No Refunds? No God-damned Taxes!
February 17, 2009 By: Kvatch Category: California, Government, Protest
About three weeks ago, as California’s budget crisis deepened, the state announced that it was going to stop paying income tax refunds. On Monday, Kansas announced that it would do the same.
Now let’s be absolutely crystalline clear on this issue: A tax refund is not some kind of bonus. It’s not a stimulus check. Not welfare! It belongs to the taxpayer. In fact, it’s not much more than a loan that the unwitting taxpayer has made to their state, and as such the government HAS NO GOD-DAMNED RIGHT TO THE MONEY! Any state that decides to hold back income tax refunds is engaging in fraud, and that state’s officials—from the governor on down—should be arrested, tried, convicted, and thrown in jail!
Of course jail-time for our elected thieves isn’t likely. So may I humbly suggest that a state that engages in that kind of fraud doesn’t deserve our tax dollars, and we should all simply stop paying our taxes. “But Kvatch,” you might say, “…I don’t want to end up in jail myself!” Quite right! And with that in mind I present (once again) Kvatch’s handy dandy tax protest methodology:
Start by submitting a new W-4 listing 100 allowances. (That’s for federal taxes. You’ll need an additional form for your state.). The effect of this is to reduce you tax withholding to practically nothing for the remainder of the year. You should then take all that saved money and invest it in some conservative monetary instrument like a CD. Then…in January of the following year make one “quarterly” payment that covers your entire tax burden for the previous year and use your capital gains to cover any penalties.
Though claiming excessive allowances is not illegal—many taxpayers must do it to get their withholding set correctly—it’s also not exactly legal. The idea is to cause a steep, temporary drop in revenue, the kind that will throw your state’s comptroller into a tizzy. A second advantage is that, if you get really pissed off at your state’s shenanigans…well…you’ve still got a hold of all that money and can decide if you want to pay your taxes at all.
February 18th, 2009 at 5:05 am
It sounds totally illegal to withhold tax refunds. I don’t think it’ll stand up to a federal court challenge. And doing what you describe is probably what everyone will do if states stop refunding overpaid taxes. A lot of people take fewer deductions than they’re entitled to so as to be sure they won’t own at the end of the year. Won’t be doing that anymore. If you just save it and pay up when you file your return I don’t even see why there’d be a penalty.
February 18th, 2009 at 9:37 am
@zenyenta
Unfortunately, if you owe enough at the end of the year, the government gets to charge you a penalty for underpaying.
They consider it interest on the money you withheld from them.
BUT they don’t give us interest when they’re the ones not paying on time.
February 18th, 2009 at 10:44 am
Sounds like too much work, Kvatch. This is why I rob banks.
February 18th, 2009 at 10:48 am
So the State’s logic goes something like this, “We don’t have the money to pay all of our bills, so we’re keeping yours.” That didn’t work so well for homeowners in foreclosure and those people who lost their jobs. Why is government allowed to get away with this bullshit? I am sick to death of having everyone’s hand in my pocket!
February 18th, 2009 at 11:06 am
Zenyenta… The only sensible course w.r.t. taxes is to end up owing the government money at the end of the year. Moreover, don’t pay any taxes you don’t have to. The Frogette and I have large quarterly payments that cover the majority of our tax burden. Unfortunately, quarterlies are the law. If you pay in one chunk you’ll owe penalties for underpayment (as Robert points out) and penalties for not making the quarterly payment. But… the interest you earn should cover the penalties.
Robert… You can get smacked with a penalty even if you overpay by 10%. How’s that for adding insult to injury?
February 18th, 2009 at 11:07 am
Randal… Yeah, I hear ya’. But you want to talk stiff penalties…
Frogette… Unfortunately, until someone challenges the state in court, they can do just about anything they want.
February 18th, 2009 at 11:46 am
How about a great big shoutout to all those Republicans who forced the Dems to cut billions from the stimulus bill for state aid.
February 18th, 2009 at 3:40 pm
Several years ago, during California’s annual budget stalemate, they were talking about using IOUs to pay people’s tax refunds. But the canceled that idea after too many people said that the following year they’d use those same IOUs to pay their taxes.
February 19th, 2009 at 8:59 am
Abi… And another for all the Republicans in states like Texas and South Carolina that say they’re going to forgo bailout funding ‘on principle’. SHEESH!
Tom… I’ve been thinking that maybe California residents should set up a ‘tax exchange’. I’m going to owe money this year and am thinking that I’ll just pay it out as the refunds to the first ‘X’ people who apply (plus a small nominal ‘handling’ fee).
February 19th, 2009 at 11:14 am
I wouldn’t worry about going to jail too much. If California can’t afford to send out tax refunds, they’ll never be able to pay to keep you locked up. ;-)
What a screwed up mess this country has become.