Tuesday, April 15, 2008

Tax Day!

Just some idle musings about taxes on this most obnoxious of days:

I'm not the first to say this, but I really wish national elections were held on April 16. Then again, PA's primaries are a week from today, and it doesn't seem to make a lick of difference about whom the parties select for November, considering our already outrageous tax burden.

When, as a people, did our collective consciousness finally become okay with the concept of a government who takes our money willy-nilly, and keeps claiming the right to more and more of our property? And why aren't we outraged at this?

The above complaint outrages me even more at the state and local level. Local jerks who up and decide that they, too, deserve a slice of our pie just mandate that we have to pay a certain percent in tribute to them. It's aggravating.

I'm also not the first to say this, but I think tax software and automatic tax withholding are bad things, despite the fact that I use both. They make the taxation process practically transparent to all but the most careful of observers, making it less likely that we'll sit down and realize just how big a slice the government is taking from our pie, and how complicated they make the procedure! We should be forced to write a check for our entire tax burden, either monthly or yearly. That way we'd know damn well just how much the government is garnishing our wages for their stupid pet projects. And itemized proportionate list of where our tax money is going, provided by the government as a receipt, would also be handy. And the tax software, God bless it, just enables the IRS to create all-the-more complicated tax rules that only computer software can handle! The more complicated the tax code, the less able we are to complain about specifics...

Despite all my complaints, tax resisters are fools at best and charlatans at worst. Going to jail for a cause can be good, but not when it's based on ridiculously flawed argument.

Also despite all my complaints, I know that I am Biblically required to pay taxes, whether the burden be just or not. So I will do so, without cheating, for the rest of my life. But I see nothing wrong with taking every legal remedy to reducing that burden!

I got a rather large "refund" this year. I did last year too, and could have increased my withholding allowances to "break even", which is supposedly the ideal way to do things. Nevertheless, I did not do so -- I like the psychological effect of receiving a large check of my money from the government. Hooray for a mortgage, a kid, and a tithe!

The logic behind "breaking even" on tax day is that you received all "your" money with each paycheck, thus being able to invest it at the time, rather than after tax day -- gaining potential interest on that income rather than allowing the government to do so. Wouldn't it be more optimal, then, to withhold NO money, and invest all the surplus (that will eventually be "harvested" on tax day) into some sort of safe investment account, only to withdraw the principle and "give it back" to the government on April 15, keeping the interest profit for yourself? Wouldn't that be something akin to a short-term, interest-free loan? Is there a flaw in this logic? Maybe a tax rule that prevents this? Because I'm thinking about it...

I take my tax refund and pay my real-estate taxes with it, which in turn reduces my tax burden for the following year. It's a vicious (and stupid) cycle. Sort of like robbing Peter to pay Paul, down at the microscopic level.

More than that, I will also use my upcoming tax "rebate" (Thanks, Dubya!) to pay down my real-estate tax burden, thus totally and completely defeating the point. Am I screwing the economy? Probably, but oh well.

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Anonymous Marty said...

What is wrong with you? Why haven't you maxed out your credit cards and leveraged your house to live in borrowed luxury like everyone else? Tithe? What's that? Here's how it's done: You inflate the amount you gave to some charity like the Free Mumaya fund on your tax return, or dump your trash at Goodwill and claim hundreds on it. Kid's college? You work at Penn State, for cripesake. And Obama's gonna pay for everyone's tuition! You are such a chump!

7:51 PM  
Anonymous Anonymous said...

I got bored after the first paragraph, but I would like to let you know that my new home town imposes a city income tax of around 2% on top of all of the other income taxes that there are.

8:27 PM  
Anonymous Chris said...

You cant't just save your money and pay all the tax in April. You will get penalized if you haven't withheld or pre-payed the vast majority of your tax burden. I forget the specifics, but it's something like 90% of your tax burden, or 100% of the tax paid the year prior.

I like your thinking though Ben...

I decided this year that the tax system has gotten so complicated, and the individual's actual tax burden is so well hidden, that it can't be fixed, short of a revolution. There are too many special interests benefitting from the 67,200 pages of tax code, that a flat or fair tax will never get passed.

And for me, the pain continues. We had to file an extension this year...

9:40 PM  
Blogger Benjamin said...

I'm assuming "new home town" is Louisville, KY, and that that's Sam in the "Anonymous" slot? Well, sorry to bore you. I'll try to work some talk of guns into a post about taxes. And yeah, I get taxed at the "township" level rather than the "city" level". Fortunately, it's only 1.25%. But that doesn't factor in real estate taxes, which come out to be approximately 5.5% of my GROSS income. I'd much rather there be a flat, across-the-board income tax that impacts EVERYONE to pay for public schooling (that I'll likely never use) than to have the burden rest solely on us homeowners, but that's how they do it in PA. That's right, homeowners alone pay for all the public schooling. And NEW homeowners pay a massively disproportionate amount of that burden, since tax assessment on new homes is always much higher than most existing homes, and they're very sluggish about reassessment.

Thanks for the general idea, there, Chris. I figured it was too good to be true. Now I just have to dig up the specifics to figure out what the optimal payment level actually is.

7:41 AM  

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