You've heard it before, and you most assuredly will hear it again. Those of you who work will note an increase in your Social Security tax in 2006 - the base upon which the tax is levied will increase from $90,000 to $94,200 - a "modest" almost 5 percent. Somebody's got to pay for the recently announced benefit increase, right?

On the other side of the ledger, some good news for worker bees. The IRS recently announced that the limit on annual additions to your defined contribution pension plan will jump from $42,000 to $44,000. A good thing indeed.

And we know more than just a few folks who employ a "nanny," or other domestic worker. Recall that for several years, now, individual tax return filers have had to notify the IRS about these sorts of arrangements, and pay the "Nanny" tax - the income and Social Security taxes associated with household worker employment.

Recognizing the effect of inflation, IRS has also announced an increase in the level of compensation subject to such levies-to $1,500 in 2006, up from $1,400 in 2005.

And as we all continue to await the word from on high (that would be the commission appointed by the President to look into possible structural changes in the country's tax policy - whose report is already annoyingly overdue), we find right "on target" the recently-expressed conclusion by the Tax Foundation that before Congress and the Pres tackle meaningful reform, they had first better recognize the class distinction which pervades the current system. The old "80/20" rule, notes the Foundation. The notion that the top 20 percent of taxpayers - those making more than about $71,000 in 2004 - currently bear over 80 percent of the income tax load!

The Foundation's stats go on to note that in 2004, one out of three folks who actually filed a tax return had no income tax liability whatsoever, and millions more paid peanuts. "In many areas of America, these taxpayers are 'middle-class' by any standard," quoth Foundation guru Scott Hodge. "But these families are taxed at the highest income tax rates because our progressive tax rate system is not fully adjusted for such things as cost of living, age, education, or the number of incomes in a household. Unless we reform the tax code so that it is neutral to these demographic traits, America's suburban middle-class may soon be the only 'taxpayers' actually paying income taxes."

Amen. And we wonder if the popular alternative of some sort of "consumption" tax is truly the answer either. Sounds good, sounds fair-tax folks on what they spend, not on what they make. But consider: those of us who have been "paying" all our lives, and saving and accumulating what's left for lo these many years will clearly get smacked yet again - when we spend what's left over after income taxes, for recreation or retirement, or whatever. How is that fair?

And Lordy, Lordy, did we hit somebody's hot button, or what, in our recent mention of tax crackpot Irwin Schiff-presently on trial, again - in Nevada. The result could determine whether Irwin may be headed for the clink, and with pockets perhaps a bit lighter for the fines. Stay tuned.



Mr. Quinn is a shareholder of Ashley Quinn, CPAs and Consultants, Ltd., located in Incline Village. He may be reached at 831-7288, and welcomes comments at jquinn@ashleyquinncpas.com.