I’ve always enjoyed learning interesting and unusual facts and statistics. Since digging into research on income tax, I’ve come across some information I think is pretty cool!
We get a two-day reprieve from filing taxes this year thanks to a little-known Federal holiday. Tax day this year is Tuesday, April 17. Now wait just a minute…you don’t get Monday off! April 16 is a Federal holiday only in Washington, DC. Monday is Emancipation Day in the District of Columbia. It commemorates a day in 1862 when Abraham Lincoln signed an act, emancipating some 3000 slaves, several months before the Emancipation Proclamation.
I had to laugh at this. Tax preparation giant H&R Block over-reported company earnings by $91 MILLION in 2003 and 2004. How do you think you have $91 million bucks more than you actually do? Perhaps the corporate tax return was done by people who’d taken H&R Block’s own tax preparation course. Of course, over-reporting income would result in a HIGHER tax liability. They’d better give themselves that “second look” they advertise!
A research study shows that about 16% of Americans think it’s OK to cheat on income taxes with about half that number of people believing there’s nothing wrong with “cheating as much as possible.” The IRS estimates they lose between $250MM to $300MM each year from under-reported income. This is up significantly in just the last few years. Researchers believe the increase is due to media focus on what have been dubbed “millionaire tax breaks” and strategies used by wealthy people to pay lower tax overall.
In part, those so-called “millionaire tax breaks” can be explained by the lower tax rate placed on money earned by money, that is, financial investments. Generally, wealthy people have more money to put to work making money so they are in a better position than the rest of us to take advantage of this tax benefit. For example, you’d pay a lower tax rate on money you earned by trading stocks than you’d pay on the salary you earn from your job. You could pay a potentially even lower tax rate on profits from futures and options trading! You don’t have to be a millionaire to enjoy this tax break. Even if you have a small trading account, any profits you earn from trading stocks, futures, or options will be taxed at the Capital Gains Tax rate.
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by Dagny Kight