How you can resist funding the government →
other ways the government is funded →
dummies who over-withhold
If you expect a tax refund this year, that means you gave an interest-free loan to the U.S. government last year.
Unless you intend to be so generous, you should ask your employer to reduce the amount withheld from your paycheck by filing a new W-4 Form with additional allowances.
USA Today reports on Americans paying too much too early, and what it costs us:
Americans are enjoying their biggest tax refunds ever — and it’s costing them billions of dollars.
Taxpayers overpaid their federal income taxes by a record 29% in both and , according to a USA Today analysis of Internal Revenue Service data.
That has pushed refunds above $200 billion a year. Final figures aren’t in for , but the average refund so far is $2,423, up 4% from last year.…
The extra withholding gives the government an interest-free loan worth more than $10 billion a year, equal to about $100 per tax return.
“The deficit is a little smaller because of this voluntary tax,” says Leonard Burman, co-director of the Tax Policy Center in Washington.
You don’t need to help them take your money.
As the Wall Street Journal enthuses, federal tax revenue is coming in hand-over-fist so far this year:
In , overall revenue continued to surge, growing at an overall rate of 10.3%, or an $81 billion increase from the year ago period, to $871 billion.
That builds on the astonishing 15%, or $274 billion, revenue increase for , which various fiscal wisemen assured us would fall off dramatically.
Apparently not.
’s double-digit increase is roughly triple the rate of inflation, reflecting strong gains in business profits and individual wages and bonuses — both signs of a vibrant underlying economy.
Corporate income taxes are up 30% , while individual income tax payments have climbed by 10.3% .…
If you’re wondering why the alleged fiscal conservatives at the Journal are crowing about the magnificent swelling of the government coffers, well, it makes for another good occasion to call for cuts in capital gains taxes, doesn’t it?
Most Americans who file their income tax returns get a refund — more than $2,000 each on average.
Some families even come to rely on this refund as though it were some sort of “year-end bonus” or forced savings plan.
But when you think about it, it’s a sort of investment: you’re taking part of your paycheck each month and investing it in the government — and you’re getting a 0% return on your investment!
It’s an interest-free loan to Congress, and you don’t even get a “Thank You” card!
You can do better than an investment that’s a guaranteed loser and that supports Pentagon priorities and political pork.
Not only that, but the IRS is warning that it will probably be sending out refunds late this year because Congress and the White House still haven’t agreed on what the tax law is going to be.
This is from a series of pages on sources of federal war spending other than
the federal income tax and strategies that war tax resisters can use to reduce
their support of the government in these areas.
Over-Withholding
Many people have more money withheld from their wages for the federal income
tax than they owe. This means they get a refund when they file their tax
returns, but it also means that all year long they have been giving an
interest-free loan to the government: another source of government funding
that war tax resisters can work to interrupt.
Description
People who receive a wage from their American employers typically have
an estimated federal income tax amount deducted from their paychecks. People
who are self-employed are required to file quarterly tax returns that
include a portion of their estimated taxes for the year.
During tax filing season, people determine their actual tax liability
and compare this to the amount of estimated tax they paid through one of
these two methods. If they overpaid during the year, they get a refund; if
they underpaid they are supposed to cough up more.
Amount of this “Tax”
Most people overpay during the year, and so most people who file their tax
returns are filing for refunds. In , for instance, taxpayers overpaid their income taxes by 29% — some
$200 billion — and most received refunds that on average exceeded $2,000.
How Much the Government Collects
According to USA
Today, “The extra withholding gives the government an interest-free
loan worth more than $10 billion a year, equal to about $100 per tax return.”
That $10 billion a year isn’t the amount of money over-withheld, but the
amount of money the government saves by being able to borrow $200 billion
interest-free.
If it had to borrow those billions in some other way, it would have to pay
interest; but since it gets an interest-free loan from taxpayers, it has that
$10 billion to spend on other things (like the military).
How This Tax Is Collected
People have money withheld from their paychecks based on withholding formulas
and tables. The values in these formulas and tables are based on the number
of “allowances” the employee has selected on the W-4 form the employee
submitted to the employer. But the estimations in these tables are necessarily
oversimplifications of most people’s tax situation — they don’t take into
account many of the deductions and credits people may apply for. For this
reason, they are biased towards overwithholding.
For people who are self-employed, the situation is more complicated. A
self-employed person files estimated tax returns four times a year, and is
required to pay an amount based on the estimated tax owed for that year, but
bounded also by the actual tax owed in the previous year.
Are the Tax Receipts Earmarked?
The “receipts” from overwithholding are more virtual than real — it isn’t
actual government revenue but avoided government expense. These “receipts” are
earmarked in the sense that the excess money available to the government via
over-withholding is money that would otherwise be spent in interest on
government debt.
How Can You Resist This Tax?
Any actions you take to stop or to reduce withholding will reduce the likelihood that you will directly contribute to the over-withholding “tax.”
See the NWTRCC Practical War Tax Resistance pamphlet “Controlling Federal Income Tax Withholding” for detailed instructions on how to do this.
But beyond this, you can resist the over-withholding “tax” by encouraging
other people to change their W-4 forms so that they aren’t giving the
government an interest-free loan. This is something that makes good economic
sense for everyone, even for people who do not think of their taxes in terms
of activism or conscientious choice. The next time you hear someone brag
about the big tax refund they got, remind them that on the bottom-line this
means that they lost more money than they had to, and that it’s in their power
to fix this by adjusting their withholding.
