The AMT is a calculation that assigns an alternate tax amount due if your regular income tax liability is not as high as Congress would like it to be.
It is simply an unfair way of forcing people to pay more taxes, even if they follow all the rules and mandates in the convoluted tax code. Each year, the AMT bandit holds up more and more of the so-called rich.
In 2004, anestimated 2.6 million taxpayers fell prey to the AMT. By 2010 33 million, or an estimated one-third of all taxpayers, will be subject to the AMT. All because youand your spouse worked hard enough to earn at least $75,000, which in 1969 was considered rich.
The AMT does not consider inflation, a family's decision for both spouses to work, nor the promotion you received because you worked a little harder last year. The AMT punishes people for investing, working harder and growing their small businesses.
More sneak-a-taxes include corporate income taxes, which lead to higher consumer prices, the double taxation on dividends and corporate earnings, taxes paid on Social Security benefits, raising the maximum income subject to payroll taxes, lowering the maximum limit for certain taxable deductions, limiting the equipment expensing amount for small businesses, and the many taxes, fees, and surcharges hidden in your monthly phone bill.
In fact, one of the most ridiculous sneak-a-taxes is the Federal Excise Tax. The Federal Excise Tax, which is figured at 3 percent of your phone bill, was enacted in 1898 to help pay for the Spanish-American War. That war ended 107 years ago.
The federal tax code is filled with bandits, loopholes and limited deductions. Mostpeople can't afford to find all the loopholes and deductions, but the tax-code bandits find everybody.
The only solution to locking up the tax-code bandits and making sure they never escape is to first repeal the 16th Amendment to the Constitution, which gives Congress the "power to lay and collect taxes on incomes, from whatever source derived."
Second, we must replace the federal income tax code with a national sales tax, also known as the FairTax.
Under the FairTax, all citizens will see an increase in their personal incomes and intheir ability to save and invest for their future and their children's futures.
Credit must go to President Bush for bringing long-overdue debate on overhauling the tax code mess to the forefront of the national political agenda. But Congress will not take action without a vocal and persistent demand from the voters in betweenelections, and not just on election days.
Let's put the tax code bandits out of business. Ask your members of Congress to replace the tax code with the FairTax. If they say no, or do nothing, then it's time to replace them.
And that will not be a sneak attack.
Herman Cain is chief executive officer of T.H.E. New Voice, Inc. and New Voters Alliance, and host of the nationally syndicated radio talk show The Bottom Line with Herman Cain. He is past chairman of the Federal Reserve Bank of Kansas City, and past chairman and CEO of the National Restaurant Association.