My series on taxes officially ended yesterday, but here’s a bonus entry submitted via e-mail by my college buddy David O’Nan:
Personally, although tax changes are needed badly, the first action that should be taken is to do away with withholding. Make every taxpayer pay a check to the government every month for taxes and another check for their FICA/etc (and quit allowing them to move surpluses from one to the other to hide their spending). It’s so “hidden” now that most only have general ideas and don’t feel the pain the same way they would if they consciously had to pay the taxes. And any changes are similarly “hidden.” If every time they made a change in taxes you had to change the amount you paid (up or down), everyone will know exactly the difference rather than relying on pundits and wonks and people with agendas to tell them a slanted view of the impact.
People will start to think twice about what they expect government to fix when they get slapped upside the head with the tax bill the first few times. Once that object lesson is learned, then you could make better headway in addressing some of the ridiculous stuff that doesn’t raise widespread ire because the consequences are out there in the ether somewhere.
In a separate e-mail, he wrote,
It would be a fun idea to implement, but even if someone has direct-deposit and banks online, they still get to see the impact on every bank statement (paper or online). Every taxpayer already has a taxpayer ID number so it can’t be any more difficult to track than tax returns. Have them pay their tax within a month of the paycheck (more than one paycheck a month, more than one tax payment and FICA payment a month).
I don’t know about having to write so many checks based on how many paychecks you get — for those of us with multiple jobs, that would be a real pain. But I do know that my tax burden became much more real when I started paying estimated taxes, since part of my income has no withholding and my income fluctuates from time to time. So with respect to making it more obvious just how much everyone is paying in taxes, David is certainly on to something.
Thanks, David, for sending that in and letting me post it!by