(Mike Maharrey, Money Metals News Service) They say nothing is certain but death and taxes. No matter what you do, the Grim Reaper and the taxman always show up eventually.
Well, folks, it’s April 15.
And the Taxman cometh.
Again.
I guess that’s better than the Grim Reaper. Of course, he only shows up once. The Taxman makes an annual appearance.
Come to think of it, maybe they are the same person! I mean, have we ever seen them in the same room together?
Something to think about.
Anyway, I’ve been dreading this day for a long time. It means I’m going to have to write a big check, and my bank account balance will be significantly smaller tonight than it is right now.
Of course, for a lot of people, tax season is great – or at least they think it is. It means they get a big fat check from the government because they get a refund. In fact, most of those folks probably filed a long time ago in anticipation of their little windfall. But I’m self-employed. That means I write checks. No windfall for me.
The withholding system was a brilliant move by the government. It’s like anesthesia. It deadens the pain of taxation. Most people have no idea how much money the government takes from them. Their employer just siphons it out of their pay and sends it to the IRS. And then they get a refund. I think a lot of people view this as a gift from government. They certainly don’t feel the pain.
But let me tell you; writing a check is painful.
For all of you people who got a big refund, I’m going to let you in on a little secret. You’re getting ripped off too. They just hide it from you.
In fact, they get you with a double whammy.
Not only does the IRS suck money out of your paycheck that you never see, but you also pay the inflation tax every time you go to the grocery store or gas station.
That’s right. Inflation is a tax.
The Federal Reserve enables the federal government to borrow and spend far more than it otherwise could by buying some of the bonds the government issues. (This process is known as quantitative easing or QE.) It buys these Treasuries with money created out of thin air. This is, by definition, inflation. One of the symptoms of inflation is rising consumer prices. So, when you pay more for everything due to inflation, you’re effectively being taxed on the money the federal government borrowed.
But hey, that’s the price you pay to live in a civilized society, right?
At least that’s what “they” say.
But you know, I have questions.
How does taking money from me essentially at gunpoint make society more “civilized?” I mean, isn’t that kind of like stealing? Or maybe extortion is a better word. Whatever label you want to put on it, I wouldn’t call stealing or extortion civilized. In fact, it’s kind of the opposite of civilized.
But I’m supposed to understand that the government is going to take its ill-gotten gains and make the world a better place. That supposedly justifies the extortion and theft. I should feel good about it! I’m a good citizen!
Sure. That sounds good in a political speech, or maybe coming from a civics teacher, but it’s propaganda spin.
And by propaganda spin, I mean utter BS.
Think about it; given the price tag, we should have reached the pinnacle of civilization by this point.
I think we got hosed.
Here’s the truth: taxation is the price we pay for an overreaching, unconstitutional government. (And a lot of killing and wars.)
In Federalist #45, James Madison explained that the federal government was intended to be rather small. He wrote, “The powers delegated by the proposed Constitution to the federal government are few and defined. Those which are to remain in the State governments are numerous and indefinite.”
We’ve flipped the system on its head. As a result, we have to hand over a chunk of our income to the IRS, pay an inflation tax, and the federal government is still running massive deficits month after month.
If the federal government operated the way Madison said it should, we wouldn’t be in this situation.
But here we are.
So, the tax man cometh – over and over and over again.
Reggae artist Lucky Dube gets it. He performed a song called “Taxman.” The lyrics are poignant.
I pay my gardener to clean up my garden
I pay my doctor to check out da other ting
I pay my lawyer to fight for my rights
And I pay my bodyguard to guard my body
There’s only one man I pay
But I don’t know what I’m paying for
I’m talking about the taxman
I’m talking about the taxman
I’m talking about the taxman
What have you done for me lately?
Mr. Taxman
What have you done for me lately?
Mr. Taxman
What have you done for me lately?
Mr. Taxman
What have you done for me lately?
Mr. Taxman
You take from the rich, take from the poor
You even take from me, can’t understand it now
I pay for the police to, err…I don’t know why
‘Cause if my dollar was good enough
There wouldn’t be so much crime in the streets
They tell me you’re a fat man
And you always take and never give
What have you done for me lately?
Mr. Taxman
Good question. What have you done for me?
Not much.
I mean, sure, we have roads. But have you driven through Ohio lately? It’s not exactly a ringing endorsement for taxation.
But what about schools?
Yeah. OK. Go talk to some public school students. Also, not a ringing endorsement.
But hey, I’ve sent billions of dollars to Ukraine to help with the civilizing going on over there.
You get the picture.
So, whether you’re writing a check or spending your refund, give Lucky Dube’s song some thought.
I think you’ll come to a similar conclusion – Mr. Taxman ain’t doing much for us.
Mike Maharrey is a journalist and market analyst for MoneyMetals.com with over a decade of experience in precious metals. He holds a BS in accounting from the University of Kentucky and a BA in journalism from the University of South Florida.
