The trouble with taxes

I'm with James--I think Al Franken made an honest mistake, and that mistake was trusting his accountant not to be an utter fool. It's all very well to say that he should have checked, but tax law is insanely complicated and getting more so every year--most of us don't have time to be a tax attorney and a success in another career.

I would wager that most of the people piling on do not have a great deal of 1099 income earned in a variety of states. It took me basically an entire day to do my taxes this year, and I only had to deal with two, New York and DC. Allocating income between them, calculating the differing deductions for each state, figuring out which business deductions I was entitled to against my freelance income, and which could be applied against my salary . . . hours of fun for the entire family. And the problem is getting worse every year as the tax codes get more and more complicated at the state, federal, and local levels.

Serves you right for doing them yourself, one of you is about to say. Get an accountant.

What, and end up like Al Franken?

Comments

Here's an interesting question: would the Fair Tax apply to speaker's fees. Presumably so. In which case, wouldn't it mean more work preparing taxes for people (like Franken ) who make a significant amount of their income from such fees?

Posted by Blackadder | April 30, 2008 11:45 AM

I really dislike Al Franken for a lot of reasons, although the stuff he does without a lot of publicity, like the USO tours, is admirable. Overall, however, he seems to to just mirror many of the worst aspects of those he despises.

This tax stuff is really something I sympathize with him on. People who have never been self employed have no idea what an administrative nightmare our governments make it to be entrepreneurial. I don't even mind the tax rate per se. It is the gargantuan number of hours spent on recordkeeping which brings out the anarchist in me.

Posted by Will Allen | April 30, 2008 12:02 PM

I sympathize with him as well, but I'll bet that there will be a low-blow "Tax Me More"-type attack on Franken. It'll be interesting to see if it has traction.

Posted by Klug | April 30, 2008 12:12 PM

The worst tax year for me was 2003. My husband worked in California, New Mexico, Texas, Mississippi, and in Louisiana, where we live. That was four state tax returns. The horrible part was that each state assumed all state tax returns would be prepared simultaneously. It was a nightmare figuring out which one do first!

Posted by Donna B. | April 30, 2008 12:13 PM

Serves all of you right for living in states with income taxes.

Posted by secret asian man | April 30, 2008 12:20 PM

If you are an independent contractor, you can end up doing tax forms for multiple states, even if you live the whole time in only one. this year, I even got to do tax forms for a state where I never once set foot all year. (One of the companies I worked for just takes out taxes for the state where they are based, no matter where the employee lives. Want a refund? Gotta file there, too.)

Posted by wj | April 30, 2008 12:34 PM

Is any blame to be placed at the feet of a tax hungry, aggrandizing, welfare state? If so, then Franken's travails are in part a logical consequence of the voracious government he insists we can't live without. Hence, the schadenfreude at his predicament.

Posted by Martin Gale | April 30, 2008 12:47 PM

I've often wondered what the best type of tax would be. Net income, gross income, wealth, improved property, unimproved property, poll, sales, duties, etc... What methods do other countries use that seem better than ours?

Posted by Nelson | April 30, 2008 1:06 PM

There's also the issue that DC is completely insane about estimated taxes. This is why I'll never run for senator. As always, it's the masses who suffer.

Also, we don't have a senator, but I think my point still stands.

Posted by Eddy Elfenbein | April 30, 2008 1:20 PM

There is no way to end these problems. They can only really be ameliorated. We have 51 sovereign entities within the United States. That doesn't even count the reservations.

Any state that gave up this income would be idiotic. Especially taxing people who moved out of the state during the year. That is essentially free tax money to the politicians. They get to spend the money, but don't have to worry about an angry voter.
There is also a fairness issue for the states. If I live in a three different states within one year, it is not fair to the first two states to have to pay for the services I used an then not be able to bill me.

If I have three ex-wives, they all receive alimony. It isn't the one to whom I was married the longest who gets all of the money. They all receive some portion of my alimony payments.

Posted by jon | April 30, 2008 1:41 PM

My problem with Franken is not that I assume his tax problems were cheats, or other attempts to break the law.

It's that he's for raising my taxes! And making them more complicated!

If his response to this mess he's in were to say "we need to simplify the tax code, have no federal income tax rate above 15%, lower cap gains" I'd be with him. But he's not saying that at all. It's all about what's good for thee, but not for me.

Posted by mouse | April 30, 2008 1:46 PM

There is also a fairness issue for the states. If I live in a three different states within one year, it is not fair to the first two states to have to pay for the services I used an then not be able to bill me.

Yes, but if all citizens had income taxes go to the state where they lived the majority of the time, presumably it would even out in the aggregate.

Posted by Ryan W. | April 30, 2008 2:18 PM

I'm clueless about the deductions and all that but I file in 2 states, used to be 3, and I get a credit in the state I live in for the taxes paid to other states.

Is this not the case everywhere?

Posted by sam | April 30, 2008 2:31 PM

I suspect that the "piling on" comes in part from a perception that Franken would not himself be similarly charitable toward other wealthy people making errors on their taxes.

Posted by Tom T. | April 30, 2008 2:49 PM

Hell's bells, you don't have to be self-employed to have problems like this.
I once employed a live-in nanny (a friend from PRC who was temporarily amnestied since she was here when Tienanmen Square happened). Since she was thinking about trying to get a green card, I formally employed and paid her completely "above the table".
One year I filed 19 returns (not counting the returns *she* filed), and this was in a single state! The paperwork I accumulated while she was here (2 years) probably outweighed her.
I'm in CA, and my wife once worked in and lived in NYC. Add in selling/buying a house, and a job change, to the NY State non-resident and NY City filings, along with some quarterly estimated payments (tax on stock sales), and that year added up to 11 filings.
Of course, my wife and I have both been self-employed at various times. Don't even get me started on that...

Posted by Fred the Fourth | April 30, 2008 3:01 PM

Al Franken has long opposed ANY and ALL proposals to simplify the tax code on the grounds that "but intrest groups X, Y, and Z are so important!! And what about ..."

He richly deserves this.

Posted by Person | April 30, 2008 3:34 PM

If all legislators, at all levels of government, were required by law to prepare and file their own tax returns without professional assistance, the federal and state tax codes would be simplified very quickly. Failing that, "abandon all hope, ye who file here".

Posted by Ed Reid | April 30, 2008 4:11 PM

I would tend to give Franken a pass on this, if he hadn't also "neglected" to pay Worker's Comp for the people he employed.

Sounds more like "Let's see if we can sneak this past the government. They'll never find out."

Posted by Johngalt47 | April 30, 2008 5:06 PM

Any politician or would be politician who does not favor a post-card tax return deserves all the opprobrium for screwing up his or her taxes. They want to screw us 19 way to Sunday to hep "the poor", special interests, etc? Well then they should get every little thing right.

Politicians should face 20x penalties for all infractions - 10 years for jay-walking, etc. No power without responsibility. The Roman idea of MANDATORY prosecutions/investigations at the end of a term of office is also very attractive.

Plus, there's the complete and utter idiocy to this. Franken has been running for Senate for a long time. He was contemplating it before hand. Any idiot knows that before you embark on a candidacy you need to make sure that you've cleaned up any outstanding problems. Clinton demonstrated this with all the problems his appointees had with illegal immigrant nannies and his own bimbo eruptions. The first step the smart candidate makes is to investigate himself. Hire a new lawyer and accountant to go over ALL of your business deals and tax returns. If there are any problems (like you were cheating on your taxes or ha a crappy accountant) you settle up make it all go away, then make a statement Friday afternoon before a major holiday (you're barely a public figure at this point, so you have total control of the news cycle) saying that you were saddened to find out that some clerical errors had been made and you didn't report $100M in cocaine distribution income but that as part of a regular review of your finances you discovered the errors and have made amends like a diligent citizen.

It's over and done with and it won't come up at a critical moment. Bush should have done this with the DUI arrest, because you can spin it so easily no matter your position. It's either a demonstration of why you believe in reform (good people are hassled for no reason by unjust policies/rules/laws) or why you believe in the current system (you were deeply changed by the experience, you noticed infractions yourself and told the authorities due to your deep commitment to America...). Doesn't matter what the policy is (taxes, drugs, DUI, underground ferret gambling) the skilled politician makes the issue his own and turns the negative (breaking the law) into a positive piece of biography. And I thought Franken was supposed to be smart and imaginative!

Posted by Hey | April 30, 2008 5:17 PM

i guess HEY you didn't even bother to know the issue before you commented. He did pay all his taxes. He simply paid the wrong state. So it's not that he didn't pay his taxes, it that the taxes he did pay should have been divied up among the 17 states.

Posted by Brian Despain | April 30, 2008 6:56 PM

So why should any Minnesota voter think that Franken will hire policy advisers who are any better than his accountant?

Posted by Anthony | April 30, 2008 10:10 PM

The reason Franken's troubles are funny, to me at least, is that Franken favors high taxes. That he got in trouble for paying too little is poetic justice, in my opinion.

Posted by Dan | April 30, 2008 11:48 PM

Post Enron, I thought 'I just did what my accountants said' was no longer a valid excuse - legally or in the court of public opinion. Isn't this is the same excuse Skilling and Lay used?

Posted by Curmudgeon | May 1, 2008 9:09 AM

Brian - I didn't say he didn't pay enough, I said he screwed up. That he screwed up is not up for discussion. I despise him and hope that he suffers grievously for this hypocrisy and utter stupidity.

I'd also like the Kennedys to suffer the same thing (Jay Rockefeller, Kerry, etc, etc). All politicians should have their situation and finances reviewed by new accountants and lawyers with a view to how they would look in a campaign. Screw Al Franken and all other limousine liberals who want a pass but want to screw business people, professionals, and "the rich".

Posted by Hey | May 1, 2008 8:51 PM