Taxes: A Destructive Plague In Their Own Right

Taxes: A Destructive Plague In Their Own Right
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This extended Tax Day, I thought I’d tinker around a little bit.

Being our smallest source of income, I punched in my side gig first.  I quipped to my oldest daughter “look at that; my ‘refund’ is almost half my earnings, and I didn’t even have anything withheld!”

Yeah maybe this didn’t brighten-up her Sunday breakfast, but since her and her next oldest sister have tuned in more to current events of late, I saw it as a teachable moment.

“How much sense does that make?”
“What if somebody could actually use (that ‘refund’), dad?” 

And with that exchange, a few problems with the tax code emerged.

My wife and I fret annually about doing taxes: partly because of the time and money required, and partly because of different amounts we’ve had withheld, a requirement that is perhaps one of the worst ideas in any way attributed to the late Milton Friedman. 

Withholding is a unique two-way narcotic. 

It provides politicians a way to loot their involuntary benefactors with frequent regularity, for pet programs/projects they otherwise wouldn’t have the wherewithal to finance.  The fact that they can wash their hands of the inevitable failure of their schemes is all the more an enticement for them. 

On the flip side, never seeing that chunk of our pay relieves us of the responsibility to save adequately for the bill.  This façade shields us from incurring more directly the expense of government’s wasteful spending.  The fact that we can actually be penalized for not having enough withheld adds insult to injury.   

If I must endure the process, I prefer to have as little seized as possible, and instead try to earn a return on it along the way.  That’s more appealing than getting a $1000 “tax refund,” one of the cleverest linguistic contortions ever sold to the American people.

Nevertheless, withholding may not be the worst affront.

When I entered that info from my teaching W2, Turbo Tax may have been drawing on our information from last year, which includes multiple child credits.  In other words, permission we grant to our representatives to be pawns on their social engineering chess board.

These loopholes are political busywork that do little more than keep artificial industries, like tax preparation, afloat.  Such trades (regulatory compliance also comes to mind) are a waste of good minds and good capital, cast adrift in a sea of deadweight loss, much like the enterprise they’re latched onto. 

Furthermore, some tax dodges, like the child care credit, serve to inflate the cost of the very service with which they’re meant to assist.  You can’t make this stuff up … or actually I guess you can if you’re congress. 

“What if somebody could use those tax breaks, dad?”  
“There are more efficient ways to help sweetheart, that don’t entail taking a fifth of my earnings.”

I know, I know; that’s selfish of me, but hear me out.

When going through our paystubs, I was reminded how much I give to United Way-affiliated orphanages and domestic abuse shelters.  Imagine how much more I could donate if Uncle Sam didn’t “wet (his) beak” so much, regardless that he blesses this activity with its own loophole.

It would be even moreso if the form of taxation wasn’t such a societal retardant.

As the saying goes, if you want more of something, tax it less.  If you want less of something, tax it more.  Why then do we tax a person’s productivity?  Wouldn’t it be more sensible to tax the less valuable act of consumption? 

“But Baecker, you don’t buy many toys.  You like to gaze longingly at your savings account balance (actual accusation).  If everyone was like you, the government wouldn’t have enough money to function.”
“Yeah … and?”

I’m just kidding … kinda.

The government would have all it needs with a 5ish% tax on sales.  Moreover, if big-government types knew their history, had their demons of envy exorcised, and/or were purged of their propensity for controlling others, they’d know revenues to public coffers have risen every time taxes are reduced and/or streamlined.

Even if I didn’t subsequently rush out to buy another guitar, gun or something, my savings are not sitting idle.  Someone else is borrowing them for their immediate needs or desires.  Or better yet, they may be financing a new venture, the kind of activity that actually creates value, and hence fosters prosperity. 

Besides, a person’s freedom is derived, to a degree, from his/her income, obviously a necessary prerequisite for most people’s savings.  When the latter are taxed away, so is the former.

This confiscation inhibits one’s ability, for example, to prudently take leave from work for the first couple years of a child’s life.  It creates a needless obstacle to someone like my uncle, who may want or need to change course at some point (from the health care industry to independent farming, in his case).

That’s to say nothing of the immoral impediment to saving for life’s inevitable emergencies

If you feel like little more than a cog in the wheel on a train driven by “The Man,” government is pouring salt in the wound, and serving to ensure you stay there.

“But what if someone can’t afford the sales tax?”

“What if someone …” is one of the most worn-out, saddest indictments of society.  It presumes people are incapable of taking responsibility for themselves.  It’s the condescending view that, should someone make a mistake, or have a rare bit of bad luck, that they are powerless to right the ship, or recover. 

I wonder; “what if people” were less subject to the snobbish whims of elitist voters who ask “what if someone …”? 

Christopher E. Baecker manages fixed assets at Pioneer Energy Services, teaches economics at Northwest Vista College, is a board member of the Institute of Objective Policy Assessment, and is a member of the San Antonio Business & Economics Society.  He can be reached via email or Facebook

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