Well, tomorrow the 17th is the actual tax day this year. (For those of you who wonder or care, there is a federal holiday April 16th, Emancipation Day, apparently only recognized in D.C., that keeps the IRS from work today.)
Some thoughts on our tax system.
Withholding on paychecks is an insidious practice. I am constantly surprised by how many of my clients have no understanding of the actual amount of taxes they pay to the government. They only care about April 15th. If there is a check due to the IRS, many think that is the amount of taxes they pay for the year, not thinking to add up all that has been withheld. IF there is a refund due, many seem to think of it as manna from heaven, not understanding it is just a return of their own money.
And the tax code doesn’t help these misconceptions. With credits like the Earned Income Credit and Child Tax Credit, the IRS has become a welfare tool, where people can get refunds back bigger than any amount of taxes they paid in the year.
The IRS is also a social engineering tool. Green energy credits drive me nuts. If they are such good money savers long-term as is proffered, the government shouldn’t need to offer incentives to taxpayers to install solar panels or buy a Prius. Which leads me to my last thought.
The IRS is a giant slush fund. Tax credits and subsidies go to politically connected companies and industries (think ethanol), who turn around and donate funds to the right politicians. All sides are guilty of this, but liberals only seem to kick up a fuss when this collusion is between evil big business (oil and military) and don’t mind so much with approved big business (green energy and organic wheat germ farming). The willful blindness is highly annoying.