I may have become a full-fledged anarchist today. Well, maybe not, but right now, I’m not a very happy camper. Why? Well, call it “looking ahead to April 15”.
Today was a “snow day” here in Nebraska, and while I had a lot of things I could have done while the kids were fighting, reading, playing in the snow, etc., I made the mistake of deciding to do a first run at calculating our taxes.
Now, without going into specifics, I should probably make a few things clear.
- My husband is a general practice/family physician. I will not pretend that we don’t have a higher than average income. I will, however, say that we have a significant mortgage; my husband drives a 1999 Durango with 180,000 miles on it; I drive a 2004 minivan with 150,000 miles; we’ve got two kids at home; we helped pay for my oldest daughter’s wedding last year; we’ve got consumer debt that we’re trying to pay off; we’ve got some parent student loans from our oldest daughter’s college years that we’re working our way through, etc. We try to take a larger vacation about every other year, and settle for long weekends or non-major trips in the off years. In other words, while some might look at our gross income and say that we were quite well off, if they looked at our bank accounts, they’d see that we’re paying our bills, and occasionally able to save a little.
- Our income in 2012 was higher than in 2011. I taught a few more classes, and my husband had a very busy year (which in doctor terms means 12 hour days aren’t unusual, late nights aren’t unusual, weekends are common), and had some extra dollars come in via his performance incentives that he gets at work for working more and seeing more patients. He’s a salaried employee for his base income, and gets incentive payouts twice a year based on estimated levels above and beyond a benchmark figure. All income that we have is subject to withholding.
- Last year (2011), our taxable income less our itemized deductions netted us a small refund on our taxes. This year, our taxable income less our itemized deductions (both of which went up—we had more money, so we gave more to charity) results in us OWING the IRS roughly the amount equivalent to the increase in income this year. In other words, not enough was withheld, and all that “extra” we made, is going back to the feds (and a bit more of it to the state, who we’ll owe some money to, as well).
Now, I could complain (oh, I guess I am!) that our tax system stinks. This “problem” of making more money obviously isn’t going to affect everyone in the way that it affects us. We happened to hit one of those benchmarks where all of a sudden you’re paying more. But you know, I have to think carefully about whether it makes sense for me to keep teaching part-time, because for all intents and purposes, every cent that I earned last year will go toward paying the remainder of our tax bill this year. EVERY CENT, and then some.
Is that the end of the world? No, probably not. Fortunately, my husband’s performance incentive for the last half of last year was paid a few weeks ago, so we’ll have the money available to write a check when the time comes (but I have this rather bad attitude—if we OWE money, I’ll wait till after the first of April to file—no sense in letting them have MY money any earlier than I have to). But as I started working my way through our taxes today, I started feeling ill, as I had this realization that our income taxes alone this year would have been enough for us to buy a new or a couple of newer cars, without borrowing the money and adding to our monthly payments. It would have been enough for us to replace some of those kitchen appliances that are now 10 years old and starting to need replacing. It would have been enough for us to pay off our second mortgage and then some. It would have been enough for us pay off virtually all of the consumer debt that we’ve got.
Our income tax payment—and the income tax payments of everyone—represents money that really doesn’t seem to be helping the economy all that much; it represents money that someone has earned, but is not entitled to spend as they see fit—in ways that—through consumerism or investment, would likely have helped put others to work and keep some businesses open. It makes me wonder whether we should work so hard for that “little extra”—especially when that “little extra” isn’t going to be ours anyway. And it also goes to prove, I think, that taxes can be a disincentive to work, for some anyway.
We’ll pay our taxes—we always do—although we won’t be happy about it. It’s been a while, though, since we’ve had to write a big check to Uncle Sam—back in the days when my husband was moonlighting and no taxes were being withheld from that pay. But I’m a fine example of what’s wrong with withholding taxes: when we never see the money—or when we get some little bit back after having it withheld all year—it’s not nearly so painful, nor so likely to inspire resentment; but when you’re faced with writing a check for a significant chunk of change, and you think of all the things you might have done to make yours and your family’s life a little more pleasant this year (or how much more we might have given to our church or other good causes), well, it changes (or in my case, confirms) your opinion of a government that spends more than it brings in every year already, and just demands more and more all the time.