"All that mankind has done, thought, gained or been: it is lying as in magic preservation in the pages of books."
-Thomas Carlyle

by Paul Lytle

I've been putting off my taxes a while for two reasons. The first is that I was on vacation the week before the dreaded April 15, so I knew that I would have time to work on it. The second is that I knew I would have to write out a nice big check, and I didn't want the IRS to have my money any sooner than the last possible second.

My total income tax this year was $4,149.00. You know, on paper it doesn't sound like that much, except that my wife and I are not millionaires. That number represents almost a whole year of student loan payments, and more than that in car loan payments. $4,149.00 would pay our mortgage for three months. It would pay for my schooling for almost a full year. That includes books. This could have been the seed money for one of several small businesses I would like to start, but cannot because I simply do not have the funding.

In essence, $4,149.00 is not something that we can afford. Of course, money has been taken out of our paychecks every two weeks, so the check I have to write is not that much. But we just bought a house. After closing costs, moving expenses, and connection fees, I am rather tapped out. I guess I could have put off buying the house, but that's not really what we want, is it? We don't want our citizens having to put things off another year, or just staying in the smaller place with the junk car.

To pay for this tax, I could spread the amount out in payments, but the government charges extra fees for that, not to mention interest. I could put it on the credit card, with another fee, but I'm not able to pay off the credit card to begin with because of this $4,149.00.

Basically, my wife and I are going to be in a financial bind for the next several months because of the $4,149.00 that government is forcing from me. Do you think that this may be the reason that our Founders forbid the government from collecting an income tax?

I've already listed some things that I could have done with the money. Any one of those would help me, a man just now emerging into the confines of "middle class," secure my future and provide for my family. Paying down my debt today would allow me to save in the future. Instead, my debt remains, and will remain longer because I do not have the means to get rid of it yet.

Well, perhaps I am exaggerating my intentions here. I would like to pay down my debt, but I doubt all $4,149.00 would have been used for that. Maybe I would have bought some DVDs or gone out to eat more often. Or perhaps I would have used that last ten percent of my income right now taken away to build a new house rather than buying an older one, as I did. Perhaps it would have been a bigger house. Perhaps I would have taken my wife on a trip. As it is, we could only afford one driving trip over a three-day weekend in 2005.

But even if I had followed one of these slightly less noble paths, what would have happened? If I had spent my $4,149.00 at Best Buy on DVDs, and other people spent their $4,149.00 there too, then Best Buy would have to hire extra staff to tend to the sudden influx of customers. If I had built a house, I would have provided a few months worth of work for a construction crew. If I had gone on a trip, there would be more work in the tourism industry.

You see, money begets money. Wealth helps others to become wealthy. It is natural. Even if you are a miser and hoard your money in a bank, that bank, its employees, and its stock holders benefit. If you spend it, then those people who then receive it become more wealthy, and they will pass it on at the next store.

And the more noble causes? I am a sensible guy, who likes to save and invest, so perhaps I would have paid on my car. That money to that cause would mean several years less in paying that bill. When the bill does end, that is an extra three hundred dollars a month that can go into savings. Even at a measly four percent interest, that three hundred dollars would turn into over a hundred thousand in twenty years. Twenty years! I won't even be retired by that point. In thirty-five years at eight percent interest, we are talking about almost $700,000.

That $4,149.00 alone, without adding next year's $4,149.00, or the next, will turn into over sixty grand in thirty-five years.

What if I were to build that small business? Not only would I provide jobs in the local economy, but it may be that I strike it big. What if I became a success?

The wealthy do not pay this income tax, despite what the politicians try to tell you. There is no "wealth tax." If Bill Gates stopped working and put all of his money in a cash room at his house, he would not pay a cent more in income tax. Meanwhile, I am paying $4,149.00 more than I can afford. I am living in a poorer neighborhood, have more debt, less stuff, struggling to meet this month's bills because this year the government wants $4,149.00 of my money. Next year it will likely be a little more. And it keeps going.

Of course, there will be people out there, looking at my little tirade and think, "Goodness, Paul really needs help! The money does not go into a black hole. It is not spent on your house, perhaps, but it is spent, so we can't really pretend that the money disappears."

These people are obviously right in a way, but there is a distinct difference here. When I spend my money, I create jobs. When the government takes money, jobs are lost. When corporations have to spend millions to pay taxes, then they cannot build that new department everyone would like. Or perhaps they have to downsize because profits have not been good. So some guy who was making thirty thousand a year loses his job. That thirty grand goes to the government, where a big chunk of it is taken out in bureaucracy. When it comes out, it is given to that guy who lost his job as unemployment — maybe fifteen thousand of it.

The problem here is that someone who was contributing to the economy, adding to the Gross National Product, is now making less is a weaker economy!

No, that is not worth $4,149.00 to me.

It gets worse. That was only income tax. In Social Security we paid $3,220.80. In Medicare we paid $753.28. The total we paid in direct Federal taxes is $8,123.08. Let's not even get into property taxes for now. What about sales taxes? I cannot even begin to compute what we paid there. What about taxes on gasoline? How many people are liking those gas prices right now? My own study showed that gas companies make less than ten cents on a gallon of gas while governments, state and federal, make around fifty cents in taxes!* Phone service? What is the cost of government fees, restrictions, and codes? What portion of my income has the government claimed as its own? What could our economy be like if we had that money back?

How much did you pay this year? And don't give me that "I got a refund, so I didn't pay anything" nonsense. On the 1040 form, look at line 44, which is your tax before subtracting your withholding. What's the number? What could you have done with that money? I seriously want you to write to the magazine and tell me. Tell me exactly how much would have been put into the economy had the government not stepped in.

Here is the truth: The reason that people in this country cannot afford basic services, the reason that companies are getting rid of health care plans and pensions, and the reason that we cannot get financially ahead is because the government will not let us. An income tax does nothing but insure that regular people have a terrible time becoming rich. Now we have a crisis in this country — people are without health care. They need food stamps, welfare, and disability. The solution, we are told, is government. Government will come in and save us.

But, after government saves me, that $4,149.00 is going to be a lot more, isn't it? I wonder what I will do without it next year.

* Those who want to see the results of this research can visit my report, "The last word on gas prices." BACK

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