This episode, Mak & G look at the different taxes we have to pay, how we calculate our income tax, and what happens if you don’t pay your pay taxes correctly.
Taxes are confusing, stressful, and nobody likes paying them.
But they are necessary and a legal requirement so they’re worth understanding.
This “Money With Mak and G” podcast episode, Mak & G look at the different taxes that exist in the United States, how income tax works, and why it’s so important that you pay your income tax correctly…
“Congress writes thousands of pages of complicated rules that require tens of thousands of extra pages to explain it all.” – G
“Taxes are a bit more interesting than you thought.” – Ben Jones
00:20 – Who’s on the ten-dollar bill.
01:34 – The difference between Mount Olympus in Greece and Mount Olympus in Utah.
04:42 – Ben Franklin’s thoughts on taxes.
05:14 – Who started taxes in the United States.
06:09 – The Whiskey Tax and the protest against it.
07:08 – The biggest tax in the United States.
07:25 – How income taxes work and what they’re used for.
08:40 – What a tax code is.
10:03 – How difficult it is to understand the tax code.
11:40 – Going to jail for not paying your taxes correctly.
12:12 – Who makes sure you pay your taxes correctly.
13:35 – The history of taxes.
14:20 – How COVID has affected how we pay taxes.
Connect with Ben Jones:
#1 Where are higher-income families more likely to do most of their Christmas shopping, compared to lower-income families?
#2 What are lower-income families more likely to use to pay for Christmas shopping?
#3 How do 29% of Americans plan to pay off their holiday bills?
#4 How long did we calculate a typical $1500 credit card bill would take to pay off at average interest rates if you only paid the minimum amount?
A) 44 months
C) Ten years
#5 Prices today are around 50% higher than 20 years ago because of what?
A) 44 months
C) Ten years
GRANT: Hey, Mak.
MAK: What’s up G?
GRANT: Do you know what happens when you start early?
MAK: I do G. You go wealthy.
BOTH: It’s time or money would Mak & G.
GRANT: Finance for you and your family.
MAK: Hey, G, I went online to try to figure out why dad doesn’t like $10 bills, because we both know he loves money. What do you find out? It can’t be the number because he loves ones and zeros.
GRANT: Plus, he loves the color green.
MAK: All true, but I think I found something interesting. I was wondering if it had something to do with the guy on the $10 bill.
GRANT: That’s a great idea. Who is it? Lincoln Franklin? Who?
MAK: First off, who should know that Lincoln is on the five, because dad gave us two last time.
GRANT: Okay, so who?
MAK: It’s not Franklin because Benjamin Franklin is on the 100 and dad loves when he can talk about the Benjamins.
GRANT: Okay, so you knock those off. And George Washington is on the $1 bill, right?
MAK: That’s right. So the $10 bill has Alexander Hamilton on it
GRANT: It’s a lovely guy and also a musical we’ve heard about that dad loves music.
MAK: He does. So I’m having a little bit of trouble figuring it out. I think we should just ask him to share his secret
BOTH: 10 10 10 10 10. Dad!
DAD: I can do it. I can do it. Keep going. Breathe. Hey, what do you guys want? I’m a little here.
MAK: What are you doing with a huge backpack on? Do you have a sleeping bag? Food shoes?
GRANT: What’s up? Are you going somewhere?
DAD: You kind of keep on the move? Gotta keep my heart rate. You guys can follow but I need to go down the steps and then up and I need to increase my stamina.
MAK: For what? Why did you step up on the bed and back down? Mom just made that bed?
DAD: I’m training and don’t tell mom about the bed.
GRANT: What do you train for? Are you going hiking or camping or something?
DAD: No. I’m training to climb Mount Olympus. I am zoos.
GRANT: That is so cool. Isn’t that where the Olympic flame came from?
DAD: No, the Olympic flame was from Olympia. Mount Olympus in Olympia are different places. And they’re hundreds of miles away from each other in Greece.
MAK: Holy cow, Dad, that’s awesome. Isn’t that where the Greek gods are from? I’ve always liked Poseidon the best. God swims with the fishes.
GRANT: Cool. Right? Knowing you. You’re going to feel the presence of Zeus, the father of Greek gods for little bonding time. Right.
DAD: That would be awesome. And I appreciate your support. Really? I do.
MAK: Sounds like there’s a button there somewhere.
GRANT: Yeah, what did we wish for?
DAD: Even though I love Greece and the Greek gods, I’m going to Mount Olympus, Utah.
MAK: You mean in the United States?
DAD: Yep. Okay, I should probably take a break.
MAK: So why Utah?
DAD: Well, it’s about 9000 feet, and I wanted to be closer to home since it’s my first. I can hike it in seven hours if I’m in shape. Did you know Mount Olympus in Greece is only about 9500 feet high?
GRANT: It seems so much larger than life, especially with the Greek gods living there.
DAD: I completely understand. When I went to Greece, it was smaller than I expected to.
GRANT: Oh, really why?
DAD: I’ve heard about all the great stuff in Greece and expected it to be bigger. Its population is about 11 million, which is less than the population of Chicago and New York combined.
MAK: That’s smaller when you compare the number of people but what about its size?
DAD: That’s smaller if you compare it to the United States and square miles, the US is 75 times bigger.
GRANT: I’d still like to see Greece. Santorini looks cool. Or that blue is wicked, especially since I love blue.
DAD: I agree. When I went to see it, it was definitely worth it. I’ll never forget it.
MAK: Okay, so is Mount Olympus in Utah, anywhere near Salt Lake City. In class, we had to learn about the capital of Utah.
DAD: It’s just west of Mount Olympus. It’s a really nice view. Well, I know you guys didn’t come in here to ask me about my trip. What’s up? And did I hear you shouting like a 10 or something like that? Or was that my imagination?
GRANT: You did hear the ceiling? 10.
MAK: We had a question for you. We know you like the $100 bill because it’s called a Benjamin just like you.
DAD: It’s all about the Benjamins. He was a cool inventor and Ben Franklin wrote there are only two things you can count on: Death and taxes.
MAK: That doesn’t sound fun.
DAD: I agree. Both of them don’t seem like much fun. Sorry, interrupted. What were you saying? Mak?
MAK: So why don’t you like a $10 bill? We know you never carry one in your wallet.
DAD: That’s just weird. You’d like money and the color green, but why not this one?
MAK: Does it have to do with Hamilton?
DAD: It sure does.
MAK: But dad, I thought you love musicals. Wait, does this have anything to do with taxes?
GRANT: Laid on me dad?
DAD: My boy Ben Franklin had it right, death and taxes. But Hamilton, no matter how cool he is, is the one who started taxes in the United States.
GRANT: So, someone to blame for your two months of pain each year?
MAK: I’m sorry, dad. I never know. He’s dead to me.
DAD: He has been dead for a long time. But he believed that the government and taxes go together like peas and carrots. like peas actually said, as to taxes. They are evidently inseparable from the government.
MAK: So that means he really believed the government should tax people.
DAD: He sure did. That’s why I don’t carry one $10. Bill. He supported a tax on whiskey of 25%. We love when 7000 people marching on Pittsburgh, Hamilton and George Washington then sent 13,000 troops to stop it.
MAK: Did anyone get hurt?
DAD: Well, since there weren’t any planes or cars back then it took a couple months to get there. So the protesters were already gone. However, two people were convicted of high treason and that’s bad.
GRANT: How bad? Did they have to pay a fine?
DAD: Well, high treason is super bad. It’s a death sentence. George Washington pardon them. You are forgiven.Or let them go. People were mad about the tax. It was also hard to collect. And so they stopped it.
MAK: People do like they’re risky. That’s crazy. There’s that death and taxes thing again?
DAD: Oh, Mak, that is funny. Good one.
MAK: So Dad, what’s the biggest tax out there? And did Hamilton start it?
DAD: The biggest is income tax, which is due April 15. Anyway, Hamilton did not start it because he died in 1804. And that was before it was implemented in 1861.
GRANT: Isn’t that when the civil war started?
DAD: It did. And do you remember that a big part of the history of taxes was to pay for war, right?
MAK: Yeah. So the income tax was used to pay for the Civil War?
DAD: It sure was. We pay throughout the year from our paycheck. After the year is over. We do a big calculation before April 15. If we paid too much by our paycheck, we get a refund.
MAK: And what if you don’t pay enough from your paycheck,
DAD: Then you have to send in money for the difference?
MAK: Ouch! I don’t like that idea.
DAD: That’s why a lot of people don’t like it. But almost three out of four people get a refund.
MAK: That’s cool. But that means the government holds your money for you when you couldn’t be investing it right.
DAD: Yep. Excellent point G.
MAK: Okay. So if on April 15 of 2019, he would have to complete your calculation of all income for the prior year, that will be 12 months ending December 31 2018.
DAD: That’s right, the extra time let you work on the calculation.
MAK: And that’s why you pull your hair out this time of year because you do a whole bunch of calculations And maybe send in money.
DAD: Yep, not always a lot of fun for me.
GRANT: What about the tax code? I’ve heard you talking about that during tax time? Does that also have something to do with your hair loss?
DAD: Yep. The tax code is something that Congress writes up to explain how to properly calculate your taxes. But it can be very confusing as many taxes are. I am so confused. Well, let me use sales tax as an easy example. In Illinois, there’s a tax on food of 1%. If it’s candy, then you need to add another 5%
GRANT: Why is the difference?
DAD: Well, you need food to live and candy is considered a luxury. So they want to tax things you don’t need.
MAK: Chocolate is not a luxury dad. It’s a necessity is life in wrapper.
DAD: Candy has flour in it. Then it’s considered food which is taxed at 1%. Just like bread has flour. A KitKat has flour. So 1% just like Twizzlers, but a Snickers bar is 6%. Tax.
GRANT: That does sound confusing. Seriously, a Twizzlers? 1%. That’s good with me. I do love me a Twizzler.
DAD: Dress me G, it’s way more confusing for income tax.
MAK: So how long is the tax code for income tax anyway? How long does it take to explain it?
GRANT: I’m assuming it’s 20 pages.
DAD: Well, you both know how long the Bible is right?
MAK: Really long, maybe 1000 pages, but why?
GRANT: The tax code could never be that long.
DAD: Actually, the Bible is about 1200 pages or around 800,000 words.
MAK: Wow. The tax code is way less than that. Otherwise, no one would read it and understand it at the same time.
DAD: Funny enough. Have you ever heard of Albert Einstein?
MAK: Isn’t he that a super smart dude with the crazy white hair. I’ve heard uncle Bryant say nice one, Einstein.
DAD: Well, I think uncle Brian was actually trying to be funny and say you did something really stupid? Probably not so nice.
GRANT: Didn’t Einstein do something with E equals MC squared and the theory of relativity?
DAD: Yes, he did. Nice one G. He is super smart. And he has a famous quote, he said, The hardest thing in the world to understand is the tax code. Isn’t that unbelievable?
MAK: What one of the smartest guys of all time said it’s difficult. That doesn’t sound like it would be easy.
DAD: Yep. And you have to read lots of other documents to come close to understanding any of it.
MAK: So how long is the code?
DAD: I haven’t read it all. And I don’t want to, but it’s over 2000 pages in a million words. But with all the other stuff you have to read, it’s easily 10s of 1000s of pages that
MAK: Let me get this right. Congress writes 1000s of pages of complicated rules that require 10s of 1000s of extra pages to explain it all.
DAD: Yep. And if you don’t read a lot about the rules and explanations, and you help people calculate their taxes, you could go to jail.
MAK: What?! Are you nuts? Why?
DAD: If you don’t pay the right amount, you could get in trouble and go to jail. The government does want their taxes. It’s rare, but if you don’t lie or cheat, you’re generally pretty safe.
GRANT: So you have to be smart to understand it.
DAD: I am very, I love that comment G more allowance for you, buddy. Isn’t it nuts, though? That’s only for income tax. There are many others too, like sales, real estate, tariffs, payroll and more.
MAK: Okay, we have some rules and explanations. So who makes sure you do with the rules say,
DAD: Well, just like police make sure you don’t break the laws where you live? There’s a group of people in the government that make sure you do your taxes, right? Do you know their name?
MAK: Is that the IRS? Didn’t you say once that it means that irritating revenue suckers?
DAD: Oh, I guess I should probably be a little careful what I say out loud. You sure do have good ears Mak, I know they have a job to do. It actually means the Internal Revenue Service.
GRANT: So they watch to make sure you calculate your taxes correctly and pay the right amount on time.
DAD: That’s exactly right. G Nice job.
MAK: Dad. Before we go, you’ve been talking about Tax Freedom Day.
DAD: Well, what does it sound like guys?
GRANT: Is it the day we get freedom from paying taxes.
DAD: Now that’s an awesome guest G. But it takes a little bit more to explain. So let’s save it for next time. I have to get back to my…
MAK: Doing your mountain goat training back.
DAD: Any funny guys really funny. I think it’s time to go. Texas have an interesting history to say the least. They fund so many programs and initiatives as a nation who would have thought that Alexander Hamilton would be the father of taxes in the United States. I didn’t until I looked into some of the history. And it’s unusual that income tax the biggest part of all the federal taxes was originally set up to pay for the Civil War. The income taxes are clearly complicated, but 1000s of pages of tax code and 1000s more have explanations that it’s no wonder it can be stressful and it takes time and effort to get through it. It’s not always clear. That’s why you normally have three and a half months after the end of the year to put together all your paperwork and calculate your tax to make sure you include all your income. The Coronavirus and the fact that all of us chan it has even affected how we pay taxes ever since 1955 When April 15 became the due date for personal taxes. We’ve never seen a change in that due date unless it fell on a weekend. However, in 2020, the government has delayed it and the government wants to pay the taxes owed as soon as possible by giving an extra three months with a new due date of July 15 2020. This is monumental. It’s unheard of and never happened before. In addition, the IRS has stopped almost all face to face meetings and they have many other services. I tried Only about a tax issue just last week and the recording said no one was available. I can only guess it was due to Corona. I really hope that you’re starting to appreciate the taxes are a bit more interesting than you would have thought. I never knew George Washington and Alexander Hamilton sent 13,000 troops to break up a potential issue based on whiskey tax, did you if you get a chance to adjust your withholding, don’t forget to make sure that you’re only paying in the amount you should owe at tax time because you can invest the difference. Well, thanks for being here. Remember to like, subscribe, comment and share us with your friends and family.