The end of the calendar year is near, and so begins the delightful task of getting our taxes in line.
Complicated tax forms, deductions, exemptions and a myriad of codes make the journey less than exciting. But as you are doing this, you should ask yourself: is our current tax system the best method of collecting revenue? I contend it is not.
In the mid-1800s, our government set up an agency to collect and control federal revenue. Although its humble beginnings were aimed at collecting money to fund the Civil War, the IRS has grown into a monster feared by all Americans.
Every year, the IRS collects trillions of dollars to keep our government funded. Based off of a tiered-bracket system, each taxpayer is required to give according to how much they earn, a principle embraced by Karl Marx.
So how does this distribution come out? According to data released by the IRS in September, the top 1 percent of taxpayers is paying 37 percent of our federal income taxes. In line with other recent studies, the top 10 percent of taxpayers is paying nearly two thirds of the total. On the other hand, the entire bottom half of taxpayers is covering a mere 3.5 percent.
Is that really fair?
I understand that the middle- and lower-class wage earners cannot afford to pay the same amounts as the upper class, but how can we as a capitalist nation penalize success with such taxes?
I believe it is immoral to base any tax system on how much a person earns. No one has the right to tell neither me nor anyone else in this country how much money I need and how much I don’t need. Doing so undermines the free market economy that our country’s success is based on.
Let me ask you one question: how much money did you give the government last year? I’m guessing you don’t really know. This is because of one of the IRS’s most genius creations: withholding.
In 1943, the IRS began this practice of taking more money than it needs from taxpayers then paying back the balance after it has had its share. While this may be a somewhat effective way of guaranteeing the need is met, it results in distracting taxpayers.
When you read my question, your first thought was about how much you got back from your refunds, wasn’t it? This is the problem!
The amount you got from that refund is not a gift from the government but rather a sly thank you for the interest-free loan you were forced to give Uncle Sam. That check represents the hard-earned money you made over the course of the year that you never saw, it’s just that now you are able to control it once again, and the whole time you didn’t bother to figure out how much you didn’t get back.
So think about how much money that refund check was. Could you have used that money in a better way over the last year rather than letting it sit in the government’s pocket, out of reach? Obviously, the answer is yes.
You could have invested it, let it sit in your bank and earn interest, or at least paid for all the Chipotle you have been enjoying.
All of these reasons and more ultimately beg the question that if this system is so bad, then what is the solution? If you want to know, meet me back here next Tuesday, when we will discuss the fair way to collect taxes.
Nick Hemenway is a senior mechanical engineering major. His column appears every Tuesday in the Collegian. Replies and feedback can be sent to firstname.lastname@example.org.