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A modest tax cut: Doing away with withholding
By Kevin Gabriel
Two weeks I wrote the Federal Government a check for well into the five figures. And when I added in the checks I wrote to various state treasuries, the figured grew materially.
By all respects, I had a very good year. In return for that, I was privileged to pay the IRS and its state clones a lot of money. These agencies must love people like me. That's not to say I was happy. I was downright angry. Then I picked up a newspaper that recounted a poll on the least liked form of taxation: the property tax. After reading that, I was not only angry, I was baffled.
Ha? I was incredulous. Surely this was a joke. Maybe something from April Fool's day that had made it into the paper a couple of weeks late. My property taxes were oodles less than my income tax. I would guess that goes for most Americans. And property taxes come without the bevy of forms, volumes of incompetently written directions, and mountain of onerous documentation requirements that are the hallmark of income taxes.
And then it hit me, the one big difference between income taxes and property taxes: Most people actually have to pay their property taxes. But they don't pay income taxes. Instead, we have good old withholding to facilitate their payment. The Feds take our money without our having to lift a finger. How convenient! We can even get refunds from the IRS – if we first grant them the interest free use of our money.
So I got to wondering: what would happen if we did away with withholding? Let every American do what I did. Let him pay his own taxes. I shuddered at the thought. How many people would be up in arms when they saw how much they really paid? How many people, through carelessness or poor planning, would find they had somehow spent Uncle Sam's loot and had none left to pay him? Try telling that to the IRS. Would one get a sympathetic ear? I don't think so.
The clamor for revision of the tax code would be deafening.
Of course, the Feds have their rationale for withholding – a World War II relic, by the way. They call it "enforced savings." That means they take more than they should from you and later give some of it back. Gee thanks.
The real purpose of withholding is to anaesthetize us to Uncle Sam's greed. If we are all numb to the pain that comes from paying taxes, then the Feds can take as much money from us as they please.
So let's do away with income tax withholding. Let's give everyone a chance to write those checks every quarter. Why should anyone object? Senator Kennedy will still be able to practice income redistribution. Senator Daschle won't lose sleep over a tax windfall for the rich. But I'll bet one thing, the next time there is a poll about the least liked tax, property taxes won't win.
This is Kevin Gabriel's first contribution to Enter Stage Right.
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