Catching up on my reading I reviewed Jonah Goldberg's article over at National Review called "Uncle Sam's Long Arm". Great reading as we get ready for tax season (we meaning all those Americans who earn $ to keep this government moving). Goldberg weighs in on withholding and argues that we should get rid of it.
"Get rid of withholding, a World War II measure intended as a temporary policy to pay for the war instead of putting it on a credit card. Even a system of mandatory quarterly payments for those who are self-employed is no good. Why is Uncle Sam entitled to an interest-free loan just because it makes things more convenient for him? If the feds want to borrow money from citizens, they should sell bonds."
He is absolutely right. I have family who think of withholding as some sort of savings plan and hate the notion that 15 April will come to pass and they will (gasp!) owe money. Instead we all do our taxes and claim a "refund". A refund?? It is our money that we overpaid in taxes and are asking the Government to give back to us. I would argue that there should be no withholding and instead every tax payer has to write a check to the US Government on 15 April for the amount he or she is taxed. Can you imagine having to write a check for the total amount of taxes each year? I would bet we would demand more accountability from the Government rather than bailouts, money to Europe and the various earmarks that somehow get stuck in the budgets each year (even in the era of Obama and his pledge of no earmarks or pork).
Looking at the 2009 tax rates (source is here) imagine a successful family making $150000. Not a bad salary right? That family's tax bill is $68637 (estimated) using the formula 28% on the income between $137,050 and $208,850; plus $26,637.50 (married filing jointly). That is almost a tax rate of 46%. Imagine this same family writing a check for $68K every April. No wonder the government wants withholding to continue.
Goldberg also notes amusingly, the length of time between tax day and Election Day.
"Notice how tax day and Election Day are conspicuously far apart? And note all the holidays involving gifts, booze, and sleep-inducing meals (turkey good . . . losing . . . consciousness) interspersed between the two occasions? Mightn't this be to encourage forgetfulness and reduce buyer's remorse? Of course, as they used to say in the old Time-Life Mysteries of the Unknown commercials, this is "dismissed as coincidence.""
Can you imagine having elections the day folks write the check for their taxes? What changes might that engender?
Well these are amusing thoughts…but I have to go back and work on my taxes. Looks like I am due a refund this year.
Outspoken Roman
