Friday, March 24, 2017

Use Tax, Sales Tax, the Bible, and Other Financial Matters

As tax day--April 15--is quickly coming upon us, I thought it was appropriate to remind readers of their specific Biblical obligation to pay all the tax (although not a penny more) that the government legally requires, even if, as in the Roman Empire, many of the things the government does with the money are wicked and foolish:

 13:1 Let every soul be subject unto the higher powers. For there is no power but of God: the powers that be are ordained of God. 2 Whosoever therefore resisteth the power, resisteth the ordinance of God: and they that resist shall receive to themselves damnation. 3 For rulers are not a terror to good works, but to the evil. Wilt thou then not be afraid of the power? do that which is good, and thou shalt have praise of the same: 4 For he is the minister of God to thee for good. But if thou do that which is evil, be afraid; for he beareth not the sword in vain: for he is the minister of God, a revenger to execute wrath upon him that doeth evil. 5 Wherefore ye must needs be subject, not only for wrath, but also for conscience sake. 6 For for this cause pay ye tribute also: for they are God’s ministers, attending continually upon this very thing. 7 Render therefore to all their dues: tribute to whom tribute is due; custom to whom custom; fear to whom fear; honour to whom honour. 8 Owe no man any thing, but to love one another: for he that loveth another hath fulfilled the law.

 "Pay ye tribute also" and "Render . . . tribute" are not options, but commands.  This includes use tax.  Only c. 1.6% or so of Americans pay use tax, but probably close to 100% are supposed to.  If you buy anything online and are not charged sales tax, you are required to keep track of that purchase and report it on your state tax return.  (NOTE:  I am NOT a tax advisor and the information below is NOT official tax advice.  It has absolutely no official legal standing whatsoever but is an exhortation to obey Romans 13 and is thus speech protected by the First Amendment, rather than official tax advice.)

Examples Where You Need to Pay Use Tax

You go to an online retailer that does not have a branch in your state and you buy a book for $20.  You pay no sales tax on that book.  You are supposed to pay use tax on that book.  Let's say the use tax rate in your state is 5%.  Then you need to report $20 x 5% = $1 in use tax on your tax return.

You buy a large base package from Logos Bible Software for $4,000.  You pay no sales tax because Logos is not in your state.  If your use tax rate is 5%, you need to report $4,000 x 5% = $200 in use tax on your tax return.

Examples Where You Do Not Need to Pay Use Tax

You go to (or, better, so you can pay exactly the same price and give 0.5% to a good Baptist charitable organization).  You buy household supplies that cost $100.  You are charged sales tax on your purchase because has a facility in your state.  Since you were charged sales tax, you do not need to pay use tax.

You go to and buy a bike for your son.  You have the bike shipped to your local store and pay sales tax on the purchase because the store is in your state.  You do not need to pay use tax on this purchase because you paid sales tax.

What Should You Do?

Many readers of this post have probably never heard of use tax in their life.  Whether you have heard of it or not, Romans 13 teaches you should pay it.  You should keep track of everything you need to pay use tax on and pay it.  If you did not pay it in previous years you should amend your tax return and give extra money to the government, not so that it can waste your hard-earned money (which it will certainly do), but because God commands you to do this in Romans 13.  Find out what your use tax rate is online, with tax software, or with a tax advisor.  Start paying use tax yourself and also encourage other people you know to obey the law and pay use tax.  Not paying your taxes is a sin, and sin is what put the Lord Jesus Christ on the cross.  Stop sinning and start paying use tax.

A few other financial things you should also consider doing:

1.) Make sure you don't just deduct your charitable donations but also other things you give to your church for the glory of God.  If you drive your car to go soulwinning, deduct the miles.  If you make food for a church fellowship meal, deduct the cost of the meal.  You are donating the food.  Don't give the government a penny more than you need to.

2.) If you don't have a Roth IRA, open one.  The government will pay you to save money in a Roth IRA depending on your income bracket, so you can get up to $1,000 simply for saving your money. Find out more on my website in the appropriate article on Biblical financial stewardship here. Furthermore, a poor person making a small salary can become a millionaire simply by investing in a Roth IRA.  How?  Illustration:  If an 18 year old invests $5,000 in a Roth IRA, and never touches the money again until he is 65, and makes about the average stock market rate of return (c. 9%) in that time, the $5,000 will have become more than $287,000.  Try plugging in some more numbers in the Roth IRA calculator on my website to get more information.  That is just $5,000 and some time.  The Christian mutual fund called the Eventide Gilead Fund has made an average rate of return of 13.58% since it was started in 2008, as of the time this post was written.  That same 18 year old who put his $5,000 in a Roth IRA at age 18 and made 13.58% until he was 65 would have over $1,986,000.  While past performance does not guarantee future results, do you see how a poor person can become a millionaire?

3.) Lay up more treasure in heaven by making sure that you are tithing (or, since we are under grace, not under the law, maybe giving double the tithe--20%--or more of your income) not just on your gross income, but also on your investment gains (and you can deduct investment losses).  If your 401k went from $100,000 to $150,000 this year, you have gained $50,000 that you should tithe on.  You should also tithe on the value of your health insurance premiums, etc. if those things are covered by your employer.  How much? The equivalent amount of what it would cost you if you had to pay for it out of pocket.

If you owe a lot of use tax (or do not tithe on your investments), whether you will obey God is a good test of whether you really believe Matthew 6:19-21:

 19 Lay not up for yourselves treasures upon earth, where moth and rust doth corrupt, and where thieves break through and steal: 20 But lay up for yourselves treasures in heaven, where neither moth nor rust doth corrupt, and where thieves do not break through nor steal: 21 For where your treasure is, there will your heart be also.

If you invest in a Roth IRA and become a millionaire, that will also test whether you believe Matthew 6:19-21.  God is blessing you financially as you make wise decisions for His glory so that you can be generous with what you have and lay up treasure in heaven.  Do not set your heart upon the money in your IRA, but set your affections on things above, not the things on this perishing earth.

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