First, to set the backdrop: I'm retired, disabled, and have an annual income of around $20,000.
It's been a frightening last couple months for me. Try as I might to take advantage of any deductions and credits, on April 18th I sent in checks for about $700 each to the IRS and Minnesota's department of revenue. As I was writing those checks, the IRS disallowed my deduction for buying a $15,000 home in 2009 and sucked $1700 out of my savings account. I had to rush to find enough money to transfer to my checking account to cover the checks for 2010 income taxes.
That was just the first salvo, our property taxes in Minnesota are due in May and October. I have no qualms paying taxes for my summer home in rural Minnesota- an energy efficent earth sheltered two bedroom built in 1983 that I paid $40,000 for. It's worth every cent of that and I gladly pay the $800 yearly taxes on it. But I'm stuck with the home in Minneapolis' North Side that I was forced out of. Set in a neighborhood with crime rates that rival Detroit's, it's a tiny 1887 vintage hovel with neither basement nor central heat. It needs a roof and rewiring and a ton of other repairs. After asking Minneapolis for help in rehabbing that house and receiving none, I was forced to cut my losses and move out. That rundown shack in Minneapolis is assessed for a higher "market value", around $50,000, than my much nicer home in greater Minnesota. Two "comparable" homes within a block of it recently sold for around $15,000... And they were nicer homes. But thanks to the city of Minneapolis, I have a tax bill for $800 a year for a run down tiny house in a crime ridden neighborhood. For nearly a year now I've offered to give this house away to family and friends and had no takers; Given the 'hood it's in it's not hard to see why.
Having been hit already by the IRS, I decided it was time to cut my losses and let my Minneapolis home go tax forfeit. So I went to the county website to cancel the automatic deduction for the taxes due May 15th. No go... They insist on three weeks notice to stop the deduction. Gotcha! Again!
As you would expect, having been hit for over $4000 in taxes in barely a month has caused a bit of introspection on the part of this ol' progressive. How did we get to this most un-progressive tax system? Lets look at the federal income tax first- I did the right thing and bought a trailer in Florida to help revive the economy. The IRS said that mobile homes and travel trailers were eligible for the tax credit. Then, when I and other taxpayers actually claimed the credit, the IRS demanded of us an obscure HUD form that's used for transferring title to conventional homes. This is a mobile home, it even has a Florida vehicle title and liscence plate! So my deduction was disallowed, then I was told by the IRS that they were reconsidering, and then they sucked the money out of my savings.
Then there's the income tax hit from Minnesota. IIRC, the top income tax rate here in Minnesota is around 8%, and the bottom rate around 6%. With most of the federal deductions and credits unavailable, the result is a very unprogressive tax system where researchers have found that low and moderate income folks pay a higher % of their income in taxes than the wealthy. Now you'd think that the democrats would do something about that... But last year, when they controlled the legislature, they barely managed to produce enough votes to pass a modest tax increase in the senate. The house, led by a democrat from a wealthy district, didn't even have the courage to take a vote on the proposal.
Finally, we have Minneapolis outrageous property taxes. Researchers have already found that properties in Minneapolis' wealthier neighborhoods are undervalued, while properties in the 'hood are greatly overvalued. The Northside, long used as a dumping ground for criminals, looks and feels like Detroit. The block my house is on there is over half vacant, as most every house slowly falls into disrepair and goes tax forfeit. Meanwhile, Minneapolis' mayor and council spent $10,000,000 to plant a "green roof" on less than 10 acres of a money loosing sports arena. The school board is building a new $25,000,000+ administration building for themselves while enrollment drops precipitiously and empty school buildings litter the city. With residents and businesses fleeing while Minneapolis budget goes further and further out of control, the city is lock in a downward spiral with no end in sight.
So I added up the numbers and concluded that I'm spending over 20% of my income on taxes. Yup, of the measly not quite $20,000 the pension funds send me a year, around $4000 is sucked up by various levels of government in taxes. So, thanks to republicans who insist on tax cuts for millionaires and democrats who haven't got the spine to fight them, I've become a progressive fiscal conservative.
So Democrats: Don't waste my tax money on fancy new offices and a plephora of staffers/campaign hacks and protect the wealthy from progressive taxes... And then have the nerve to ask me for donations!