Should I Refuse My Tax Refund?

Should I refuse to accept my tax “refund”, yes or no?

It is not really a refund.  Since I have children, I get the Earned Income Credit.  Free money.

Harry Dexter White suggested that I take my refund and then give it to the richest person I know, since the money is coming from the taxes that rich people pay.  This is a novel idea.  Do you have a better one?

You may think I am joking, but I am genuinely having a little moral dilemma here.  I can use the money.  There is no one who can’t use the money.  But should I use it? (I am constantly asking myself what I should do.)  I’ve taken the refund before, but after a certain number of conversations with Mr. Harry Tuttle, I have begun to feel a bit like a leech for doing so. (Not that Mr. Tuttle called me a leech.)

The problem is, I can’t see who it would help to not take it.  Like many “sticking to principles” actions, the benefits are spiritual.  The good result that I can forsee would be that I would be able to say to myself, and to Mr. Tuttle or anyone else who feels that our tax structure is unfair to the well-off and the middle classes, that he didn’t pay my “refund.” I accepted no handout from the government.   They are not paying me for anything.  I owe them nothing.  Their handouts are not affecting my desire or ability to be a productive citizen.

Friends have argued that we (my wife and I) are good people.  We deserve it, or at least we will put it to good use.  We are better stewards of that money than the government.  The government is going to take all sorts of money from me over the course of my life – I should take what I can get.  I wish all of these arguments convinced me that I should take it, but they don’t.  Because they don’t really address the issue of whose money it is.

However, if I do succeed in convincing myself that taking the refund is the right thing to do, here is the argument I might use:

There is no such thing as a “fair” tax structure, and if there is, I don’t know what it is.  (Perhaps a taxes-by-donation setup, like a church.) There is no possible way to spend all taxes in a way that pleases all of the people who pay the taxes.  Fair doesn’t exist.  It is the duty of the government to spend the taxes in a way that will most help the common good.  Giving some of that money to M. Ragazzo may or may not benefit the common good.  (Actually, I am such a blessing to humanity that helping me is helping the world.)  But that is what our governement is choosing to do.  The thing I should be having a dilemma about is not whether or not to take the money, but what to do with it when I get it.  I didn’t ask for the money.  It is not as if I am going to the government and applying for a handout instead of for a job.  It is something that is just coming to me.

So that might be my argument.  I am not completely convinced yet.  I talked about taxes with Mr.Tuttle a little last night.  He wants everyone to pay for what he uses.  He says that government is a service, or a store.  If you don’t pay, you don’t get the goods.  You shouldn’t get service.

Harry Tuttle wants each person to earn his keep.  I agree that it is a sin to bury talent, to not work, to squander time and wealth.  And a handout to someone who is already squandering what he already has probably doesn’t help him.  I have seen how handouts hurt people and keep them dependent.  Perhaps my yearly check from the IRS hurts me.

But none of us earn our keep.  We are given life as a free gift.  From the moment we are born we receive and receive and receive without earning any of it.  When we grow to adulthood we continue to receive and benefit from all the free training, love and care and good genes we were given as children.  Even a wild caveman who hunts for a living does not earn his keep.  He did not make the deer, he merely kills and eats them.  He works, but he doesn’t earn.  No matter what we do or how hard we work, there is nothing we have that did not start out as a gift.

In my family, we expect more from our daughter who is older, and less from her younger sister.  We expect nothing from the two-week old baby.  None of my children earn their keep.  But they help, according to their abilities.  It is not fair.  Sometimes the younger sister takes advantage of the fact that we expect less from her and she torments her older sister.  Sometimes the older sister takes uses her superior strength and experience to get what she wants from her younger sister.  We try to give each of them as much freedom as they can safely  handle.  We try not to intervene in every little dispute they have.  We respect their property rights.  Each of them has belongings that they are not required to share, but they do learn that they must share as a general rule.  Ultimately, we all share everything.

I don’t know that a country can be, or should be run just like a family, but it’s something I’ve thought about.  In a family, some pay more than others.  Some get more than others.  But everyone contributes according to their gifts.  Even the newborn baby contributes.  He is our entertainment.

– M. Ragazzo

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10 responses to “Should I Refuse My Tax Refund?

  1. M. Ragazzo,

    I’m going to step in and help with your moral dilemma. Send me the money. I’m probably better equipped to deal with the angst.

    Disclaimer: I haven’t read the comments, but I felt your pain and wanted to help.
    Disclaimer 2: all or a portion of your contribution to me could be used to upgrade my TV viewing equipment.
    Disclaimer 3: it will actually go to tuition for my son by offsetting any investment I might have made in equipment
    Disclaimer 4: I don’t claim to be a good person
    Disclaimer 5: If it is above the tax free annual gift amount ($ 10k?) will you help me with the additional taxes I must pay?

    • Thank you, MX, for your interest. We are glad that folks like you want to help. Your application is being considered. I have a couple of questions:

      1. Where is your son attending school?
      2. Does he have your old TV equipment in his dorm room?

      In response to Disclaimer #5, the amount is significantly less than $10k. At least, it has been in the past. We just had baby number 3 though. I am not sure what, if anything, that will do to the numbers.

      • M R,

        Always a pleasure to interact with you.

        1. My son is attending Rowan University in Glassboro, NJ.
        2. He has no TV facilities in his dorm room.

        He is a Senior in standing, but has about 3 semesters to go due to changing majors/schools. He wants to be a high school English teacher because, “I’ve experienced so many bad teachers and kids don’t deserve bad teachers.” I’ve always encouraged my sons to do what they love, so I’m okay with it. He’s also gifted at English.

        Congratulations on your growing family. It’s an exciting time in life. My boys are older (23 and 25), so I’ve changed my last diaper (no one leaves Grandpa alone with a baby…no grandkids here or on the way yet). Just to you don’t think I’m creaking around the place, I turned 50 this year (so I’m not quite ancient yet).

        Mysterious X

      • MX,

        Congratulations on having such a great son and for encouraging him to do what he loves. A teacher who loves what he does is priceless. I certainly have never forgotten the few that I’ve had. I admire what he is doing and sometimes consider changing directions to do something like that myself. But I do love making music and going back to school sounds oh so tedious.

        Best,

        MR

  2. 17% eh? Well, well, well. So you pay less than your share as well…I guess that rules out you as a candidate for me to give my refund to doesn’t it? Bummer. I was seriously considering it.

    Other points:
    I wrote in Ron Paul in my presidential vote last election. Hope that helps.

    Also, I’ve thought about your question last night. You asked whether I feel I’ve been co-opted if I accept the refund. The answer is no, I think. Receiving or not receiving the refund doesn’t change my level of productivity as far as I can detect. Like I mentioned in the post, I did not go looking for this refund and I do work. If I did not work, I wouldn’t receive this negative tax. And actually, at my current income level I would get a bigger negative tax if I made more money each year. I’m not arguing that the refund is right or wrong here, I’m just saying that I don’t think receiving it would make me lazier.

    Another interesting thing about this negative tax is that you have to have kids to get it. There is some logic to this. Someday, my kids will be working in this world, supporting the people who weren’t blessed and burdened with children.

    All of this thought about income and taxes really makes me ponder my income as well. I work all year. I make very little money. My tax return would baffle some folks. However, one of these days I will calculate the dollar value of all the work I do on the ol’ homestead and publish it in a post. Then the IRS will read it and decide they had better start taxing us a bit differently.

    So your answer is: No, don’t accept the refund.
    Is that your final answer, Mr. Tuttle?

    • M:

      Final answer? Hmmmm. OK, here goes. No, don’t return the refund. (BTW, I think you’re just trying to confuse me now.) What you do with it is another question. (I regret that I’m now ineligible as a recipient. I’ll be happy to suggest alternatives, ha, ha.)

      I can’t blame anyone for things outside of their control. I’m just postulating that the system we have is generally destructive.

      As far as the child credits go, I do understand (and, as a part-time demographer, actually appreciate) the argument. I still don’t want the government engaged in that type of social engineering.

      It’s wholly another matter for the individual family to make that decision on the basis of having their own kids around to help them in whatever capacity. In fact, you could say that such an arrangement would tend to enhance family cohesion….that sort of mutual need and dependency is positive in my opinion. (I’m grateful that Mr. White is out of town and unlikely to opine on working your children’s fingers to the nubs at the family farm.)

      Our own childless condition, as it happens, resulted from a number of factors, but I have to say that concern for the ability to provide for children was in the mix. Of course, I didn’t factor in the potential tax benefits.

      As I noted the other day, work isn’t always a monetary arrangement. I mentioned that I work hard, and I do. It’s just not always for money. I hate that I feel compelled to hire myself out as much as I do, but lacking any other significant resources and wanting to avoid needing (if at all possible) charity – institutional or otherwise – that’s my lot in life.

      We could live somewhat more simply than we do, but the mortgage, among other needs, must be met. There are, of course, other benefits to having more money, but I’d not want to choose a career path on that basis alone. We should talk about “worthy” work sometime.

      HT

      • I’m with you. I’m not sure the state should be paying us to have children. It could easily go the other way. If it suited them, I am sure they could pay people not to have children, or penalize them for it. Let’s not talk about China.

        For the record, naivete is a big part of our lifestyle over here. We didn’t plan a whole heck of a lot when we started having kids. We just do things and see what happens.

        Worthy work is a question that is on my mind constantly. And we should talk about it some more. You already know how I question my profession. But no matter what work I’m doing at any given moment, I’m always questioning it.

      • M:

        Yes, China is a very good example of what I’m talking about.

        Not planning can be a good thing, I think. I would suppose that you have enough data points now to provide some insight to “what happens”, ha, ha.

        I’m trying hard not to worry about “retirement”, whatever that will mean. Still, that doesn’t mean “not saving”, “not working towards a goal”, or “not being prudent”.

        I’ve been reminded lately of this phrase in the Declaration of Independence: “firm reliance on the protection of Divine Providence”. I think we’re actually supposed to live that way to some extent (and there are a number of scriptures that would support that notion).

        Yes, let’s talk about “wothy work”.

        HT

  3. M:

    If I recall correctly, flat tax advocates argue that a universal 17% would level the tax burden on all income tax payers. On that basis, I’d have to admit to paying somewhat less than my “fair share” as well. The real problem is that the burden is so high, precisely because we’re doing more than simple redistribution. We’re giving away more than we can actually afford.

    I’ll probably be inspired to address the “fairness” issue myself in the near future, but I’ll add that I’m personally an advocate of something like the “fair tax”, which is a consumption based tax that exempts food and other necessities and, if I recall correctly, does have some other “progressive” elements for the lowest income households.

    Oh, for the record, my answer to your question is “no”. I’d also not be inclined to follow HDW’s devious, patently sarcastic, advice. Do, however, assure me that you’ll consider voting for a removal of these punative, divisive, counter-productive, servile, statist tax strategems in the near future….like next week, for instance. If something doesn’t change soon, there will be more than a few of us “Going Galt” as we move down this road.

    HT

  4. M:

    Wow, great post. The wheels must have been turning all night. I hope you got a little sleep.

    I probably ought to clarify a couple of points from our discussion, but first, I must affirm that I’d never call you leech, at least not an intentional leech. That’s just life, I guess, always hanging us up on the horns of one moral dilemma after another.

    1. To start, I’m actually a bit squishy on the “store” metaphor. What I intended to suggest was that government is (or should be) the provider of mutually beneficial services. At it’s core, this idea refers to the “social contract” in which individuals (willingly) give up some portion of their individual sovereignty in exchange for a “social good”, such as a “civil society”. The first order social good is “peace” itself, which typically supports the prime function of government as means of preserving order and, thus, the safety of it’s members.

    2. Next, the “store” metaphor, unfortunately, is all too close to the sort of government that we actually have; in which the services that are provided are given to those with either enough money and/or political power to control division of the “spoils”, as it were. Often as not, these powers control the list of products on “the shelves” of the store as well.

    3. On the issue of taxes, I’ll merely suggest that no (or few, anyway) individual sovereigns would (without coercion) willingly enter the social contract with the foreknowledge that their labor would be confiscated to the benefit of their competitors, the opponents, or otherwise to their own detriment. That is, in effect, what “slavery” in all it’s variations is all about.

    Many argue the (largely indirect) social benefits of redistributive and progressive taxation, i.e. “it contributes to an orderly society” and the like. I suppose that I’m inclined to believe that whatever soporificc effect such programs might have are both temporary and debilitating in the long-run. Any practice that effectively breeds a class of permanent dependence undermines all notions of equality of opportunity and of real “fairness”.

    In more practical terms, such practices will also fail on the basis that the dependent class will always grow at the expense of a shrinking productive class. It simply doesn’t work in the long run, which ought to tell us that it doesn’t actually produce a “social good”.

    4. I’m not wholely opposed to some measure of “progressivity” in the tax structure, but I’m disinclined to exempt anyone that is able to work. More important, I’m also disinclined to accept the notion that “the rich” somehow benefit disproportionately and, thus, owe the rest some punative boon. People like Bill Gates surely “have more than they need”, and in such achievement provide the material support for the families of tens, if not hundreds, of thousands of employees. That’s a major and critical contribution to the “social good”. That said, I’d expect their tax load to be exactly as onerous as everyone elses.

    5. Finally, I can’t help but ponder the question of whether there is any real moral or ethical difference between “corporate welfare” on the one hand and the sort of negative taxation (and/or other forms of welfare) that we know is provided to those who either choose not to work or, by virtue of their wealth, have less (or no) need to work?

    This inherent “gaming” of the system requires (forces) others to subsidize those who must be identified as “political victors”, insofar as the political power of the state is thereby used to the benefit of one class at the expense of another.

    What’s most troubling to me is that, while such shenanigans are going on, the “real needs” that exist in society go wanting. This is a squandering our resources and of our real charitable instincts, which might actually thrive if so much of our wealth weren’t being siphoned away to meet politically defined “presumed needs”.

    6. As far as your refund goes, as I’ve said, it’s not really for me to say, but I’d love to know how many actually refuse them. So far as I know, at least, you haven’t promoted (or voted) for those who set this program up, have you? Even if you did, good for you for at least thinking about the implications now. I wish more people were doing that. All I can tell you, it’s getting quite dispiriting and tiring to be one who’s pulling an increasingly heavy cart with less and less help.

    HT

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