Townhall.com, Where Your Opinion Counts
Talk Radio:   Bill Bennett   Mike Gallagher   Dennis Prager   Michael Medved   Hugh Hewitt   
BREAKING NEWS  LeftArrow - Townhall.com : Conservative, Political, Republican   RightArrow - Townhall.com : Conservative, Political, Republican  
Columns, funnies & more in your inbox!
  • Check the boxes and send us your email address to receveive your free newsletter
  • Your daily must-read of conservative columns, cartoons and news. Coulter, Sowell, Krauthammer and more.
  • Townhall.com’s weekly inside scoop on what’s happening behind the scenes in the world of politics. When news breaks, we report.
  • Signup to receive the latest daily Townhall cartoons
Friday, April 18, 2008
Matt Towery :: Townhall.com Columnist
End Withholding, and Let Buffet and Gates Pay The Difference
by Matt Towery
Vote on It:
Average Vote:
[+] Text [-]
 
Poll
Will the Dems' health care Christmas Present to America be an improvement or detriment to our health care system?


This column isn't going to read very profound or intellectual. And I'm sure others have written before what I'm writing again now. But read on, and let's have a little fun.

During this tax-filing week, I've overheard the annoyed mutterings of several of my employees as they return from their visits to the tax preparation offices.

My co-workers are pretty smart. They already know too well that they are taxed to death. So they aren't shocked when they prepare their taxes and find out that, despite the withholdings from their regular paychecks, they still owe additional money to Uncle Sam. But this knowledge and cynicism still doesn't keep them from being upset.

Far more eye opening is that there's a huge segment of the American population that believes they pay no taxes at all!

You read right. We polled full-time employed Americans and asked them, "Last year, did you pay taxes to the federal government, get a refund or both?"

An amazing 40 percent of respondents said they received a refund only. They didn't say they paid taxes and then received a refund. They only said that they received a refund.

Nearly half the country believes that they don't pay taxes to the federal government. They probably know they pay sales and other taxes, such as tolls. But because of our system of payroll withholdings, these folks never notice that on their pay stubs, it says clearly that they are taking home a lot less money than they are being paid by their employers.

So is it any wonder that when this vast portion of the American public is asked whether they believe we should all pay more taxes, in order to bankroll certain popular causes, that they're often all for it?

Similarly, many people will usually support increasing taxes on "the rich." They figure that it's the wealthy who are paying all the taxes anyway, and not themselves. So why not have the rich pay even more?

As long as we hold to a very loose definition of "rich" in this country, then it's true enough that "the rich" really do pay the vast amount of taxes to the government. But that definition of rich is, for example, a wife who makes maybe $85,000 a year, and a husband who makes $65,000.

Of course, the fact that they first pay darn near half of their income in state, federal and property taxes before they get to spend a dime on themselves -- well, that doesn't really matter.

Every time I read about somebody like Bill Gates or Warren Buffet is talking about how wealthier Americans should pay more taxes in America, I have to laugh.

For fun, let's define "wealthy" at $100 million of "net worth." Now let's include in that net worth all the donations these gazillionaires make to their own (tax-exempt) foundations and trusts; and let's tax all that at a rate of 90 percent. I wonder if Gates and Buffet would be so wild then about the idea of raising taxes on the wealthy?

Or we could just do away with withholding for, say, one month a year. That way, we won't destroy national cash flow. (Oh, I forgot that the feds can just print cash on demand.)

If we stopped withholding for one or two pay periods, we'd probably see that 40 percent polling number drop. People would figure out quickly enough that they are being taxed, and how.

My guess is if tax time meant that everybody had to reach into his or her own bank accounts for the full tax amount owed, there would be a new mindset about taxes.

Why don't we try it? If John McCain can propose a gas tax holiday, why not a payroll withholding holiday?

Here's why not: Because if people don't think about the fact that they have to pay taxes, then they won't march to Washington, pitchforks in hand.

If they did march that march of anger, their unhappiness wouldn't necessarily help either political party. Yes, the people would blame the Republican administration for letting spending get out of control. But their support for Democrats -- who never met an entitlement they didn't like -- would wane as well.

But hey, never mind already. As the song goes, "It's just a fantasy it's not the real thing." This is just a thought experiment, after all; it's not the work of an intellectual.

Then again, maybe that's a good thing.

Share:
Vote on It:
Average Vote:
 
About The Author
Matt Towery is a former National Republican legislator of the year and author of Powerchicks: How Women Will Dominate America.
 
TOWNHALL DAILY: Be the first to read Matt Towery's column. Sign up today and receive Townhall.com daily lineup delivered each morning to your inbox.
 
©Creators Syndicate
Taxes are vastly understated
The argument in this article to end withholding while containing valid arguments, overlooks a key issue. Not only are wage earners fooled by the withholding farce, even more of their wages are taken in the form of the employers portion of payroll tax. Even though the tax appears to be paid by the employer, the amount paid was that much more than the withholding. A difference is that the wage earner can not get it back and does not even see that it was paid. It does represent a dollar for dollar increase in cost to the employer to put the wage earner on payroll.

Taxes
It just drives me crazy listening to the so called knowledgable people talking about taxes and how to FIX them. The tax code has had over 16,000 changes since l986 and look what we have.
The tax code book itself is over 66,000 pages;
the IRS correctly answers questions to tax problems 50% of the time.
The Fair Tax is the answer to the above and more.
The Fair Tax is a nonpartisan proposal that re-
places all federal income and payroll taxes with a progressive tax on consumption (National Retail
Sales Tax).
For more information, visit:www.FairTax.org

Equality
I'm all for the FAIR Tax with the changes others have mentioned. No rebates and no exceptions for any entity, idividual, or group. Equality means just that. Everyone is equal and all special interests are denied exceptional treatment. Think how quickly the parasites making a living by pitting one group against another would disappear. Starving parasites by denying them what they feed on is the only way to get rid of them. It's past time to do so.

Who gets taxed?
I'd like to know how poor you have to be to pay no taxes. I had a really bad year in 2006. I barely earned enough to even file a return. Yet, everything I earned was considered "profit". That was not profit folks, that was money earned in exchange for labor performed. I had no "profits" in 2006. I still wound up with a tax bill that equaled half of my taxable income. That level of taxation is called "slavery". So, fellow tax slaves, welcome to the revolution. It's time to stand up and be heard! The central government was never intended to be this cancer on the people. The founding fathers were quite specific about the functions of the central government and taxing the population into slavery wasn't one of them. The Fair Tax is certainly a workable solution. It might not be the best one, but it is a heck of a lot better than what we have! I have a laundry list of things that would help, but none of which would be done, so I'll just settle for the Fair Tax as a step in the right direction.

Fully Half ??
The fact of the matter is, more than half of the country doesn't earn income. Most workers earn wages which is not legally or otherwise defined as income. Thus, they should not pay income taxes.

Wages are an exchange of labor at a predetermined rate of pay. Wages can be better likened to a barter transaction. Just because a person earns a check as opposed to a bag of groceries does not make it 'income.' And the exchange is not limited to time, so don't argue, "my time can be spent working or sitting on the couch, therefore I am not really giving up my time."

Income, on the other hand, is defined as, "Profits from investment." To liken wages to income implies there is no cost to producing the labor. FICA taxes the first dollar earned as does State and Municipal income tax.

The problem with taxes being levied against wages is the government claims to own a lien against the wage earners labor which would constitute indentured service at the least. At worst, it is a form of slavery. While no one likes to admit it, it is undeniable.

How did they come to own the labor of free men?
Where is the bill of sale? When was the 13th amendment repealed?

Good Grief wake up!

What really gets me
is that the liberals calling for more taxes on "the rich" don't seem to realize that if they themselves don't feel they're taxed enough, they can send a check in any amount to the US Treasury.

Fully half of this country's working folks pay no Federal income taxes at all.

In the meantime, my husband and I pay more in taxes than many people make, because we're considered "rich". When I do temporary work outside the home, my wages basically go for taxes. In other words, there is no net benefit to our family from my wages. This is fair?

Aside to Audi-We're not so far behind you, friend! :/

FICA
Matt forgot to mention that the 12.4% FICA occurred during the Reagan administration, it was the largest tax increase in the US. It was one of 13 tax increases passed under Reagan.

Withholding
As I understand it, the withholding system was set up during WWII. The man who invented or designed it was

Milton Friedman

There may be no way to get rid of the withholding system, but that shouldn't stop us from trying.

As with the Federal Reserve System, so with the withholding system. Anything we can do to weaken either of these is for the good of the nation and mankind.

Barry

The current Fair Tax...
is truly a Socialist's dream. Imagine we all get to receive a check from Uncle Sam. How marvelous. I can just imagine the Socialists are all praying (if they pray) for this bill to be implemented.

I favor a fair tax but we must not have a prebate. Either exempt the common things like food, gas, clothing (first $50), water, electricity and heating oil for personal use or impose a lesser tax like 10% as Tacitus X above advocated.

We have to stop the idea that the government is giving money to people. The government is an anchor on the prosperity of America and if we want to prosper we must reduce the size of government.

Parker
I recall an anecdote about an employer who did exactly that; employees entered a room and were handed their full wages in cash, then went table by table down the room handing over their federal tax, FICA, state tax, and so on. The experiment (again anecdotal) had to be called off within half an hour to forestall a riot. I can not and do not vouch for the accuracy of this anecdote, but I think anyone wishing to try the experiment would enlighten a lot of wage earners.

The Fair Tax
The Fair Tax Act of 2007 (House HR25)(SenateS1025
is a nonpartisan proposal that replaces all federal income and payroll taxes with a progressive tax on consumption (National Retail Sales Tax). No exemptions or exclusions. Over 20
million dollars and many years of economic research have made this the most researched tax bill in history. Many leading economic professionals from Boston University, MIT, Harvard and other distinguished universities have
endorsed The Fair Tax
For more information on The Fair Tax: visit:
http://www.FairTax.org

Folks
Can anyone display a list of Warren Buffet's companies? I know he buys and sells often and I have had difficulty finding an up-to-date resource on the internet. I really don't wish to patronize him under any circumstances.

Please advise.

Tax Freedom Day
Tax Freedom Day in the USA is April 23.

Tax Freedom Day in Kanukistan is June 20.

That's the difference between capitalism and socialism in a nut shell.

Since we are making wishes
Tax Freedom Day is April 23 this year.

So...
Why not really make the point and just have all Americans pay every dime of the tax they 'owe' right up front until Tax Freedom Day.
This way you could work without pay for four months and really feel good about helping your government take care of everything.

On the other hand...

Instead of withholdings, I still think tax collectors should be required to set up tables on sidewalks outside of employers and retail establishments in order to collect the taxes from the people.

Then we could really see firsthand just how much people love "paying their fair share."

Rain or shine, hail, sleet, snow, and gloom of night: An IRS agent sitting at a table, calculating the taxable income portion of every paycheck, followed by someone from Health and Human Services to garnish the FICA portion, then a state collector, and finally a municipal revenuer to confiscate the city's portion of tax due.

Lastly, right outside the grocery store, the drug store, Wal-Mart and every single retail outlet sits a county sales tax collector to gather in those sales taxes.

Oh how I wish it could happen.

You know, if some politician really 'thinks' hard on this he could really sell it as a government jobs creation program.

sedonaman
It seems to me that liberals define "rich" as "anyone not receiving government assistance."

Amen!
I was thunderstricken that so many people think that their tax refund is a gift from the government. If they're that dumb, they have no business voting. I like AUDI's solution with tax day and election day back-to-back. That would get the point across!

BTW, McCain recently said we need to replace our tax "system" with either a flat tax or a national sales tax. Maybe there is hope for the man yet.

"The Rich"
It is true that only the rich pay income taxes. "The rich" have always been de facto considered those above the median. For those unfamiliar with the term, the median is the level at which half are above and half are below. If you look at the IRS data, you will see that the half who are above the median pay all the income taxes. They are "the rich".

"Only the rich"
It is true that only the rich pay income taxes. "The rich" have always been de facto considered those above the median. For those unfamiliar with the term, the median is the level at which half are above and half are below. If you look at the IRS data, you will see that the half who are above the median pay all the income taxes. They are "the rich".

FairTax: Shoveling money into the street
The "Fair Tax" is like shoveling money into the streets. The reason is the prebate is not a rebate instead.

Courts have ruled time and again that you cannot deny illegal aliens any benefit you give to legal residents and citizens. This proposal claims that if passed even illegal aliens “will pay taxes too.” So all the illegals will get a prebate check, somewhere just under $500 for a married couple.

Well, guess what. It won’t take the illegals long to figure out that they can live on $500 a month in Mexico without even having to work, and will just move back while arranging for their prebate checks to be direct-deposited in a bank here.

Then it won’t be long before word gets around Mexico that the US is shoveling money into its streets, and they all try to get here any way they can. Even if we stop them, those here will figure out a way to enroll all their relatives south of the border. Is there any Mexican national without at least one cousin in the US? Probably not.

We then end up supporting the whole population of Mexico. Brilliant.

Said it before
And I'll say it again Gates and Buffet are leftist hypocrites.They could pay more taxes if they wanted to,but they won't.These super rich dudes and dudettes (Oprah etc,)protect their wealth so they can be known as the number 2 or 4 richest people in the world it is purely a status symbol for them.I do not begrudge them yheir wealth,I just wish they would not be such hypocrites.

Withholding holiday - for the holidays
--
Suggests Mr. Towery:

"Or we could just do away with withholding for, say, one month a year. That way, we won't destroy national cash flow...."


This notion could become *VERY* popular both among working Americans and businesses (small and large) if that holiday month were begun shortly before Thanksgiving each year, so that the increase in immediately disposable cash hit the collective American wallet right around Black Friday.


Mr. Towery continues:

"If we stopped withholding for one or two pay periods, we'd probably see that 40 percent polling number [in support of 'increasing taxes on "the rich"'] drop. People would figure out quickly enough that they are being taxed, and how."


Because blunting the ability of the average taxpayer to perceive his/her own pain is the *PURPOSE* of payroll withholding, the bureaucrats and politicians would oppose such a holiday.

Setting it in the context of a sort of "Christmas Club" way of increasing liquidity in shoppers' hands at a critical time of the year for merchants and manufacturers, however, it should be possible to "sell" this idea more strongly in a time of recession (admitted or not), and thereby get the government goons to give in.


Changing the American sheeple's collective "mindset about taxes" is an entirely worthy objective, and should be pressed as cleverly and effectively as possible.




--------
"The less taxes, the better. Removing taxes removes money from the government. Removing money from the government removes power. A less powerful government is always a good thing."

--Frank Unibaum

End withholding? Great idea!
When my taxes were withheld from my check, I never knew just how much of my money was going to the government. After I became self-employed, I had to pay my own taxes. Believe me, that was a rude awakening!

The biggest disillusion was Social Security. If I didn't have to pay all those ridiculous Social Security taxes, I could afford a retirement plan that would pay some real benefits. But the government says I have to keep paying my SS taxes, or I'll get in serious trouble.

This is a "safety net"? It sounds more like a protection racket.

Most people don't know just how much the government is ripping them off. If they were forced to pay their own taxes for a change, there'd be such a national outcry that the government would be forced to enact some real reforms.

Fair Tax not fair enough
Fair Tax doesn't go far enough. There should be a strict 10% national sales tax on every purchase, no exceptions. No tax-exempt non-profits, including churches. No rebates. No other federal taxes. None.

That way, even the poor have a stake in the tax system and keeping taxes low. You don't want a situation where 51% of the population can vote to pay no taxes and to loot the productive 49%.

This is true fairness. You spend 50 times more than the next guy, you pay 50 times more taxes. Perfect fairness. Even then, few would gripe about paying 10%.

The poor, etc. need to rely on themselves, insurance, or voluntary charity. This is only cruel if you admit you would not help those in actual need or in emergency situations.

The ecnonomy would take off like a rocket, and, ironically, the biggest improvement would be to the standards of living of the working poor.

Klip
Many of my co-workers and myself are with you on the Fair Tax.

Taxing income is absurd. Taxing wealth thru consumption makes much more sense. What many people don't understand is how much more freedom they will acquire by giving the gov't THEIR MONEY ON THEIR TERMS!

My solution
(1) End all withholding, and require everyone to come up with the full amount owing the taxman by April 15th -- no extensions and no exceptions.

(2) Make Election Day April 16th.

FairTax please
FairTax is the only system that will "super tax" the "super rich"
and "zero tax" the poorest of our society.
FairTax needs pitchfork politics to get it front and center.
This is the CHANGE that DC needs.
Sign Up to Post Your CommentsSign Up to Post Your Comments
If you are already registered, click here to login. Otherwise, please take a few seconds to register with Townhall.com. Once you sign up, you’ll be able to post your comments immediately, use the action center, get podcasts, and more!
Note: Fields marked with a red asterisk (*) are required.
Salutation:
First Name:
*
Last Name:
*
Email:
*
Nickname:
*
Note: Nick name will be shown when you post comments.
Address 1:
*
Address 2:
City:
*
State:
*
Zip:
*
Phone:
      
Your daily must-read of conservative columns, cartoons and news. Coulter, Sowell, Krauthammer and more.
(Bi-Weekly) We highlight the best opportunities from our partners for surveys, action items and more.