Taxes Done

Well, more or less. At least all the Canadian stuff is filed, and we can slide a bit (no later than June 15) on some of the U.S. forms. It all gets rather technical.

On the morning of May 1st, I was talking taxes with my running partner -- another American. We were both pining for the simplicity of good old Form 1040. We agreed that having to file a 4-page tax form with two mandatory two-page schedules was basically equivalent to being flogged with a live wolverine.

But at least they eliminated the "surtax". That was an extra percentage of your tax that you had to pay, on top of your normal tax obligation. As my friend put it:

"First they bend you over and f*ck you. Then they smack you on the back of the head for good measure."

The corporate surtax, of course, has not been repealed.

And why do they have this idiotic system of refundable credits instead of simple deductions? That's why form 1040 is so easy to understand. First you total up your income. Then you knock off your adjustments -- self-employment tax, alimony paid, self-employment medical expenses, student loan interest, what have you. This gives you your Adjusted Gross Income (AGI). Now you either take a standard deduction or an itemized deduction, exempt your personal exemptions, and they tax the rest. Simple.

In Canada -- and this applies both to personal and to corporate taxes -- you practically have to fill out a separate worksheet for every form of "creditable" behavior. When you tote up all your not-quite-deductions, you multiply by the lowest marginal tax rate (16% for people) and that's the amount of your credit. Then you deduct your credit amount from your tax obligation.

So basically in the United States, deductions and adjustments come in at the highest marginal rate that applies to you, while in Canada, they come in at the lowest marginal rate that can apply to you. (One exception: charitable contributions over $200 are credited at the second-lowest marginal rate of 20%. Gee, thanks.)

And that's not even getting to the special subsidy tax rates available to small Canadian-owned corporations. And especially for small Canadian-owned manufacturers.

I'm still waiting to find the schedule for Liberal party contributors:

1. Look up your Business Number in the following list.
2. If you do not find it, STOP. You may not file this Schedule.
3. Enter the total tax owed from line 4000.
4. Enter this amount on line 4001, "Tax obligation forgiven."
5. Multiply by 1/10.
6. This is the AMOUNT YOU OWE. Make a cheque payable to "JEAN CHRETIEN" or current prime minister and forward to his residence at...