Tax Simplification for Michigan's Disabled Not Complexity for the Wealthy

My Editorial published in Benton Harbor/St. Joseph Herald Palladium April 9, 2014:

The April 15 tax deadline fast approaches.  The Tea Party conservatives are readying their tri-corner hats and “Don’t Tread on Me” signs for boisterous protests throughout Michigan on Tuesday.  Obviously, they don’t like paying taxes.  I mean they REALLY don’t like taxes, especially when there is a Democratic President or Governor.  My advice to the Tea Party Patriots is have fun on tax day and dress warm.  Michigan’s April showers do after all bring May flowers.

For the rest of us, you know those of us who get that taxes in a democracy are necessary to pay for our schools, medical care for veterans and seniors, a safety net for the poor, police and fire protection, clean water and safe food, fundamental scientific research like that which brought us positron emission tomography (PET) scans, and our parks and roads, here’s a tip on how to survive the tax deadline and get your taxes filed properly and on time:

Don’t panic.  

As someone who is up to his neck in helping folks file taxes this time of year, I understand that 99 percent of Americans despise filing taxes.  Only one percent of Americans like tax time.  The Americans in the one percent, let’s call them accountants, have been declared to be clinically nuts by the American Psychological Association.  Most people, i.e., normal people, would rather see their dentist for a tooth extraction than have to sift through mounds of paper and bring them to a tax guy, who is grumpy because she or he has been working like a hundred hours a week for the last three months and whose sense of humor rivals that of an economist.

Other than having to spend an hour or so with an accountant who tells bad jokes, there’s no reason to panic about the tax deadline.  So, pull all of those coffee or tea party stained receipts, W2s, and 1099s out of your desk drawer and take them to the accountant who tells the fewest jokes.   He or she would probably appreciate it, and charge you a whole lot less, if you organize them a little bit.  You know, separate the receipts stained by coffee from the receipts stained by Bud Light.  Just kidding.   Separate donation receipts, from medical and dental bills, from mortgage and property tax statements.  It’s also a good idea to choose an accountant whose office is next door to a bar just in case you end up owing money.  

On a more serious note, we all know that our income tax system has gotten too darned complicated.  We all agree on that.  How to fix it is where we start the disagreement.  Personally, I think we should eliminate IRS Schedule A itemized deductions.   Most Americans, 68 percent per a February Congressional Research Service report do NOT itemize or detail deductions.  Who does?   Wealthy Americans.   Whereas, only 22 percent of Americans making between $20,000 and $50,000 itemize, over 95 percent of Americans making more than $200,000 do.  So, itemized deductions and tax complication primarily benefit the wealthy.  

Accordingly, my plan for federal tax simplification would start by eliminating Schedule A.   Donations to charities and payments to mortgage companies reduce the taxes primarily of the wealthy not the working or middle classes.

In simplifying Michigan taxes, I would start with simplifying taxes for Michigan’s residents who live in adult foster care homes.   All Michiganders who make less than $50,000 can qualify for the Homestead Property Tax or Renter’s Credit.  For home owners, the homestead credit is based on the amount of their property tax which is greater than 3.5 percent of their household resources.  For renters, 20 percent of their rent counts as if it were property tax and it is this 20 percent which counts toward the Homestead credit again if it exceeds 3.5 percent of household resources.   

But not for Michigan’s approximately 50,000 mentally or physically disabled adults in adult foster care or homes for the aged.  The calculation for these disabled adults is more complicated than the hokey-pokey.  Their homestead calculation is based on the amount of property taxes at their foster home (and the foster care owner is not required to report to them) divided by the home’s capacity as approved by Department of Human Services.   Why in the world would anyone design a calculation of Homestead credit harder to compute and less beneficial for mentally or physically disabled adults?   

All taxes should be simpler.  Basic fairness and decency says that we should simplify taxes for disabled Michiganders.