Friday, January 29, 2010

Time For Tax Changes

We are in the process of doing our taxes; we like to get them done at the earliest time possible to just get it out of the way and not have to worry about them. In the past, we have usually owed money to the federal government, but in the past couple of years we have gotten refunds, and this time around will be no different. But there is a big part of me that has a problem with that.

It begs the question: why are we overpaying taxes in the first place? It seems to me that we are ok with the government taking more than they should and then we feel grateful that we get a 'refund', i.e. money that we should have been able to keep to begin with. Many have this Pavlovian response every year at tax time...the promise of a 'refund' is like the bell that gets the dog's mouth to water.

A lot of people just pay their taxes quietly. Actually, they don't pay taxes at all; the money is withheld from pay every time. I wonder how many people would be quiet about it if they had to pay taxes every month like a bill. You ever notice that the one tax that people complain about more than anything is the property tax? Why is that? Because they get a bill for it. It doesn't get quietly sucked away from every paycheck.

Maybe it's time to eliminate withholding altogether. Or here's something radical - eliminate the federal income tax altogether and switch to a VAT (Value-Added Tax) instead. It would eliminate the need for a gigantic bureaucracy like the IRS and it would only be dependent on what we spend. Just a thought. I don't expect it to happen, but it is a hope.

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