Thursday, April 3, 2008

A Tax Season Proposal From NC Congresswoman Virginia Foxx

This great article is from an email sent by Congresswoman Foxx on 4/2/08.
A Tax Season Proposal: Giving you a choice on tax withholding
Tax Withholding Act repeals mandatory tax withholding

By Congresswoman Virginia Foxx

If you are a North Carolina taxpayer you probably just filed your taxes or will submit your return to the IRS any day now. What you might not know is that for most North Carolinians, federal taxes will skyrocket over the next five years if nothing is done to stop the planned increase.

The 2009 federal budget, which I voted against, includes a $683 billion tax increase over the next five years. That translates into an average tax hike of $2,672 for hard-working North Carolina taxpayers. At a time when average folks are tightening their belts we can ill-afford such a punitive tax increase on the middle-class.

As part of my fight against higher taxes, I am working to help North Carolina taxpayers see the real burden that federal taxes place on their personal budgets. Unfortunately, a major obstacle stands in the way of taxpayers realizing how much tax they pay. It’s a system called mandatory withholding.

Have you ever wondered why you never really write a check to “pay” taxes to the federal government? The federal government takes its share out of your paycheck before you ever lay eyes on the money you earned. This is the essence of withholding.

The withholding system has been in place since 1943. It was instituted in a time of war when the federal government was desperate for a constant funding stream to help pay for the unprecedented war effort of World War II. At the time it was viewed as a way to ensure the government collected every dollar of tax that it levied to pay for the fight against fascism.

This was a time of great national sacrifice when some Americans paid a top income tax rate of 94 percent. High rates of taxation helped to fund an Allied victory, but according to the Treasury Department it also increased federal tax receipts by 520 percent in four short years.

Unfortunately for you, a wartime tax collecting system proved a little too successful and it was not repealed at the end of the war. The government couldn’t kill a mechanism that disguised the true burden of income taxes and thus withholding became the status quo.

In the language of government-speak, withholding is “a way to make tax collection easier.” In real-world terms, it’s a clever way to hide the heavy toll you pay in taxes and, by extension, the cost of government.

This is the worst part about withholding. It silently drains your paycheck before it gets to you, distorting the tremendous bite that federal taxes take out of your earnings.

The thinking goes that if you never get your hands on your money in the first place, you’ll never miss it. That’s government logic for you. And it’s this kind of logic that also helps disguise the negative impact that tax hikes have on your wallet.

If you don’t actually have to feel the pain of writing a check to Uncle Sam each month you are desensitized to future tax increases. The money just slips out of your paycheck and into the embrace of the federal government.

I believe that you are a better steward of your money than the faceless government bureaucracy. That’s why I’ve introduced legislation that does away with mandatory tax withholding. With my bill you have a choice to continue using withholding or to pay once during tax season.

You’d be free to keep the money you earn and then pay the tax you owe on your actual income at the end of the year. Some people might be tempted to complain about losing a “tax refund.”

With my bill you don’t lose a tax refund, you gain control over your finances. After all, a tax refund is simply the federal government admitting it’s confiscated too much of your hard-earned cash. Why not keep it in your bank account and earn the interest yourself?

My bill is called the Federal Tax Withholding Act of 2008 (H.R. 5175). Please let me know what you think of this legislation. I’d be honored to hear your thoughts on this bill or your ideas for other ways to keep the federal government out of your pocketbook and from meddling in your life.

In fact, on Tax Day, April 15th, I’ll be hosting a telephone town-hall from 7pm to 8pm on the topic of taxes and spending. Any constituent can call in and participate by dialing 877-850-4133 and entering the pass-code FOXX (3699). I hope you’ll be able to take part.

Note: Virginia Foxx is a United States Representative from North Carolina’s Fifth Congressional District. You may contact her office toll free at 1-866-677-8968 or e-mail her from her website, www.foxx.house.gov.

1 comment:

Anonymous said...

Withholding is like a cancer.
But a better suggestion is for the government at every level to send us a bill detailing exactly what they propose to do with our money.
Let us see how much for a teapot museum, golf courses, and military chaplains - then let our public servants hear from "the governed" on how they are using OUR money.
Jerry Cohen, Asheville NC