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Gullibles’
Travels
By Kate Burch
I have heard a few radio ads lately by auto dealers making the pitch
that, since this is tax season, it’s the perfect time to buy a new
car! Apparently, many who receive a tax refund think of it as a
windfall and can’t wait for a good opportunity to spend it.
How does it happen that people do not rise up in protest over a
significant portion of their pay being confiscated week after week,
before they ever see it, to pay the tax man? Why are they not
outraged by this money being taken from them, when they could be saving
or investing it all year? Wouldn’t you think they would like to
use or invest this money, benefiting from any interest or dividends
themselves, rather than make an interest-free loan to the
government?
If the average American had to write a check to the IRS on April 15 for
the same amount of tax that has been withheld all year, that person
would find it incredibly painful. Most people do not have
anywhere near an amount equal to their income tax liability in savings
or liquid assets. The truth is, most people have no idea how much
they are paying the IRS every year, as the government takes its cut
systematically and, eventually, unnoticed. People tend to be
concerned only with their take-home pay and do their budgeting
accordingly. If they did total up the withholding, they would be
outraged.
Automatic withholding of income taxes started out, like almost all
government programs, as a temporary expedient that just never went
away. The first salvo was part of a “Victory Tax” imposed in 1942
to help finance World War II. In 1943, withholding was expanded
to all income taxes, and it has become firmly entrenched.
Automatic withholding has been perhaps the major enabler of the
monstrous growth of the federal government. The tax code has
become almost unimaginably convoluted and complex, and it is
manipulated to provide benefits to favored groups and special
interests, frequently to the detriment of most of us.
You might think that, if automatic withholding were suddenly eliminated
and people did know the size of the IRS tax bite, they would be
storming the Capitol demanding decreased spending and lower
taxes. Unfortunately, the crowd would be too small to have
effect, or even, probably, to make the nightly news. The income
tax, despite the Left’s screams about it benefiting the rich, is paid
largely by those who produce wealth. Those who earn $500,000 or
more in a year—in other words, the top 1%--pay almost half of income
taxes. 47% pay no income tax at all, because they earn too little
or because of various credits or deductions. Roughly 2/3 of this
group is employed and so they do, through payroll taxes, support Social
Security and Medicare. Nonetheless, very many of them benefit
from entitlement programs, so have little or no incentive to ask for
lower taxes. Our income tax system was designed to be
progressive, and so it indisputably is.
The arguments against an income tax, both economic and moral, are
strong. Aside from that, automatic withholding of taxes is an
incredibly smarmy policy, as it allows the government to continue its
spending orgy with interest-free loans from taxpayers, all the while
appearing to be benevolent when it issues refunds.
Taxing consumption, rather than income, is both morally and
economically preferable, as it encourages productivity, investment and
thrift. Proposals, such as the “FairTax” have been crafted that
take into account and compensate for the fact that lower-income
individuals spend more of their money on necessities. Resistance
to eliminating the income tax, however, and its nearly endless
opportunity for corruption and enrichment of special interests and
politicians, is formidable. Citizens should become informed about
tax policy and use their power, while it still exists, to push back
against the Leviathan State and regain the essential liberty of being
allowed to benefit from one’s honest labor.
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