Monday, April 7, 2014

Tax refunds are no reason to be happy

A strange thing tends to happen this time of year: taxpayers who should be damning the government end up praising it. These brainwashed souls, numbering in the millions, feel rewarded by what appears to be government benevolence in the form of a tax refund, failing to realize that they are getting back only a little of the money that was rightfully theirs to begin with.

They are so focused on the last line of a 1040’s calculations that they completely ignore what are the most important lines of the document and its supporting schedule. They should be focusing their attention on all of the federal (income, Medicare and Social Security), state, and real estate taxes paid.

It is from that accumulation that one can understand how much of one’s hard-earned money is really being taken away rather than returned. They may think that they are in the 15% to 25% tax bracket (because that’s what their tax professional and federal schedules told them), but when all is added up, most will find themselves in a 33% -- or higher -- tax bracket, and that’s without sales and excise taxes on their regular purchases being added to the mix!

Slyly, the system inhibits such inquiries into the reality of taxation because it is devised in such a way that the gratification of a check in your name trumps the thievery that preceded it. Consider the art of income tax withholdings. Looking back through history these withholdings were brought about with the best of intentions as a scheduled – rather than lump sum – collection of taxes meant to consistently fund our forces in World War II. Unfortunately, the best intentions oft become soured. It didn’t take the post-war government long to figure out that it created a profound method of collections that could be applied to all future taxation and that would, for all intents and purposes, create a passive, captive and unknowing audience.

This ploy is strengthened by demanding that every business act as a tax collector on the government’s behalf, which often makes the taxpayers wrongly point the finger at their employers. A tax-deflated paycheck or bonus can be frustrating to workers and it is easier for them to blame than the one who issued the paycheck (the business) rather than the one who pilfered from it through the backend (the IRS).

The weekly infringement upon one’s financial well-being also softens the blow that government yields. If these withholdings did not occur and Americans were obligated to pay a lump sum on April 15 (rather than anticipating a token return) then the taxpayers would realize how badly they are being mistreated. The ecstasy of tax refunds would be replaced with the agony of cash outlays in the thousands of dollars. Most taxpayers would be utterly mortified - if not borderline revolt-minded - by such a payment.

Withholding quells such dissent and it is without a doubt our government’s greatest brainwashing trick of them all. By slowly and deliberately taking from the taxpayers the government can confuse and confound them in regards to what the final bill will be.

The mind games of refunds and withholdings truly limit the concerned citizen mindset in America. The average person pays little attention to what happens in politics and governance because, to them, there is no reason to care: Government’s most abusive act – the leeching of our pocketbooks - is kept almost clandestine, muted to the point that they do not realize how much they’ve "invested" - and truthfully lost - in a floundering system.

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