I think the universe decided that today was the day we were going to pay for our exponentially lovely weather of late. Not only is it windy and sluicing rain with a cold front waiting in the wings, but we also went to the accountant's office this morning to find out that the tax man is coming and apparantly he'll be carrying a scythe and riding a black horse.
Apocolyptic signs aside, I'm really not happy about this year's huge tax bill. The biggest problem is that we're getting heavily penalized for paying for all our capital improvements in cash. Amortization rates vary on capital improvements, but typically they amortize and/or depreciate over 10 or 15 years. In layman's terms what this means is that for every $100,000 in cash flow we spend on capital improvements, we're only allowed to write off $ 7500 to $ 10,000 and we're stuck paying income tax on the balance despite the fact we've already spent the money on legitimate business expenses. It's a good problem to have, but it is, nevertheless, a real problem. As Dave Ramsey so aptly says, our system is not set up to reward financial prudence and conservatism.
I really don't mind paying income tax, so long as what I think I'm paying is reasonably fair, but thanks to the aforementioned scenario the amount of money we've had to cough up the past two years has been ridiculous. As much as I don't want to do so, I've begun looking at the cost of borrowing money to finance at least some of our capital improvement projects so that I can more closely match our cash outlay with our depreciation/amortization schedule and make some moves to reduce our tax bill at the same time.
This last part is going to be a bit of a vent, I'm afraid.
When politicians stand up in front of groups of people and say that we need to tax the wealthy harder, lots of folks jump up and cheer. After all, taxes are nothing more than a redistribution of wealth (to the state, and through them, back to us), and wealthy people have lots more money than the rest of us to redistribute, right ? Besides, spending someone else's money...money we didn't actually work for....is kind of fun. And of course we aren't wealthy and nobody we know is wealthy so nobody in our world gets hurt out of this, right ? Besides, those wealthy folks probably inherited their money and spend their days eating bonbons while driving to the bank in their Mercedes to count their money.
Well folks, hang on to your hats. According to our government's tax system, Melissa and I fall into the category of "wealthy". Please be jealous of us. And please send us some bonbons and a Mercedes, because I'll be damned if I can find the money to fund them. We work seven days a week, upwards of 12 hours every day in every kind of weather and when we come in the house we are filthy dirty and dog tired. Our last day off was May 27th, 2010. That's not figurative. That's literal. We live in a tiny apartment over my in-laws workshop and our personal vehicle is 11 years old with 200,000 miles on the odometer. This year, we'll pay considerably more money in taxes than we took away from our business to live on. While taxes are necessary and I don't mind paying them, I grudge every single mis-spent and mis-appropriated tax dollar our government spends. I can't help but believe that the mis-spent dollars would be a whole lot better spent if they were back in the pockets of the people they came from in the first place.
End of rant ! That wasn't so bad, was it ?
49 minutes ago