Tax Time

We received a final tax document last week — an explanation of the coronavirus relief check sent on the last day of 2020. There is about a month to file taxes on time in the United States. I do ours and help our daughter with hers. It’s time to get to work on them.

The only time I had a problem with filed tax returns was when the accountant applied a tax credit incorrectly. We had to pay it back with a penalty. The following year, I decided to complete our returns myself. It was a good decision.

In other times I would post the YouTube video of the Beatles song Taxman from Revolver. The album was released Aug. 5, 1966, the summer before I started high school, in my second year of learning to play the guitar. I remember winning a copy of Revolver at a Freshman dance that year. I’m not sure it is an accurate memory. It was when I met my friend Joe, who would attend Georgetown after high school and then become a physician.

I had not worked a job that produced a W-2 form in 1966, and wouldn’t until 1968 when I earned $934 in taxable income working as a stock boy at the Turn-Style Department Store.

In the 21st Century gig economy I’m not sure how people contribute to Social Security and Medicare without employer deductions and taxes. The reason we are able to survive on our Social Security pensions is we contributed for most of our working lives and the benefit is based in part on how much one earned:

Social Security benefits are based on your lifetime earnings. Your actual earnings are adjusted or “indexed” to account for changes in average wages since the year the earnings were received. Then Social Security calculates your average indexed monthly earnings during the 35 years in which you earned the most. We apply a formula to these earnings and arrive at your basic benefit, or “primary insurance amount” (PIA). This is how much you would receive at your full retirement age—65 or older, depending on your date of birth.

Your Retirement Benefit: How It Is Figured, Social Security Administration, 2013.

In a gig economy the margins are often quite thin for gig workers. The idea of paying Social Security and Medicare taxes gets sanded off in the woodshed of economic survival. The government program worked for us and will — at least until 2034 when the trust fund is projected to begin losing value unless the Congress fixes it. However, it doesn’t work for individuals unless they pay in at a predictable pace. I haven’t read a study of the impact of the gig economy on Social Security and Medicare, but would.

In 1966 I wanted to learn: to play the guitar, do well in my studies, and get along with my cohort. The future was open ocean and my boat had been christened by grade school nuns as college bound. I can’t recall thinking about taxes during that time, not even once.

To participate in high school one required some cash. There were expenses, although not many. I had to give up my newspaper route after eighth grade, so I paid for dances, books, guitar strings, bus fares, and school activities with my savings and allowance. I was privileged to be able to live in Northwest Davenport where Father held a union job, I had access to funds, and the neighborhood was safe. Those were the best times, full of hope and opportunity. I thought to myself, maybe I could record an album like Revolver some day.

Whatever the combination of privilege, economic security, social stability, and a peaceful home created, I benefited from it. I continue to benefit. My life hasn’t turned out as expected, yet in 1966 my expectations had not been completely formed. I stay out of trouble today, in part because I realize I must pay income taxes. It is a baseline for participation in American society and I’m in.