Observations from my tax returns
I have been filing with Turbo Tax since the 2001 tax year. The nice thing about the service is that I can see all of my prior year returns anytime. It is kind of interesting to see summary of the information over the years. Incidentally, 2001 is the year that Mrs. Stew and I were married, so all of this data was filed under the “married, filing jointly” classification. I posted all of this data as percentages with 2001 as our baseline number. For instance, our Adjusted Gross Income in 2005 was 101% of our 2001 AGI. None of the data is adjusted for inflation or cost of living, just the raw amounts or percentages. I also do not know much about formatting tables in WordPress, so please bear with me . . . if I were really good, I would have made bar or line graphs out of all this stuff. :)
Adjusted Gross Income
As you can see, our AGI has fluctuated a good amount over the years. In fact, the drop from 123% to 70% in 2003 was the catalyst for our major financial difficulties in 2004 and 2005. We made 30% less money than 2001, but continued to spend at 2002 level in 2003. This budget deficit was masked by our use of credit cards, home refinancing and a lack of a budget. I did not realize that we were in huge financial trouble until 2006, when I actually laid out a budget for the first time and saw the information in black and white.
Our taxable income has been most impacted by our qualification for deductions. Three children plus our move plus renting a house at a loss resulted in no taxable income in 2008.
I used real numbers for this one. I think that the total tax number includes payroll taxes like Social Security and Medicare. I have always had several part-time or self-employment type streams of income on which I did not figure the self-employment tax until it came time to file. The amount of free-lance work that I did in a given year constitutes the fairly wide disparities in these numbers.
Amount of Refund
Once again, I used percentages of our first refund as a married couple in 2001. This refund has grown considerably over the years as our deductions have increased and as our government continues to give handouts to lower income families like us. I am not a fan of government wealth redistribution, but it is what it is. I have not complete filing for 2009, however, our refund might be in the neighborhood of 2,000% of our 2001 tax refund.
Effective Tax Rate
Our family’s effective tax rate shows how we benefit from our country’s progressive tax system, however, I would support a flat tax or even a national sales tax where everyone pays the same percentage of their income with no deductions even though it would greatly reduce our tax refund every year. I think that the extra money in the economy would cause greater job creation through investment and higher wages. I could be wrong . . . but that is what I think.
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