5 Tax Laws You Shouldn't Have to Worry About
Benjamin Franklin said that nothing is certain in this world but death and taxes. In our more fast-paced times we might add the certainty of having to replace our iPods at least once every two years, but you get the point. Taxes are a part of the fabric of modern human society, yet they are totally beguiling to most ordinary folk. With laws like this, it's no wonder.
1. The Jock Tax
You can thank Michael Jordan for this one. After Jordan's Bulls put the hurt on the Los Angeles Lakers in the 1991 NBA Finals, the state of California began to enforce a nonresident income tax on visiting performers, especially athletes.
Basically, the tax applies to any income earned while competing or performing in California, and it allowed California's Franchise Tax Board to reach into the pockets of Jordan, Pippen, et. al. to extract some revenge for the hard-court beatdown.
Not to be outdone, Illinois, and eventually 18 other states, instituted a jock tax, making a patchwork quilt of tax laws that basketball, baseball, and other sports figures have to consider. Thanks to these regulations, it's more difficult to file a professional athlete's tax return than to map the human genome on a Commodore 64.
2. The Crack Tax
In 1983, Arizona became the first state to implement a "Cannabis & Controlled Substances Tax" in order to boost state revenues and further punish those found guilty of possession. It works like this:
if you are in possession of an illegal drug or illegally produced liquor (AKA moonshine), you need to go down to the state tax collection agency and pay the tax on your illegal substances. You are then given tax stamps to affix on your illegal goods.
Sounds insane, right? Well, part of the code now on the books in more than 30 states says that the tax collection agency is not allowed to rat you out to the local law enforcement agency. This should put every drug dealer's mind at ease, yet so few of them pay their required taxes. The truth is, many of these taxes are levied in arrears after the local constabulary has caught the criminal dealer. It's really an additional fine for dealing that gets paid straight to the state coffers.
And what of those few people that pay the tax? Records show that the vast majority of them are stamp collectors.
3. Take in a Midwesterner
For 2008 and 2009, the IRS is allowing a $500 exemption for each person that you help house from a Midwestern disaster (e.g. the floods in Iowa and surrounding states). In typical IRS fashion, the rules dictating who can and cannot be counted for this charitable act are both coldly technical, and moderately vague. Need more info? Check out the scintillating IRS Publication 4492-B. It's a great beach read.
4. It's not a tattoo tax, it's a body art tax
Arkansas has added getting a tattoo to its list of services that require an additional 6% state tax. One other service that's subject to the tax is electrolysis. [Tattoo image courtesy of Inked Methods.]
5. Hide the window, the taxman is coming
You'll never have to worry about this last tax since it was repealed in 1851, but it's just too silly not to mention.
In 1696, a tax was placed on British homes based on the number of windows the home had. Previously the tax was levied per household, no matter the size of the house or the number of residents. The law changed, however, to levy higher taxes on larger homes with, presumably, more windows.
Instead of paying the higher taxes, people just bricked up the windows that they found to be extraneous. An astute visitor to England can still see evidence of this law today in the scores of walled up windows in older buildings throughout the country.