Stop complaining about taxes!

It’s tax season, and everyone is talking about refunds or how much they hate paying taxes.

To be honest, I don’t get the visceral hatred people have for paying taxes. I mean, it’s not my favorite thing to have 25% of my pay taken away from me, but I do enjoy interstate highways and the government paying the interest on my student loans while I’m in school and criminals serving time in prisons. Heck, I work for a government contractor!

I may not approve of everything my taxes pay for, and I may never get the benefit of all the services the government provides. I’ve resigned myself to not getting Social Security when I retire. I’m sure, however, that some things I like are hated by others, and vice versa. We all have to pay for each other’s crap.

And of course, the US has one of the lowest tax rates of any first-world country.  I’m not saying there is no waste or corruption.  But if you’ve ever complained about the status of healthcare or public education or about the amount of national debt,  you shouldn’t complain about taxes.

Sweden is recognized as having one of the best healthcare systems in the world.  But you’ll pay up to 55% of your salary to get it.

College is free in France, with a tax rate of up to 40%.

Personally, I think that the tax code is way too complex.  The best option would be a simple graduated tax rate.  If you earn $75,000 a year, you’re taxed on it.  No deductions for things like interest paid on your mortgage or charitable giving or hybrid cars.  If you pay for medical care or school, that’s a deduction, but hopefully the system could be improved so that healthcare and education are covered.

I don’t understand why it has to be so complicated.

Another thing I’d like to address is this widely-used bit of personal finance advice: “Don’t get a tax refund!  You’re giving an interest-free loan to the government.  If you put that money into a savings account at unrealistic X% interest, it would earn $inflated amount over 30 years!”

The average refund in 2008 was around $2400, or $200/month.  My ING account earns 2% interest.  Over the past year, my 401K has lost about 35%.

If you put that $200 into an ING account, you’d earn roughly $22 over the year.  At 3%, you’d get $33.   If you increased your allowances to offset your 401K contributions, you’re currently down about $1800 (assuming you did as well as I did).  Or, your cost of living swelled up to swallow that $200 every month and you have no savings and no refunds.

As always, do what works for you and accept that others do what works for them.  I find the debt snowball method to be sort of silly, but I understand that the psychological benefits outweigh the mathematically better method.  So stop mocking those of us who get the refunds and like it.


6 Responses

  1. I totally agree with you that we really shouldn’t be hating on paying our taxes. As Oliver Wendell Holmes said, “Taxes are the price we pay for civilized society.” I think the only reason why I would rather pay on 4/15 rather than over paying through the year is that I lose control of the money that I’ve overpaid. I have full confidence that our state and federal gov’t will refund tax overpayment but you sometimes get the California IOU situation. I feel bad for my co-worker who is stressing out since he was expecting to pay his property tax with his refund.

  2. Amen, sister! (…or something like that!)

  3. I like the debt snowball method, combined with lower interest rates. It’s what I did to my debt 🙂

    If not, I would have just paid the higher interest rate down.. but I do like the idea of focusing on ONE debt and then channeling the money to the other debts once the first one has been cleared. That, is the real crux of the snowball.

    I’d rather get money back than pay it. *sobs* I think I owe $7k this year…

    And our tax money goes to repairing roads, etc and I agree completely with the examples of Sweden and France (so does BF). Without that tax money, nothing would get done.

    We pay a lot of taxes in Canada as well especially in very Francophone Quebec (I am salivating over your U.S. tax rates), but I feel like we’re getting ripped off because the roads and bridges here in Quebec SUCK compared to Ontario, and I paid less taxes in Ontario. :\


  4. @ shtinnkykat: I feel so bad for your friend! I wish there was some way I could tell California that my refund can wait and that people like your friend should get theirs first. Luckily, I wasn’t thinking I’d get much – if anything – back.

    @FB: I see the appeal of the debt snowball, I just think I’d never be able to do it myself. I’d be calculating how much extra I was paying in interest…

  5. I don’t mind paying taxes either and with my income I pay quite a bit of them. But, here’s an alternate thought to your withholding/refund argument. What happens when the car breaks down in July and needs to be repaired, if you had the money in your ING account you could just pay for it. Instead you’re letting the gov’t have the money and you have to put the repairs on your credit card paying 15% interest. Cashflow is important too. Most people spend their refund, not save it for later.

  6. @ Miss M: That’s actually a really good point. I guess I’m sort of spoiled because I do have savings (and I save most of my refund, too) so that kind of situation had never crossed my mind!

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