Is Complaining About Taxes Politically Incorrect Now?

Phil Mickelson has been roundly castigated for daring to comment on the amount of taxes he pays. He calculates it at 63 percent. Others have said that he really only pays 53 percent (btw, I note that KPMG is his sponsor — couldn’t they tell him what percent of tax he pays?). Others say he should stop the “whining.” Apparently, it got so bad, he felt he had to issue an apology.

Where have we come to as a country that a person can’t complain that more than 50 percent of his income is skimmed by the government?

How Much Is Too Much?

Let’s go with 53 percent as the correct number. That’s just the tax on income. It doesn’t take into account sales taxes, property taxes, fuels taxes, and the list goes on. How much is too much? And what about the “tax” imposed on individuals and companies that must hire accountants (like PJCo) just to help them navigate the complicated tax world. It’s really getting to be ridiculous.

Federal taxes account for the biggest bite when it comes to income taxes. But state income taxes are a significant part of the overall income tax picture. And it’s not all about rates either. State income taxes present a much bigger level of complexity than the federal. Individuals and businesses have to also figure out where they should be filing tax returns. They may have nexus in another state by virtue of their own travels or by employee activities or even by non-employee representatives. If they fail to file tax returns in all the right jurisdictions, they could be on the hook not only for the tax but penalty and interest too. You may be interested in our list of Ten Common Nexus-Creating Activities.

And we haven’t addressed the complexities with the sales taxes. For businesses, deciding where they should be registered to collect sales taxes and upon what items (not everything is taxable everywhere) and at what rate can be overwhelming. FWIW, I believe it’s something that everyone should complain about. Yes, the good news is, we do have solutions that make all of these problems somewhat less “taxing,” but we can’t take it all away and we don’t work for free (usually).

Complaining Is a Civic Duty

We should all complain, and hopefully changes will be made. In the meantime, though, we have to deal with the situation at hand. The fact is that states have incredibly broad powers to impose tax on businesses. We can and should complain, but we must not ignore the realities. If you have nexus, then a state can force you to pay their income taxes and collect their sales taxes.

If you have nexus, you should act quickly to get your systems set up as efficiently and accurately collect and pay the proper taxes. Fortunately, it’s not all gloom and doom. There are some excellent software solutions that can be implemented very cost-effectively and address all of these issues.

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