taxes are painful

Paying taxes is painful.  Every year you have to give a significant amount of money to the government.  The problem, from the government’s point of view, is that very few people would actually save money for taxes.  So rather than pay taxes once a year, the government takes a chunk every payday, and settles once a year.

If you’re an employee, you don’t notice this so much, because the government takes its chunk before you ever see it.  Every spring we figure out how much we owe for the previous year, compare that amount to what the government actually took as the year went along, and then settle the difference, which hopefully is small.

If you’re self-employed, the government can’t get to your paychecks, so you have to be disciplined enough to set aside a little bit every time.  But Uncle Sam still won’t let you wait a whole year.  You have to file quarterly estimated returns and then settle the difference at the end of the year.

The self-employed certainly feel the pain more acutely than employees, but the financial impact is the same for both – a significant amount of money is going to the government.  To be fair, the government does some great things with that money.  Roads, schools, and police are services we all benefit from.  On the other hand, the government does some not-so-great things with that money.  We don’t need any more entitlement programs that teach people to be dependent rather than self-sufficient, for example.  Some might also point to over-bearing regulatory agencies and misguided wars.

So what can we do about it?  In the short term, really examine how much the government gets each paycheck.  Grab a W-4 from your employer and claim every exemption you are entitled to.  This will reduce Uncle Sam’s bite each paycheck and leave more available for you.  At the end of the year, you might not get a very large refund, but so what?  You’ve had more money all year long – to do with as you please.

In the long term, start thinking independently.  Pretend the government doesn’t exist and isn’t going to take care of you.  The fact is, the less we need the government, the less they’ll need our tax dollars.  Think about protecting yourself, feeding yourself, educating yourself (and your kids), and saving for your own retirement.  How could you do these things better?  How could you do them in a way that didn’t depend on the government?  Every time you have a chance to vote for or against a tax increase, don’t ask yourself if the new tax is for a worthy cause – of course it is.  Instead, ask yourself if the new tax will support a program that will make independent living a little more difficult.  Worthy cause or not, we do not need any new government agency to answer to.

In short, more taxes equals less freedom, not more.  Paying taxes is painful.

This article originally appeared in the April 16, 2008, edition of the Greenhorn Valley View.

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