Wednesday, January 10, 2018

Taxes - The IRS Quandry

The IRS is facing its first big challenge implementing the new tax law: deciding how much in taxes to withhold from millions of Americans’ paychecks.
The agency is under pressure to take as little as possible so people will see big increases in their take-home pay ahead of this year’s midterm elections.
But that would come at a cost: smaller or even nonexistent refunds next year, though millions rely on them to plug holes in their family budgets. Democrats are already accusing the Trump administration of plotting "phantom windfalls" ahead of the November contest that will come back to haunt taxpayers next tax season.
Don't get me started on the IRS or Withholding.  I've long been of the opinion that we won't get true tax reform until withholding is abolished.   When taxpayers have to start writing quarterly checks to the Treasury quarterly, then you'll see a general tax revolt.  People will demand extreme austerity form the government, and many welfare entitlements will just dry up and blow away.

Yes, I know that withholding is relatively painless, and that many people count on a tax refund during the first quarter of the year to help balance their budgets or provide a small windfall for projects.  But, that's money that the government has used interest-fee for several months.   Just because something is painless doesn't mean that it's good for you.


Javahead said...

I must be an extreme out-lier. My wife and I try to arrange our withholding to generate as small a return as possible, or to owe them a small enough amount that it does not trigger a penalty.

And I'd *prefer* a system where we make quarterly payments.

Of course, I already think that we should eliminate, oh, 50% or more of what the Federal Gov't spends money on, and if we keep Income Taxes should further simplify to a from-the-first-dollar, no-deductions, single-rate system. So I guess I'm already a wee bit out of step with mainstream thought.

BobF said...

I have never understood why so many people prefer to give the US Government an interest-free loan during every day of the year. And when I think of some of the people the government is giving that money to every day of the year the picture gets even worse.