WALSH: America Could Be Transformed For The Better Overnight If We Made This Simple Change To Our Tax System


People have been whining over the past few weeks because their tax refund checks are lower than previous years. The media, of course, is more than happy to amplify these complaints. George Washington and Thomas Jefferson, meanwhile, weep in their graves.

Those who have even the most rudimentary understanding of our tax system will immediately see the problem here: a big tax refund is not a good thing. The check you get from the U.S. Treasury is not a gift or a bonus or a token of appreciation. It is not like picking a winning scratch off ticket or hitting cherries on a slot machine. It is your own money, which the government took from you during the year and is now returning without interest or even a “thank you” note.

If you get an especially large refund, that means the government took way more than it was owed out of your paycheck. Think of it like a loan you gave to Uncle Sam. Complaining about a small refund is like loaning someone 50 bucks and then complaining that he didn’t pay back 1,000. Considering this loan is taken without interest, you can only be returned exactly what you gave. If you want to get back 1,000, you have to give 1,000. But why would you prefer to loan the government 1,000 rather than keeping that money for yourself? You can store it in savings and make interest. You can invest it. You can put it towards a new deck. You can go to Disney World. You can do whatever you want with it. It’s your money. Again: if you’re upset about a smaller refund, that means you’re upset that you were able to keep more of your own money throughout the year. That is absurd. Not to mention un-American.

This is the consequence of the withholding system. Americans are handing ridiculous amounts of money over to the government but they don’t feel it. They don’t notice the money leaving their hands. The process is painless, way too painless. And because of this brilliant and insidious scheme by the government, many Americans actually love Tax Day. They are excited to file taxes because they know they’ll be getting money back. But the “back” part, for whatever reason, doesn’t register. So they leap for joy, grateful to have their money returned without interest. With regards to these pitiful people, one remembers that immortal line from Samuel Adams: “Crouch down and lick the hand that feeds you; May your chains set lightly upon you, and may posterity forget that you were our countrymen.”

The greatest trick the Devil ever pulled was convincing the world he doesn’t exist. The IRS has managed a similar feat. It takes our money by the truckload and convinces us to not only tolerate the appropriation but enjoy it. To many Americans, the IRS is a generous organization that sends us a belated Christmas bonus every year. No wonder the government spends trillions and wastes billions and nobody seems very bothered by it. It’s their own money being chucked down the pit, but all they notice is the crumbs they get back. The government takes the bread from our plates, flings a piece of crust in our direction, and we erupt with joy at our good fortune.

The only way to restore fiscal responsibility to government and sanity to the minds of our hand-licking countrymen is to abolish the withholding system. There are very few policy changes that would translate to massive and immediate societal change. This is one. The country would be transformed overnight, and for the better, if every American was forced to actually write a check to the government. “Spending,” “waste,” “debt,” “taxes” — these are just words to most of us. Abstract concepts. They would suddenly become much more than that if paying taxes actually meant paying taxes. Private companies shouldn’t be in the business of collecting taxes anyway. Our employers shouldn’t be the ones divvying out our checks. Let us do it. Let us feel it. If taxation became a palpable, tangible reality to every American, everything would be different.

This is not such a radical idea. After all, governments have been collecting taxes for millennia and the withholding system has only existed for a few decades. Back in the old days of tax collection, people used to violently revolt if taxes got too high. Our country was founded upon such a revolt. And it’s worth noting that the colonists carried a tax burden that was practically non-existent compared to ours. They wouldn’t tolerate a tax on tea. We have taxes on tea and on every other beverage, and on every other consumer product, and on every other thing we buy or rent or eat or do. We pay taxes every time we turn on a light or drive down the street. We pay taxes on everything all the time, and we tolerate it because the payments are always done automatically. As long as you don’t look too closely at your grocery receipt or rental car agreement or pay stub, you’ll hardly notice that Uncle Sam has you over a barrel.

All of this could be fixed by getting rid of the withholding system. Which is why it will never happen.

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