Friday, February 27, 2009

The Taxman Cometh

One of the downsides to being an amateur mathematician with a background in Computer Science is that sometimes you get asked to do something uncomfortable every now and then.

Like taxes.

The Lord Giveth, and the Lord Hath Taketh Away...

That's the withholding tax table for the family bakeshop, and the source of my accounting misery every now and then.

I have nothing against taxes, mind you. Yes, I do live in a country where the government sees fit to take portions of our hard-earned money and spend it on such things as congressional pork, foreign junkets, and endless political hearings... but hey, who doesn't?

What I do have, however, is a problem with the government's endless fiddling with the amounts and the percentages. I feel that the current withholding tax system is complex enough, for example: You start out having to identify yourself as "Married with Three Dependents", or "Head of Family with One Dependent", or the ominous-sounding "Single". From there, you grade your monthly income according to a hardcoded scale of brackets, then take its difference from the given lower bound, calculate the corresponding percentage, then add a fixed-tax amount to the result.

And once you manage to figure out all that, just think of how you'll feel once you realize that that's the amount that you have to pony up to the tax collectors. But I digress.

I mention this now because the government has a bad habit of shuffling around the numbers every couple of years or so. I suppose that it's logical to do this with such a complex system — I mean, there's inflation and all to consider — but that's a wall of numbers we're talking about. That's almost a hundred numbers that you need to replicate exactly, then double-check to make sure that your calculations don't get screwed up for the next eight months.

And then, what really twitches my eyebrows is the fact that we've had two large-scale withholding tax refunds for the bakeshop in the last two years. While I normally wouldn't complain about the prospect of getting our money back from the government, the fact that I'm calculating withholding tax payments and giving them back at the same time is not lost on me.

What's stranger is that, earlier this evening, I found out about Republic Act 9504. This was apparently passed in the middle of last year, and is an amendment to the old 1987 National Internal Revenue Code. Its primary point of interest is that it exempts minimum-wage earners from paying income taxes. (Yay for all minimum-wage earners!) For the purpose of this article, however, it also happens to exempt these same people from paying withhholding tax. (Yay for all... huh?)

About half the bakeshop's employees are on minimum wage, I must add. And I must point out that we're still paying off thousands of pesos from the last withholding tax refund.

And all that boils down to our current scenario: The government is actually paying money to about half our employees.

That just feels wrong on so many levels. And it screws up all of my calculations — which are now a patchwork of cobbled-together wage hikes, allowance increases, and rate changes from all the adjustments that the government has forced us to put together... just so that they can put on a good face to the public at large.

No wonder my college classmates tore their hair out whenever the prospect of accountancy classes came to mind.

Years ago, I remember opening a magazine and learning that there was a country somewhere whose income tax schema involved charging citizens exactly five percent of their monthly income. Yes, that's it... five percent. No muss, no fuss, no headaches that won't go away at two in the morning. Why can't we have a system like that?

On the other hand, I suppose that it gives our bureaucrats something to do every day. That's if they're not conducting their usual series of endless political hearings, that is.

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