Article Parses "Tax Myths"

An interesting recent article in the Washington Post by Roberton Williams and Rosanne Altshuler of the Tax Policy Institute addresses five of what the authors perceive as "tax myths".

Some of the myths the authors discuss are complete canards, while others have real merit.

"Myth #1 - The poorest and the richest Americans pay no taxes."

Here the authors argue that the poor pay significant amounts of tax in the form of Medicare, Social Security, use taxes, etc. However, I'm not aware of any observer who thinks the poor pay "no taxes". Rather, the argument is that they pay no income taxes, which in many ways allows them to vote en masse for various tax benefits at the federal and state level without actually have to contribute in any real manner to the costs themselves.

"Myth #2 - Americans are overtaxed."

The authors contend "that other developed countries collect even more" taxes than the U.S. The authors are clearly wrong on this point, but in fairness they appear to be arguing that other countries collect taxes at higher rates than the U.S. or as a higher percentage of GDP, even if their total tax haul is actually far less than what the U.S. federal brings in annually.

Bottom line: the fact that other countries choose to tax themselves to death is not evidence that the U.S. itself is not similarly over-taxed; rather it just proves that other countries seemingly want to tax themselves into Socialist oblivion.

"Myth #3 - Higher taxes could eliminate the federal deficit."

On this point I have no argument with the authors. It's apparent that imposing more and more taxes on Americans will result in less economic activity overall, which would have the effect of decreasing total tax receipts, not increasing them.

"Myth #4 - Most people's tax returns are way too complicated."

Again, the author's resort to a straw-man argument. The U.S. tax code is too complicated, with too much social engineering being run through it in the form of tax credits, exemptions, etc. The surging business at H&R Block, Liberty Tax Service, as well as independent CPA firms, attests to the fact that for a lot of Americans, tax returns are too complicated to complete on your own.

"Myth #5 - You should aim for a big tax refund."

The authors argue that the prevailing myth that looks favorably on a big refund from Uncle Sam come tax return filing time is a more or less a scam. I agree completely. Better to owe the government a little money when you file your return, so that you know you had access to every last dollar you were entitled to throughout the prior year, than to get a big refund which means you lent your hard-earned money out on an interest-free basis.