Money & You – March 2011

Death and Taxes
Money & You Gallup Journey

By Tommy Haws

They say that the only two sure things in life are death and taxes – and we’re not too sure about death.

Taxes are all around us, but most of the time when we say taxes we are speaking about income taxes.  But in reality, they are much more pervasive than that.  Not everyone pays income taxes in this country, but we all are affected by taxes in one form or another.

Every time you fill up your car with gas or diesel there are many taxes in that gallon of fuel.  Sometimes, it is almost as much as the cost of the fuel portion of the total price.

Every time you purchase something there is a tax – except with food now in New Mexico – there is a gross receipts tax.  Whether you know it or not, you are paying it.  Even if it is not broken out on your receipt, it is part of the calculation that the providers of the goods or services have used to know what to charge you.  Doctors, cars, haircuts, bank fees, etc. all have a tax either added on or factored into the charge that is paid out.

Property taxes are pervasive and provide many good governmental services.  McKinley County is in an odd situation, however, because only about 11% of the land in this county is subject to taxation, but 100% of the voters can vote to raise the taxes on this smaller percentage.  We used to fight about taxation without representation, but some get representation without taxation.

We often get excited around here during “tax season” because so many of our area residents get a tax refund and then those dollars are spent in the community.  However, we could all do a better job of understanding how some of the short-term loans are actually very expensive.  There are those that think an extra week of waiting is impossible, and sometimes it is.  However, a little patience could save hundreds of dollars.

Payroll taxes are also the unseen portion that goes out to the government for Social Security, Medicaid, etc.  Your employer also pays a portion of these, so the cost to employ you is indeed more than just your hourly wage or salary.

Some people like self-imposed taxes like the lottery.

There are sin taxes on things like cigarettes and liquor above the normal gross receipts.

It makes it seem that there is just as much certainty in taxes as death.  With all of these things to consider, remember that our earning power is affected by taxes.  As they get more complicated, I encourage business owners to make sure they are getting the best possible tax advice – not from ME – but from a CPA or other trained professional.  That is my advice to you, dear reader, too.  If you have rentals, a small business, a large business, etc., make sure that you are getting good advice from all your sources that you trust.  Avoidance of taxes should be legal and proper, so no cheating!  If you do not like how your tax dollars are spent, there is a political process.  The debate is raging now as local and state governments must now deal with deficits in a more grown-up manner than our politicians in Washington.  But make no mistake, there will need to be somebody paying the bill along the way, and that is every last one of us.

Finally, there is also such a thing as death tax, too, so I guess taxes get the last laugh.

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