States that do not have state income tax have the greatest growth rates. The reverse also holds true too; just look at the exodus from high-tax California to no-tax Texas. The consequence of the lack of state income tax in the Lone Star State is that you don't get a lot of services from your state government. But you create so much opportunity for wealth by attracting business.

Well, that argument fell on deaf ears in the state of "Taxachusetts" (aka Massachusetts) where voters balked when they had the chance to do away with the state income tax. There were union-paid political ads suggesting that doing away with the state tax would destroy prosperity because government wouldn't be able to provide services that people expect.

Meanwhile, neighboring New Hampshire -- an ultra low-tax state -- has had continuous economic growth. Do you think it's just by chance? No, people migrate to where they get a better deal.

For the longest time, the IRS has engaged in class warfare by forbidding those who make above $50,000/year from doing free e-filing. But that's about to change this coming tax season.

Some tax prepares have already jumped all over the coming change. TaxCut will provide free federal e-filing for all returns, all income levels. Clark hopes this will prompt their main competitor, TurboTax, to do the same. Currently, America has one of the lowest rates of e-filing among developed countries.

This new move should save the IRS a fortune. Previously, they had to have employees enter complicated tax returns for the super-rich by hand!

Have you looked at the competing tax proposals from McCain and Obama? McCain wants to make Bush's tax cuts permanent, while Obama wants to cut taxes on everybody except those who earn more than approximately $250,000.

Clark thinks both candidates are just trying to be elected president. Neither is willing to tell us what we really need to know: The federal budget deficit is approaching $500 billion by next year, which is more like $1 trillion when you factor in Social Security and Medicare.

The real question should not be whether McCain or Obama is better qualified to rearrange the deck chairs on the Titanic. The question should be what are you willing to give up to have lower taxes? That's the topic of Clark's poll this week. Vote and let us know!

Clark has a bias in favor of states that run a fiscally efficient house. He believes that's the way to position your state for growth and prosperity over time. Texas is one place that really fits the bill; there is no state income tax. That creates a favorable environment for businesses to set up shop. Let's face it, states compete with each other for employers and jobs just like nations.

Is it any wonder that the Lone Star State has more Fortune 500 companies than any other? The tax issue isn't the only determining factor, but Clark believes it's the most important one. That's why ultra-high tax state New York -- traditionally the center of business and finance -- has seen an exodus of major corporations for years. The Empire State's loss has been Texas' gain, as the latter has been a major job growth center for the last 8 years.

If you're a business owner, you want to go to a place where the government won't take too much of your paycheck. Look at talk radio, for example. Many hosts reside in Florida regardless of where their show originates. That's because Florida is also a no state income tax domicile. By comparison, New York City and state taxes can eat up some 11% of your paycheck.

One corollary of note: If you reduce taxes, you must take the bitter pill of also reducing spending. Part of our federal mess is that the president and Congress reduced taxes while increasing spending. If you want one, you've got to do the other.

Clark loves found money. When he and his associate producer Joel went to lunch today, they used a BOGO coupon for Whataburger that someone at KRLD gave them.

Right now, far too many Americans have left found money on the table when it comes to the federal government's economic stimulus payment. USA Today reports that 5 million veterans and retirees of all stripes have failed to do the simple paperwork required to get the $300. This is low-hanging fruit that they should pick.

Be sure to help out your elderly relatives if they haven't filed yet to get the payment. Even if they don't normally file taxes, this year they've got to do so. They just need to show that they owe no money, and then they'll get in the system and trigger a disbursement. It's not too late.

Don't panic if you're among those still waiting for your check in the mail. The IRS says to hold tight for a little bit longer.

Just under 40% of people wait until the last possible minute to file their taxes. A smaller percent of people file for an extension. Clark often feels like there are 2 taxes: There's the tax you pay and then there's the success tax. If you do well financially, dealing with taxes becomes a pain. Clark's had the good fortune to be successful and his tax return was 58 pages long this year. That's just silly. GE, meanwhile, had a tax return that was 24K pages long!

John McCain has a proposal to simplify taxes that Clark likes. Under the plan, a new taxpayer coming into the system would be under a brand-new tax code. Current taxpayers could choose between the old and the new tax codes. McCain hasn't fully fleshed out his plan, but it seems that once a current taxpayer chooses to go for the new code, they'd be locked in. There's no going back.

The San Francisco Chronicle recently reported on what things were like in 1913 when the income tax was instituted and what they're like today. In 1913, the form came with 1 page of instructions; today it has 92 pages. In the old days, there was a flat tax of 7%; today we have multiple brackets.

Meanwhile, the IRS has tons more employees than other government agencies. It's a broken system. Need further proof? Look at the private collection agencies that are paid to collect taxes. They're a money-losing proposition. The funds they bring in are less than what the government pays them to collect.

The National Consumer Law Center has issued a disturbing new report about tax preparation chains and some independent outfits. Undercover mystery shoppers found that many tax preparers steered them toward refund loans. Many times the secret shoppers were just defaulted into the refund loans without being asked. That's unacceptable in Clark's book.

Then there were the issues of preparer accuracy. About 30 years ago, Clark worked as an H&R Block preparer while he was a graduate student. He found the training to be very thorough and it was a great part-time job. Of course, he can't vouch for the level of today's training. But Clark doesn't really blame preparers for errors. The reality is that the tax code is a joke, so you're going to have mistakes. Why not consider using the IRS Free File option to do your taxes yourself? This option is available to those who have an adjusted gross income of $54K or less. And if you doubt your competency, pay a preparer and compare the results.

Tax refund loans have declined 25% over the last two years, according to ConsumerAffairs.com. Today only 9 million people get ripped off this way each tax season. These loans are heavily advertised in low- and moderate-income neighborhoods and they come with exorbitant interest rates. Clark wishes the numbers were down to 0, but the trend is moving in the right direction. But it's not time to let your guard down just yet this tax season. Now comes word that refund loans are also being offered for your government rebates. Clark's advice is simple: Don't do it. Wait until your money comes either by direct deposit or in the mail.

RIP-OFF ALERT: Clark is steaming because the IRS has spent $40 million to mail out propaganda to the American people about the economic stimulus payments (aka "the rebates"). But who among us didn't know about the rebates? What's the point in spending an extra $40 million on top of the $150 billion the government had to borrow to fund the rebates in the first place? This is yet another indication that the Politician Protection Act of 2008 (Clark's name for the stimulus package) is malarkey. The politicians want you to take the money; blow it to artificially prop up the economy; and then vote them back into office. But here's a better idea: Take it and pay down your debt. That's how you can make a real lasting impact on your financial house. The government is mortgaging your future, and you have to counteract that.

Clark has been on a slow burn about the IRS eliminating free tax prep and filing for those who make more than an adjusted gross income of $54K. Clark just doesn't get the class warfare angle. Why is it that the more money you make, the more you have to spend at a tax preparer -- just to give the money back to the government? There is one outfit out there still offering free federal tax preparation regardless of income -- TaxACT.com. There are additional charges for your state return. Please note that Clark has never used TaxACT.com and has no idea about their quality. He just loves that they're doing it for free.

Clark has been fielding a ton of calls about the economic stimulus payments. People have been really confused by the media coverage of these rebates that will be coming in late spring and early summer. That's why Clark has compiled his new plain English guide to the economic stimulus payments. When you visit this page, you'll see Clark opens with a blog-style posting in which he talks about his disapproval of the stimulus package. From a standpoint of fundamental economics, this package is sound and fury signifying nothing -- except it will feel like something when you get that check or direct deposit. Since he does disapprove, he wants to be sure you turn a negative into a positive by using your refund to pay down your debt. It's like following the first rule of medicine: Do no harm. Otherwise, this package may be an economic prescription that can potentially harm us as a country.

Clark recently spoke about the IRS free filing option and confused a lot of people in the process. He hopes to clear things up right now. First off, know that Clark prefers that you e-file because you're less prone to make errors thanks to software improvements. E-filing is free for those who make less than $54K/year, which is the majority of people. Note that the $54K cutoff pertains to adjusted gross income, so you may still qualify if you make in the $60K range.

IRS.gov offers a list of about 20 companies that will prepare your taxes and e-file them for free. You can even try your return with more than one company -- just be sure you don't file more than once! If you are not Internet savvy, free income tax prep is also offered offline by the AARP and the IRS. The latter's volunteer income tax assistance program can be reached at 1-800-906-9887.

Early in the primary season, a lot of GOP candidates were talking about changes to the tax code that would simplify things a lot. Clark hopes the candidate who makes it into office -- be it a Republican or a Democrat -- will put this idea to work. Remember the IRS is just the messenger; it's Congress that is the real culprit for our complex and confusing tax system.

Clark wants to update you on your friends at the IRS. There's some good news that pertains to the earned income tax credit which allows people who don't owe any federal tax to get a credit when they file. 20 million people are eligible for the EITC, but only around 5 million take advantage of it. You usually have to have kids to qualify for EITC, and your income can be up to about $40K. But if you don't have kids and you made an exceedingly low income, you may still be eligible. The EITC will give you up to $4,700 back in your pocket. You may also want to check IRS.gov to see if you meet the income requirements for free filing.

On the flip side, there's bad news for rich folks. The wealthy are being audited at near-record levels. Those who earn $100K are more likely to be audited than those who don't, while those who earn $200K are twice as likely to be audited compared to those who earn $100K. If you make $1 million or more, you have about a 10 percent chance of being audited. While that may not sound like a lot, the cost to comply with a field audit is in the tens of thousands -- even if you're completely innocent.

During a recent show, Clark explained why he doesn't like the refund loans pushed by many tax-prep chains. Now H&R Block has another offer called the Emerald Prepaid MasterCard that's an equally bad idea. This is basically a stored-value card that you take in lieu of getting a standard refund or a refund loan. This seems like a great idea -- until you get to the fees. You'll pay between $1.85-2.50 whenever you use an ATM, and that's in addition to whatever fee you're charged by the ATM itself. Clark has no idea who would benefit from this option. But this is the Super Bowl of tax return season for H&R Block and Jackson Hewitt. Everyone who overpaid wants to rush in to file at the chains and get money back as soon as possible. Special thanks to our listener Chuck for bringing this to Clark's attention.

On the saving side of the ledger, interest rates and CD rates are dropping. However, some outfits like Countrywide are still paying good money. Countrywide currently is trying to attract CDs of $250,000 and above -- probably because they're in dire financial straits and need big infusions of cash. Clark is warning people to stay away from this offer. Should you choose to bring your money to Countrywide, keep it within the limits of FDIC protection at $90,000 or less. Otherwise, you may get wiped out in the event of a bank failure. Don't go chasing yield above the FDIC limit.

Have you ever taken a refund loan on your tax return? This option is heavily pushed by tax-preparation chains like H&R Block and Jackson Hewitt. About 12 million Americans go for this option every year. There are a couple of reasons why this is not a Clark Smart decision. First, you have to understand that the government is not giving you something when you get a refund on your taxes. You're the one who gave the government an interest-free loan all through 2007 by having too much withheld out of your paycheck. Second, the big tax-preparation chains will charge 100s of percent interest on the refund loans. So you're paying to get your own money back that you shouldn't have given to the government in the first place!

Many people use their tax refunds as a way to force themselves into saving money. But Clark recommends instead that you reduce your tax withholding to be even-steven. Then contact your credit union (or ING Direct, Emigrant, etc.) to set up automatic deductions for that exact windfall every pay period. The end result is that you'll build your savings and earn interest all year. Meanwhile, the IRS is seriously considering banning refund loans. But their motive is not to protect taxpayers. Rather they discovered that tax-preparation chains have been falsifying taxes to generate larger returns and more profit for themselves when they make refund loans. After the IRS announced its intentions, Jackson Hewitt lost around 25 percent of their stock value in a day. As if you needed something else to convince you that refund loans are a bad idea!

Why does New Hampshire have a higher rate of economic growth than neighboring states like Massachusetts or Vermont? Clark thinks the answer is obvious -- taxation. The Boston Globe's Robert Gavin recently penned an article lamenting the fact that Mass. has no job growth and the second worst economy in the United States. But the story has no mention of the fact that heavy taxation can cause economic decline. After all, they don't call the state "Taxachusetts" for nothing! Michigan is also suffering because they're always raising taxes too. When you do that, people vote with their feet and leave for greener pastures. Take the case of Derek Jeter. The Yankees baseball player is being sued by New York City and State because he had the good sense to move from the Empire State to Florida. In doing so, he fled a place where he was faced an 11.2 percent tax to a place where the tax is zero!

Clark has a recipe for Mass., Mich., NY and any other tax-happy states: Control and cut government spending where you can. Don't play Santa Claus to everybody. NY has a long tradition of the government helping everybody out whether the city is run by Republicans or Democrats. Look at Texas. The Lone Star State has passed NY to be the second most populous state in the nation. It's also has one of the lowest taxes in the nation. Most politicians lack the fortitude to say that in order to cut taxes, we should be cutting government spending. But the government can no longer be our sugar-daddy. You've got to cut the sugar!

Fred Thompson is one presidential hopeful who got off to a great start and then promptly disappointed a lot of people. But there have been two instances when Thompson really impressed Clark. The first was when he laid out his proposal for overhauling Social Security. Now Thompson's flat income tax plan has interested Clark. The idea itself is not new; we briefly had a flat tax back in 1986. Back then most Americans paid a flat fee of 15 percent, while the ultra-rich paid 28 percent. It was that easy and streamlined. Thompson is proposing 10 and 25 percent, respectively. This proposed flat tax would be voluntary. If you still want to subject yourself to the arcane current tax system, you'd be welcome to do so. Or you could switch and fill out your streamlined tax return in about a minute! There wouldn't be any changes year to year in how you're taxed. Many of the world's most robust economies have simple, clean and clear tax systems. Having transparency builds creditability and confidence. As an added bonus, people don't cheat as much on their taxes when there's a flat tax system. Clark wants to stress that this is not a political show, and this should not be construed as an endorsement of Thompson. Clark just likes that Thompson had the guts to propose a flat income tax.

As listeners know, Clark steers away from political talk on his show. But columnist Jonah Goldberg recently wrote an op-ed piece about government spending that really interested Clark. Goldberg analyzed how spending grew in the 25 years following Reagan's 1981 inauguration. During that time the U.S. population grew around 30 percent, yet government spending rose almost 90 percent after adjustments for inflation. The reason behind the surge in government spending growth is pretty simple really. Human nature dictates that there's a natural tendency to want a "free lunch" from the government. That's an inclination that goes beyond whether you live in a red or a blue state. We as a nation need to decide what we're about; so far we've been about wanting it all. We have become some of the highest taxers in the world, Clark says, and that's irrespective of party affiliation. So there's a question we must ask ourselves: Do we want to grow our economy and have more in the long run, or do we want to curtail growth in order to have more money to redistribute to people? Colorado has been particularly effective in controlling the growth of government spending with their Taxpayer's Bill of Rights, which limits spending to the growth in population plus inflation. There's a difficult balance to be struck here. Clark thinks we may be tying one hand behind our backs with our spending, and we're growing weaker and weaker compared to other capitalist economies.

Would you believe that roughly 50 million Americans pay no income tax. You might assume that it’s the rich who aren’t paying. But you’d be surprised. If you make about $50,000, you’ve paid all of your taxes April 30. If you make $100,000, you are done paying federal, state and local taxes on June 20. If you make $1 million, you’re done paying August 3. So, if you look at people who make more than $100 grand, they’re paying taxes at least about half of the year. Is it right that you pay more tax as you make more money?

The free filing program from the IRS is available once again. So, who’s eligible? If your income is more than $60,000 a year, you might not qualify. So, it’s a good thing to figure out your adjusted gross income (AGI) before you start the process. Your AGI must be less than $52,000 a year to use the free program. That covers about 70 percent of all income earners. And there is a special rule that applies just for this year. You will get an extra tax break if you wait until after Feb. 3 to file. Waiting specifically benefits people who live in states with no state income tax. The IRS free tax filing has changed every year for the past three, so read the fine print carefully.

Last fall, Clark was outraged by the story that the IRS was using private tax collectors to collect taxes. It’s an invasion of privacy and personal information, not the mention the fact that there is a lot of corruption in the program. One of the three collection agencies that the IRS hired has a staffer who was convicted of bribery on a prior case. In addition, Clark just learned that these programs cost more than they collect. This is dirty politics and Clark is completely against the program. So is the national taxpayer advocate, who said this program should be repealed. This is our private, personal financial information, so the IRS – and only the IRS - should be responsible for collecting taxes. This program will probably die, but in the meantime don’t entertain questions from collectors if you get a phone call.

Clark has always warned people about refund loans on tax returns. Companies that offer these “rapid refund loans” have existed for years and they start popping up all over the place the closer it gets to tax time. Worse yet, last year the IRS allowed some of these companies to put ads on its Web site during tax time. Clark was livid about this practice because these loans are total ripoffs. With rapid refund loans, people get their refund checks about a week early, but they’re paying tons in fees. And, from the way the ads were presented on the IRS site, it looked like the IRS was advocating these ads. The good news is that the IRS is not hosting the ads this year. You’ll still see them all over town though. These loans are poison to your pocketbook, so watch out.

When the IRS says you owe additional money and need to pay up, most people roll over and play dead. It seems like the right thing to do, right? Well, yes. But did you know you can fight to lower what you owe. According to the GAO, people who appeal what they owe win 40 percent of the time. Those are good odds, but most people never follow through. This becomes more important when you learn that the number of people being audited is going up about 20 percent each year. If you have a “S corp” the odds are even greater that you’ll be audited. So, take a chance. Just make sure you keep good records and take those with you when defending your case.

Clark gathered paperwork to file his income tax return last night and the process took him and his wife into the wee hours of the night. It’s ridiculous how complicated the process is these days. It goes without saying that we need a new tax system in our country. The two emerging options seem to be either a flat tax or a fair tax. Back in the ‘80s we had a flat tax system in which most people paid 15 percent and higher income earners paid 28 percent. That all changed because of corruption in Congress. Now there are preferences and phase-ins and phase-outs. There are also more people cheating on their taxes, either because they’re confused or just fed up. Whatever we decide to do, we need to establish a ruling stating that it takes a “super majority” to pass a special tax preference. That way, powerful business people wouldn’t be able to manipulate the code anymore. We need to demand a change in the system. We have the power to do that, so get involved!

Americans have learned to excel at cheating on their taxes. One recent study showed that Americans failed to report more than $1 trillion in income in just one year. Why are we cheating so much? Well, partially it’s greed. But the tax code is also at fault. Our tax code is so confusing and discriminating that people think it’s okay to cheat. We need to consider either a flat tax or a fair tax if we’re going to fix this system.

How would you like to get tax preparation software for free and file for free? Last year, that was quite easy because of the IRS program available. Regardless of your income, people could go on the site, view available offers and file their returns for free. But tax preparation firms were worried about losing revenue from taxpayers, so there are now limits on the IRS program. If you have an adjusted gross income of below $50,000, you are still able to file for free through the IRS sites. So, what if you make more than that? Well, you can either pay for software or you can visit taxact.com. This site is still offering the free offer to all taxpayers. According to the site, you can prepare, print and file for free. They must be getting something out of this, right? Well, they’re hoping you buy their other products, including fancier tax prep software that they offer. Also, you have to pay to file your state return, which some people may choose to do out of convenience. But you still have a free option, so take advantage of it!

The IRS has had a deal with several tax preparation firms that allow people to file their taxes for free online. It saves the IRS a ton of money and gives those companies a lot of publicity. But the IRS has decided to do away with this program. It has instead formed an alliance with these firms and decided that only people making less than $50,000 a year can file for free. So, if you make more than $50,000, you will have to pay to file electronically at the IRS Web site. Clark thinks this stinks. The IRS makes more money off people who make more money because of all the work that goes into their complicated returns. Tell us what you think about it in our latest poll.

Neal Boortz, a fellow talk show host, has written a book about eliminating income tax all together. Instead, Boortz wants to start a sales tax at the national level. The sales tax would be 23 to 27 percent, and basically the idea is that you only pay tax on what you spend not on what you make. Boortz’s book is No. 1 on the NYT Best Seller list because it’s such a simple concept compared to our current system. In the other camp is Steve Forbes, who advocates a national flat tax. Forbes ran for president, you may recall, and he runs the magazine Forbes. Clark loves the idea of simplifying our current tax code so that people are in two or three simple tax brackets. It would mean that tax returns take just a few minutes and people could easily understand – and be more honest about – the taxes they’re paying. That system was corrupted and perverted over time by politics, and now it’s harder than ever to do your taxes. Clark is not partisan on this issue. But he worries that over time a flat tax could be corrupted again. The beauty with the sales tax is that there is nothing to mess up. Politicians can’t get in and change it around.

Clark warns listeners to never volunteer for rapid refund loans when filing tax returns. These refund loans have interest rates up to 600%, and usually average around 200-300%. People file for these loans because the money is returned immediately. But it only takes about 12 days to receive your refund check the traditional way. And you don’t lose any of your money! Is it worth paying that much in interest just to get your money a week earlier? Clark certainly doesn’t think so! H&R Block is being sued for gouging consumers on their tax refund loans. They have agreed to pay $360 million in reparations, but much of that will be paid in company coupons. Clark wants you to know that if you are withholding too much from your paycheck, then you should reduce your holdings for taxes.

What percentage of people are using their tax refund to pay down debt? Would you believe half of the population? That’s a huge change in attitude, and Clark is psyched about it. Now, whether people actually do it is another thing. But the response itself is encouraging. Also consider adjusting the amount withheld so you don't get huge returns. It's giving the government a tax-free loan, and you certainly don't want to do that.

Every spring, Clark gets calls from people who have not filed taxes in years and are wondering if they are going to get caught. He always encourages people to come out of the cold and file. The IRS may not ever track you down, it’s true. But if they do, it will get really ugly for you. The chances of being found have also increased because of new data mining programs that the government is using. In California, for example, this new program found tons of people who didn’t file income taxes in 2002, according to the Wall Street Journal. Among the non-filers were 865 millionaires, nearly 7,000 lawyers and 1,500 accountants. These people are making significant money and some are even working in the tax field, but they think they are above the law. New Jersey shares its information with other states, and New York is working with the IRS to find people. If you owe the government money, they can retro tax you for as long as they like. If they owe you money, you lose it if you don’t claim it within three years. If you are hiding, Clark wants to give you fair warning. Offer yourself up and you will be fine. If you continue not to pay, you could become an example.