By Tom Baxter
“Filing feels good! Share your tax triumph with your friends!”
That’s the cheery message, along with that familiar FB button, which greets you on TurboTax this year when you’re finished with the annual ordeal. I’ve embraced social media, but posting my “tax triumph” on Facebook is pushing it just a little too far. It’s vaguely un-American to post the news of your tax filing as if you’d just bought a new puppy.
Shame, too, because for once, I have something to share. Quite unexpectedly, our household has been the beneficiary of Sonny’s Gift.
I was at the Capitol when the retirement income exclusion was passed and signed by former Gov. Sonny Perdue, but I haven’t thought much about when I’d become eligible for it. It was not really a tax cut written for me, per se, but for that legion of fatcats who were supposed to flock to the state and buy into all those gated mountain communities which now stand empty all over North Georgia. Ever since I left the AJC in 2007, I’ve been paying state income taxes on both regular and pension income, and it didn’t occur to me that there was anything different about this year.
So there I was, having watched that little calculator climb throughout my federal returns, expecting the usual modest refund from the state, when a row of zeros popped up where the pension income had been. I’d passed the magic age threshold, and none of that money was taxed. The amount of my state refund was a little greater than what I ended up owing the feds, giving us our first net positive Tax Day in a decade, at least.
So in retrospect, was it a good idea to use the tax code as a tool for economic development? Is luring retirees to the state and shoving up the average age really such a good idea, when you consider the hidden costs associated with a rapidly greying population? Should our children, raising their families here in Georgia, really have to take up the slack for us, given our relative circumstances? Does it make sense to encourage those who don’t have to work at the expense of those who do?
On the other hand, does Sonny’s Gift come as a welcome surprise? Does it seem only fair that we get something to balance the healthy payment we’re sending the feds? Even now, so shortly after the gift has been bestowed, am I beginning to feel like I’m entitled to it, forever more?
Thus does bad law take root and become as hard to stamp out as kudzu. I know that this tax break isn’t really good policy, exacerbating as it does the tensions between young and old that stand to become a major dividing point in the years ahead. But I’m not about to give it back.
The best thing for me and the economy would be to do something more about the self-employment tax. Fewer and fewer people make a clean break of retirement these days, and more and more end up doing various kinds of short-term jobs that result in their receiving 1099s and falling under the hefty requirements that come with them. Even the modest tax break filers had this year goes away, meaning the sting from the tax will be even worse next year.
Doing something to lessen the burden of the self-employment tax at the federal level really might unleash a creative surge that could help the economy.
But on Tax Day, you take what you can get. And this year, that was Sonny’s Gift.