The taxman need not be the reaper

Published 3:58 am Monday, January 5, 2009

By Staff
January brings the start of a new year, but it also brings on the start of tax season.
In the coming months, more than 155 million tax returns will be mailed or e-filed to the Internal Revenue Service.
We have an interesting relationship with taxes in this country: we hate to pay them, but we love "government money."
"Government money" pays for great things like roads, schools and economic stimulus checks. When roads have too many potholes we say, "Why can't they fix this?" When schools underperform, we say, "Why can't our kids get new textbooks and better-paid teachers?" When we get economic stimulus checks in the mail we think $600 per person isn't enough to stimulate the economy.
Yet when it comes time to pay taxes, we gripe.
"Government money" is our money. Sure, some of us pay more than others, and there is a large sector of the American public that pays no income taxes at all, but it is still OUR money. Even the slice of the public that pays no income taxes pays them indirectly through purchases of goods. If you buy a loaf of bread, for example, part of that pays the income taxes of the employees of the grocery store, the delivery driver who brought the bread to the store, the employees of the bakery and the people at the newspaper where the grocery store advertises. So, in some form, we all chip in to the giant coffers.
So why do we gripe?
It can't just be because our money goes toward causes we don't always agree with, be it a costly war, pet projects of powerful senators that only benefit their home states or huge farm subsidies. If that were the case, certainly the American public would be smart enough to elect representatives who would curb wasteful spending. We only seem to elect politicians from both parties who promise more and more "government money" or federal benefits to their home districts.
Maybe it's because our politicians and government have moved from treating taxes as necessary dues for a civilized society to burdensome and punitive. Both parties talk of tax cuts as if they are a cure for some ailment – that by cutting taxes for either the "middle class" or "the wealthy" we'll turn our economic situation around.
In reality, if tax cuts aren't paired with spending cuts, the only thing they stimulate is our national debt.
In some cases, we also use taxation to stem bad behaviors – like taxing cigarettes, alcohol, "gas guzzler" vehicles and other behaviors that the majority has deemed detrimental to society.
Sure, those things may have added cost for the nation, like higher health costs in the case of cigarettes and higher public safety costs because of alcohol, but there are hardly any activities that don't create additional burden on the system.
If we tax cigarettes because of the additional cost to our health system, shouldn't we also tax junk food? Shouldn't there be a $2 per box tax on Twinkies?
Of course I say that in jest.
I don't believe that legislation is the right way to curb any bad behaviors – providing a better alternative is usually preferable to doling out punishment.
But because we use taxes as punishment for some things, it makes it more difficult to sell the idea of taxes as civic responsibility. That argument is denigrated every time a politician talks of "tax burden" or "fair share."
In the United Kingdom, where cigarette taxes bring the price per pack up to the equivalent of $11, it is estimated that 27 percent of cigarettes are purchased on the black market.
In theory, then, the government could lower taxes per pack by 27 percent and collect the same amount of tax revenue while cutting down on the crime rate, if the price difference no longer made the black market competitive. In practice, though, that wouldn't work.
It should be no surprise that so many in our country use legal means to dodge a portion – big or small – of their tax responsibility. There are a select few in the country paying hundreds of millions of dollars in income taxes – and many for whom paying a few thousand a year in income taxes is more burdensome. There are probably an equal percentage of both who are finding ways to pay less than they "should."
As much as I gripe to my friends and family about paying income and property taxes, I also like what I get in return for the most part, so the moaning is only half-hearted. I like knowing that my local taxes pay for an attentive police department to protect my property. I like knowing that the snow on the road in front of my house will be plowed. I like knowing that my neighbors' children (and someday my own) are being well-educated. Most of all, I like knowing that because of the social support systems in place, the people falling on hard times right now that I and other taxpayers are helping out will be around to support us should the tables ever turn.
P.S. On the subject of taxes, we will be publishing a special section later this month with helpful tax advice and financial planning information. Look for it in the Jan. 29 issue of the Niles Daily Star, Dowagiac Daily News, Cassopolis Vigilant and Edwardsburg Argus; and the Jan. 26 issue of The Leader.