This is what happens when non-businessmen run the country.

Progressives, including President Obama, are fond of the Buffett Rule, which roughly states that wealthy people should not pay a lower tax rate than their secretaries.

Mitt Romney said Tuesday that he pays an effective federal tax rate of 15 percent.

White House Spokesman Jay Carney responded, "This only illuminates what (Obama) believes is an issue, which is that everybody who's working hard ought to pay their fair share. That includes millionaires who might be paying an effective tax rate of 15 percent when folks making $50,000 or $75,000 or $100,000 a year are paying much more."

That's true, many households making $75,000 pay more than a 15 percent tax rate. But this is misleading. Here's why.

Romney, and other people whose primary income comes from investments, pay that 15 percent rate. "Working" people can pay more than that on income from their wages.

There's a huge difference between money earned from investments and money earned from wages.

Risk.

Someone getting a salary or hourly wage is virtually guaranteed to see that money but an investor's investment can disappear overnight. If there isn't an incentive to risk that money, i.e. if he's taxed at the full rate if he's lucky enough to see a profit, he will make fewer investments.

That means fewer dollars going into struggling businesses, or expanding businesses, or startup businesses, and that's the last thing our economy needs.

But people in the Obama Administration, who have a strained relationship with the private sector, either don't understand that or understand it and are placing politics ahead of the economy. Either way, they do damage to the country.

The Star's editorial board asked readers "why not tax those making $10.8 million", prompting--as of this writing--nearly 200 comments as multiple spirited debates broke out on the newspaper's website.

One of the first commenters agreed with the Star's pointed assessment. The newspaper opined:

Common sense, let alone simple arithmetic, tells us the federal deficit cannot be brought under control by spending cuts alone; it will take some combination of cuts and revenue increases, whether by tax hikes, loophole closings or, by some devoutly wished for miracle, a really robust economic boom.

 And it criticized the GOP for a lack of a budget deal:

Maybe the GOP's tax hardliners think we're stupid. If we believe this, we are.

One commenter agreed, writing:

I'm waiting for the first conservative to comment and prove the GOP tax hardliners correct in their assessment of the public's mental abilities.

Here's my response to this commenter.

The Star said, "Common sense, let alone simple arithmetic, tells us the federal deficit cannot be brought under control by spending cuts alone..."

Arithmetic would dictate that deficits CAN be solved by cuts alone, or also solved by revenue increase alone, or by a combination of the two.  Now, politics might be dictate the deficit can't be closed by cuts alone, but not arithmetic. Consider the math:

If a household makes $50,000 but spends $75,000 a year, they have a deficit problem. To close the deficit, they can a) cut $25,000 in spending, b) try to get another job or otherwise increase their income by $25,000, or c) do some combination of cutting spending and increasing income.

Isn't that common sense? Doesn't that math add up?

Speaking of arithmetic, the Star wrote:

When it is suggested that [the wealthy's] tax rates be increased a modest 4.6 percent to the 39.6 percent rate they were paying in 2000 the Republicans scream that this is "job-killing class warfare."

Ignoring the fact that suddenly we went from talking about people making $10.8 million a year to families and small businesses making a few hundred grand in the top tax bracket, there is one small problem in that statement that has rather large ramifications for taxpayers in that bracket.

Going from a 35% rate to a 39.6% rate is not "a modest 4.6 percent [increase]." It's almost three times that amount--a whopping 13% increase (it's a 4.6 percentage POINT increase, but a 13 PERCENT increase)!

I do worry about defaulting as a country. That might be too radical of a shock the global economy.  We're in a bad position--our national spending problem threatens our solvency in the long-term. The only way anyone will have enough political courage to cut spending is through sparring over the debt limit, which risks our short-term solvency.

Taxation is one of those fault lines that form our political boundaries. Conservatives tend to be against tax increases and liberals tend to be for them. In this era of mounting deficits, Republicans believe that the situation can be helped by reducing burdens on businesses, while Democrats salivate over the businesses' deep pockets. In the state recent budget battle, Republicans fought against increases the Democrats wanted.

It's a battle that's waged repeatedly, at all levels of government, in all parts of the country.  Just because it's an ongoing debate doesn't mean it's a complicated issue, however. One only needs to read this article from the Star that discusses the sales tax decrease that took effect on Friday.

"By them lowering tax rates, it'll help increase sales, absolutely," said the owner of Rocket Fizz in Camarillo.

The owner of the Bunnin Automotive Group in Oxnard told the Star the same thing.

At the Bunnin Automotive Group in Oxnard, owner Leo Bunnin thinks the cut in sales tax will be a big win for auto dealers. A 1 percent reduction adds up on big-ticket items such as vehicles, he said.

I'm a little slow so help me figure this out. If lowering taxes increases sales, won't raising taxes decrease sales? And if sales are decreased..doesn't that mean tax revenues will decrease?

So why do Democrats keep pushing for higher taxes to raise revenues, like this:

Gov. Jerry Brown tried but failed to convince legislators to maintain the higher 8.25 percent rate to help close a budget gap that stood at $26 billion early this year before severe cuts were made.

I don't quite have an answer. Tax increases certainly look good on paper. Papering over the budget gap is a time-honored tradition in Sacramento because it's all that's been required to pass a budget to clear the way for more borrowing. So tax increases might be promoted for practical reasons even though the Democrats in charge know they don't work.

I suppose they could really believe it will increase tax receipts. I hope they read the Star's article and find out what happens in the real world.

California's sales tax rate is set to drop by one percentage point Friday, but that's little consolation to online retailers. Their tax rate is going from zero to at least 7.25 percent thanks to a quartet of bills known as "the Amazon bills."

That's because companies like Amazon aren't required to collect sales tax in this state if they don't have a physical presence here.

There's some debate as to what constitutes a physical presence. While Amazon may be headquartered in another state, any distribution centers located in California might expose its customers' transaction to sales tax. Amazon has no distribution centers here (that it directly owns, anyways), but they do partner with thousands of small businesses who sell their products through Amazon's store.

Enter the Amazon bills. Desperate for cash, California saw a way to tax Amazon's sales by saying that because some of Amazon's small partners are in California, Amazon has established a presence in the state and all its sales are taxable. The budget assumes that the Amazon bill will raise several hundred million dollars.

It probably won't.  Amazon responded to the passage of the bill by threatening to sever its relationship with the affiliates (as it has done in other states) before it takes effect. Time for that is running out. It's also said the bill is unconstitutional under the Commerce Clause.

That probably doesn't matter to politicians in Sacramento, because they got to paper over a $300+ million budget hole regardless if the money is ever collected or not.

Will Amazon follow through on its threat to fire its affiliates? Will they challenge the state in court? We'll probably know very soon.

Picking a tax return filing deadline seems like one of the easiest things in the world to do--that is, unless you're the federal government. Brought to you by the people who made the tax code impossible for even accountants to follow is the saga of the annual April 15^th tax deadline, which this year includes the twist of a surprise postage rate increase that will cause many tax returns to be, well, returned.

April 15^th is known as Tax Day, but in the seven years between 2006 and 2012 only three filing deadlines will fall on that day, leading to confusion for millions of tax preparers and accountants.

What is the source of the confusion? In 2005, at the prompting of a D.C. resident Loretta Carter Hanes, Mayor Anthony Williams signed legislation making Abraham Lincoln's signing of the Compensated Emancipation Act on April 16^th, 1862, a District of Columbia holiday.

This isn't the famous Emancipation Proclamation, which came nine months later--this law freed 3,100 slaves and marked the only time the federal government paid compensation to former owners of freed slaves.

The problem with the D.C. holiday is that law requires that any holiday celebrated in D.C. also impact the IRS. According to the IRS:

By law, filing and payment deadlines that fall on a Saturday, Sunday or legal holiday are timely satisfied if met on the next business day. Under a federal statute enacted decades ago, holidays observed in the District of Columbia have impact nationwide on tax issues, not just in D.C.

This year, since April 16^th falls on Saturday, the D.C. holiday will be observed the previous business day--Friday, April 15^th.

That, of course, is Tax Day, and according to law the IRS tax deadline cannot fall on a D.C. holiday. That means Tax Day is really Monday, April 18^th.

To make matters worse, the United States Postal Service decided to raise postage rates on April 17^th. That means you might have to include more postage if you mail your tax return on the last day of this year's deadline. If you don't, it will be returned and you'll be on the hook for penalties and interest.

Undoubtedly, the Post Office did not calculate the D.C. holiday when they picked the date to start the increase.

The holiday took the IRS by surprise in 2007. Since the prior April 15^th fell on a Saturday, the IRS properly set the deadline to Monday, April 17^th, 2006. Fully expecting to have the deadline fall on a Monday again in 2007 since April 15^th fell on a Sunday, the IRS printed all its forms and publications listing April 16^th as the deadline.

Oops--that's Emancipation Day. The IRS didn't realize the mistake until three months before the deadline.

Officials recently became aware of the intersection of the national filing day and the local observance of the new Emancipation Day holiday after most forms and publications for the current tax filing season went to print.

Next year's Tax Day won't fall on April 15^th either, since April 15^th will fall on a Sunday. It won't be on Monday either, as that's Emancipation Day.

Hopefully the IRS will figure that one out before they go to print. Take heart, these types of people are the geniuses that will be in charge of our healthcare.