O Tempora!

We often hear how hard it is to pay taxes. We pay taxes on just about everything – on our earnings, our property, our purchases, and even on certain services. Taxes eat up 30% to 50% of most household incomes. In this sense, the sense of proportion of taxes to our income, it is hard to pay taxes.

But our government has made it easy to collect taxes. This has the side effect of making it easy – in the sense of convenience – for us poor schmos to pay them. Income tax and Social Security/Medicare are withheld from our paychecks every pay period. Property taxes are generally collected by mortgage companies as add-ons to the loan payment. Sales taxes are collected with each purchase. We pay our taxes in nice little bites, so we don’t notice as much loss as if we had to pay in big lumps.

And that is precisely the problem: The government’s easy payment plans. I propose that paying taxes should be hard in both senses of the word. After all, tax also means “strain” or “burden”.

Federal withholding taxes began during World War II to make paying the huge cost of this conflict more acceptable. The Big One has been over for six decades, but federal withholding lingers on. It’s time for this to go, and time for the states to eliminate their easy payment plans, too.

The model for abolishing withholding already exists – quarterly payments for the self-employed. If you’re self-employed, you have to plunk down an estimate of the income tax you owe – and both halves of Social Security/Medicare. The income tax code just needs a minor tweak to make everybody “self-employed”. That is, employers would pay workers 100% of their salary, plus the 7.5% “employer half” of FICA. Workers would be required to manage their money so that they could pay their own taxes every quarter.

Property taxes are also a target for lumping up. This could be accomplished by state statutes requiring property taxes on financed properties to be paid directly by the mortgagor – the one paying the mortgage. Of course, mortgage companies would need some recourse for non-payment – that shouldn’t be hard to work out. Once again, the taxpayer would feel the pain of sending those hundreds or thousands of dollars to the bureaucrats.

Easy payment plans give the illusion of low cost to any product. The same is true for government, which has become stiflingly gigantic at all levels. Replacing some of the easy payment options will make taxpayers more aware of what the costs of legislation and regulation are.

This country was founded on distaste for taxes. Making taxes less palatable will create a real taxpayer revolt, which will lead to lower taxes and smaller government.