Tips for maximizing your taxes... and possibly your patriotism
Is it a matter of patriotism to pay higher taxes? Here's what one federal judge said.
"Anyone may arrange his affairs so that his taxes shall be as low as possible; he is not bound to choose that pattern which best pays the treasury. There is not even a patriotic duty to increase one's taxes. Over and over again the Courts have said that there is nothing sinister in so arranging affairs as to keep taxes as low as possible. Everyone does it, rich and poor alike and all do right, for nobody owes any public duty to pay more than the law demands."
--Judge Learned Hand*
Why is this an issue?
With the United States facing a huge deficit and weathering a shaky economy, some are calling for higher taxes. Then again, regardless of the economy, as long as there is a presidential race on the horizon, income tax will always be on the table. Now, with the next election breathing down our necks, both presidential candidates as well as both vice presidential candidates are talking tax. Some say "raise taxes significantly," others say "keep taxes low to increase total revenue." And contrary to the wisdom of Judge Learned Hand, one VP candidate tells us that paying higher taxes is patriotic.
For those who agree, there's no need to wait for the new administration to take over, or for Congress to pass new tax legislation. As long as taxpayers properly report all income and accurately list the identifying details required on their tax forms, there are countless ways they can maximize their taxes and prove their patriotism.
Here are just a few:
- Don't deduct charitable contributions.
- Claim fewer business expenses.
- Better still, forget itemizing altogether.
- Even low income people who generally pay no taxes can do their patriotic duty by foregoing the Earned Income Credit.
Consider what Elvis Presley did, soon after he became a wealthy man. For decades the story has circulated of how he directed his accountant to file his taxes by short form, though he surely paid a lot of business expenses. He felt that because he had so much, he should pay more... much more. If the story is true, it is admirable. Not only did he wish to fill up the Treasury coffers, but he did it voluntarily without trying to force his brand of "patriotism" on everyone. Today, anyone who feels as Presley did is invited to do the same by skipping tax deductions. But there's also another way.
The U.S. government maintains an account called "Gifts to the United States." Established in 1843, the account exists to accept gifts or bequests that individuals want to provide out of patriotism or any other motive. It's been called the Conscience Fund, because it's believed that some people who, for whatever reasons, owe money to the government, use it for conscience cleansing. This money is deposited without coercion or conditions, and is available for general use, possibly to meet the needs of the federal budget.
Does anyone actually use this fund? Absolutely. In 2007, the
U.S. Treasury's Bureau of Public Debt received $2.6 million, and in 2006, an Ohio woman left her $1.1 million estate to the fund. By July of this year, the fund had already collected over $2 million.
Or, taxpayers can do what Democrat Senator Robert Byrd did when he received his $600 rebate check in 2001. "They were very generous in handing this money out to me, and I'm going to be very generous in sending it back."
The late-Senator was miffed that the Bush Administration had cut taxes and this was his way of demonstrating his pique. Say what you will about his motives... at least he backed up his beliefs with action. That is more admirable than the scenario that was overheard in a shoe store shortly after those checks were issued. A cashier spent several minutes complaining -– in front of customers -- that the tax rebates were stupid and would send the country to hell in the proverbial hand basket. When his long rant was finished, he pulled his own $300 rebate check out of his wallet and asked his manager how to go about cashing it. That seems to be a more typical scenario... decry the tax cuts but enjoy the benefits. Taxpayers who believe their taxes are too low are invited to take matters into their own hands and maximize their tax bills. Or just send a personal check or money order to the Conscience Fund, made out to the United States Treasury, to:
Gifts to the United States
U.S. Department of the Treasury
Credit Accounting Branch
3700 East-West Highway, Room 622D
Hyattsville, MD 20782
*Judge Learned Hand (1872-1961)was a United States judge in the Southern District Court of New York, and the U.S. Court of Appeals for the Second Circuit, and has been quoted more than any other lower court judge by legal scholars and by the Supreme Court of the United States.