"The intelligent man, when he pays taxes, certainly does not believe that he is making a prudent and productive investment of his money; on the contrary, he feels that he is being mulcted in an excessive amount for services that, in the main, are useless to him, and that, in substantial part, are downright inimical to him."
- H.L. Menken, More of the Same (1925)
April 15th has come and gone, and I felt it appropriate to share some my thoughts about that deadline for submitting income taxes, and about taxation in general.
With the possible exception of conscription, taxation is the most direct and visible State intervention into our lives. Whether one believes the current level of taxation is appropriate or not, there is no escaping the blunt reality that it is forced confiscation of citizens' private property. (With the State having a legal monopoly on violence, "forced confiscation" is not an exaggeration.)
Taxes fund government for tasks that people believe the government can perform, or perform better, than they can. Just about everybody agrees that, at a minimum, taxes are necessary to fund government to perform the following: 1) defend Americans from foreign and domestic threats, 2) develop and maintain infrastructure (i.e., roads, bridges, etc.), and 3) enforce contracts.
Once the government moves beyond those three basic functions, however, no topic elicits greater controversy and heated debate than the "proper" amount of taxation needed to support "necessary" government services. I, for one, think it unfathomable that people are content with having almost 50 percent of their income confiscated via taxes.
Perhaps the most brilliant, and pernicious, action the government implemented is the automatic withholding of federal income, state income, Social Security, and Medicare taxes from paychecks. The government knew that citizens would have fewer objections to paying high taxes if they never saw their full paycheck; mindsets would adjust to recognize only their take-home pay.
Just think about the concept of automatic withholding: The government takes your money out of your paycheck before you even see it -- and it's hard to miss what you never see. Essentially, the government has granted itself a greater claim to your income than you have, a Big-Brother concept if there ever was one.
As a small-business owner, my taxes are not withheld -- I send estimated federal and state income tax payments every calendar quarter. Let me tell you -- it is no fun writing checks to the government for thousands of dollars every three months. That simple act focuses one on the direct link between your income and government spending, and the government knows this. Government spending would be a fraction of current levels if automatic withholding never existed.
Another simple change that would directly affect government spending would be if Tax Day occurred one week before elections were held. Imagine how different the candidates would campaign if they knew voters' mindsets were shaped so recently by the grim reminders of paying taxes.
Of course, politicians understand how viscerally opposed people are to having taxes raised, which is why the federal government -- Republicans and Democrats alike -- has been funding itself via deficit spending.
Deficit financing is pure heroin to politicians -- since the "benefits" are seen almost immediately (at least, if the recipients have "shovels" at the "ready"), and the costs are pushed into the future (when the politicians are no longer in office and unaccountable), it is almost costless. The politicians get to hand out buckets of cash to their voters, and they will be long gone before the deficits have to be repaid.
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I am in complete agreement. Small business in America supplies 70% of American jobs today and those jobs provide 70% of American workers with the financial freedom to do what they will. I find it hard to believe that anyone would knowingly hand over their hard earned money to an inefficient and wasteful government trusting that the government would spend it more wisely than they would themselves. MichaelAlexD
ReplyDeleteAs an owner of an S corporation I have to agree entirely. Writing those checks quarterly is an eye opener. However the checks so far this year are a good bit smaller. I deal directly with mostly other small business owners who are all laying people off and report significantly reduced earnings. Not exactly consistent with the president's rosy scenario of a rising economy by the first quarter of next year. In fact no one I know who owns a business expects this with his economic policies. After all socialism does not work and there are no proven examples of this (liberal politicians either deny they are socialist or change the subject) and the goverment does little if anything well, with the exception of the armed forces when they are allowed to do their job withour political intervention as just witnessed in Somalia (after some political hanky panky. Alos remember that the federal witholding tax was a "temporary" measure to pay for the costs of WWII, it never went away. In 1972 Milton Shapp the governor of Pa. instituted the first state income tax as a temporay measure, guess what, it is still in force. I asked my father how much he paid in taxes in the early fifties when my mother stayed home, we had a boat and house and a new Linclon every two to three years. He had a thriving sign business and severaal employees. Hi answer was about 5% total. My look how far we have come, how many stay home mothers do we have today? Thanks a lot to the regressive tax system in this country, it has also inadavertenly helped damage the social fabric of the country, with both parents working long hours sometimes at several jobs to make ends meet.
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