My brother is a certified public accountant. He’s worked as an auditor for the state of Oklahoma and these days does the books for one of the largest school districts in the state. He also does my taxes, and he’s the best source I know of when it comes to answering tax-related questions.

My brother is a certified public accountant. He’s worked as an auditor for the state of Oklahoma and these days does the books for one of the largest school districts in the state. He also does my taxes, and he’s the best source I know of when it comes to answering tax-related questions.

This was my latest: What impact would the lack of a home mortgage interest deduction have on my current tax situation? The answer: It would cost me $2,800 a year in additional federal income taxes.

That was last year, before I moved up here from Texas. I asked him to figure my income taxes based on having that deduction, and not having that deduction, and the difference was $2,800. I would have gone from getting a small refund, to paying a large tax bill.

When Congress and advocacy groups begin talking about changing the tax code, I tend to listen very intently since my brother shared that little tidbit of information. There is a group in Missouri pushing hard to replace the state’s income tax with a state sales tax. The idea they’re pushing is that it would be revenue neutral, and on the surface it certainly seems that way. But like any good tax debate, the devil’s in the details.

It seems there would be a ton of items “exempt” from the sales tax, and the removal of the income tax would also come with a larger property tax bill.

These types of debates are happening all over the country as cash-strapped governments look for ways to bolster revenues. They’ve proposed adding sales tax levies, reducing the number and scope of tax breaks and replacing (like Missouri) or modifying the entire tax structure.

For taxpayers, there will be no “break” as these measures make their way into the mainstream. In fact, there’s a good chance the tax burden on most of us will go up as more exemptions for special interest groups are offset by fines and fees.

Politicians like to blather about what they call “revenue problems” when it comes to government funding. Let’s get one thing straight: Tax dollars should never be classified as revenue. Governments should never make the mistake of basing the annual budget on revenue, rather than expense. That’s what got us into this deficit mess in the first place.
Perhaps it’s time we reversed the budgeting process. Government should determine expenditures first, and then adjust revenue to match them. Sounds crazy, I know. But if nothing else we could finally start having a meaningful dialogue about what expenses governments should be taking on, and what expenses they should not be taking on.
If we have $1 million in expenses, and only $800,000 in revenue, a tax increase should be automatic … unless we rethink the $1 million in expenses first. The fear of “automatic” tax increases might be more motivation than anything else we’ve tried to cut expenses in the past.