Great Opinion Column in the WSJ

Loyal Readers:

There was a great staff editorial posted in the Wall Street Journal today. The column discussed the 2.9% Medicare tax (called a Medicare payroll levy in this column) being applied to passive income -- which includes incomes such as interest, dividends, rents, etc.

As you may or may not know, each taxpayer that receives a W-2 has 1.45% of their gross income set aside for Medicare. The employer which furnished a W-2 to its employees likewise pay 1.45% of the gross income to Medicare. Both of these amounts combine for the 2.9% that is sent to the IRS.

The 2.9% is only taken from total wages, not other types of income. This proposal would change that... and since passive income is typically not automatically withheld by employers, would cause additional strain on young individuals filling out their tax returns.

Here's the link to the editorial:

http://online.wsj.com/article/SB10001424052748704188104575083520811873704.html

I agree with most elements of the staff editorial. I think that several key contradictions that exist in the Health Care Reform bills are accurately pointed out, such as as the hike on capital gains tax through the 2.9% Medicare payroll levy on passive income. The article does not quite mention the burden on young taxpayers filing returns, but I identify this consequence as another negative by-product of this type of legislation.

It serves as another good reason why young people need to have a unified voice when it comes to defining the legislation that will impact our generation for many years to come.

Once again, look at this issue as a reason why Mass Tax-ed is here -- the voice of a younger generation when it comes to individual tax matters.

Attacks -OR- "A Tax" ?

You likely have read about the bitter software engineer who flew a plane in a Texas IRS building. It is indeed a sad sorry, however, an article that I found online looks at the incident through the lenses of disgruntled taxpayers.

http://news.yahoo.com/s/ap/us_plane_crash_tax_protesters

The pilot, Joseph Stack, had two registered companies suspended by the IRS. Stack left a 6-page manifesto which chronicled his clashes with the collection agency. He was one of thousands of individual contestants of tax rulings made by the IRS.

The IRS also has a "Frivolous Tax Arguments" dossier that is both referred by the web-site and found here:

http://www.irs.gov/taxpros/article/0,,id=159853,00.html

Prayers to the families impacted by this tragic accident.

More Mass Tax-ed to come later this week.

Follow-up on State of the Union

After about a week digesting the Obama State of the Union address, I'm ready to share two more links with our loyal readership.

First, it was clear from the start that tax cuts were a big discussion item for President Obama. It was a terrific mechanism for him to inculcate the two important aspects of his speech: creation of jobs and health care.

The first article that I share provides a perfect explanation for this:

http://online.wsj.com/article/BT-CO-20100128-723583.html?mod=WSJ_latestheadlines

What's most intriguing here is the immediate tie to jobs for new workers. For college-age students, this would seem to be great news -- particularly for those just now entering the job market. The small business spin may further be alleviating news to those who are not seeking the cookie-cutter entry-level corporate gigs.

Notice the mention that the ceiling for the proposal is the $106,800 income cap for social security. I would really like to explore social security in the near future, as I think this is another tax-related concern for our generation. Expect a post on that topic soon.

The second article that I want to share is a post on stltoday, the self-proclaimed "#1 St. Louis web-site. The post draws information from CNN Money that appears to be credible, so I will accept its validity in this instance.

http://www.stltoday.com/forums/viewtopic.php?p=8193347

The article begins with discussion surrounding the expiration of Bush's 2001 and 2003 tax cuts, however, it moves into other hot topics such as capital gains tax (discussed early in the State of the Union speech by Obama, too), the AMT (a hot topic in its own right on Mass Tax-ed), and the Earned Income Tax Credit (for low-income taxpayers, such as -- perhaps -- recent college students).

Let's back-track a moment here too. Again, I will constantly seek to ask "Why?" when bringing these issues into the foreground. As stated in my preface to this blog, "Many of these Americans are entering the workforce (re: EITC), expanding their future income potential (re: AMT), or beginning to save for their retirement (re: Capital Gains Tax)."

I believe this connection re-affirms my belief why awareness of key individual tax issues is important for college students in my generation. These are areas that impact our lives or our futures -- even if they aren't the most glorious or most prevalent on our agendas. I still fastidiously believe that there should be a voice to bring awareness to these matters -- and that, my friends, is truly why Mass Tax-ed is here today.

As we move onto week 2 of post-Obama State of the Union 2010, stay tuned for future developments here on The Voice of Masses.