On Tax Day

From Andrew Snyder
Executive Editor, BreakAway Investor

Sometimes sitting in bumper-to-bumper traffic pays off. Not only do I get to study my fellow commuters for the latest trends, I also get to read some of the finest literature of our time…bumper stickers.

Today’s winner: “The Lord provideth, the government taketh away.”

On tax day, truer words could not be spoken. Hundreds of thousands of procrastinating Americans will be forking over some change to Uncle Sam today.

With all of the odd taxes imposed across the country, it is easy to see why some people dread tax season and put it off to the very last minute.

For instance, did you know?

If you buy a deck of cards with less than 54 cards in Alabama, you will automatically be taxed 10 cents.

In Chicago, you will receive a 0.5% tax on all carryout food. It is called the “anti-litter” tax. But I’m sure it only entices the throwing of Whopper wrappers on the mayor’s front lawn.

Chicago is also the home of the “fountain soda tax”. If you buy a soda that is not in a can or bottle, you will be charged a nine percent tax.

Every state with a major league sports team charges a hefty “jock tax”. While it encompasses all “entertainers”, the tax hits professional athletes the hardest. The rule in the books states that any money earned by an out-of-state player can be taxed by the state the money was earned in. In other words, if the Yankees are playing a three-game series in Boston, the players will have three days worth of their salaries taxed and given to Massachusetts. Ironically, California enacted the first “jock tax” right after the Chicago Bulls beat the Lakers in the 1991 NBA championship series.

Finally, we get to the stupidest tax of them all…the illegal drug tax. Our elected officials thoughtlessly designed a tax that collects fees on illegal drug transactions.

And don’t think it is some forgotten rule left over from a bygone era. Over a dozen states have enacted moronic taxes that target the sales of illegal drugs. Many of them have enacted the rule within the last two decades.

North Carolina is a state with an illegal drug tax on its books. It requires purchasers of narcotics to purchase tax stamps within 48 hours of buying them. To get the stamps, a person must go to a government office, purchase the stamps and affix them to the drug.

The process is anonymous, and people caught without the tax stamp will be charged with the appropriate crimes and forced to pay the tax, much of which flows back to law enforcement agencies.

North Carolina must not have many drug users because only a few dozen people have purchased the stamp since it was enacted in 1990, and most of them were memorabilia collectors.

The United States is not the only country with volumes of odd taxes. Countries and cities across the globe are doing anything they can to keep their coffers in the black.

One town in Germany recently enacted a tax aimed at customers of the town’s brothels, exotic dance halls and massage parlors. The Cologne’s “pleasure tax” brings in nearly four million dollars each year.

In India, the government is constantly battling money laundering and tax evasion. So to stack the cards in its favor, the federal government is working on a cash withdrawal tax of 0.1% on large withdrawals. In India, Uncle Samir always gets his cut.