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That tax withholding is the only way that many Americans manage to save speaks more to a lack of self-control than anything else. If Uncle Sam can save a lump-

That tax withholding is the only way that many Americans manage to save speaks more to a lack of self-control than anything else. If Uncle Sam can save a lump-sum for you by deducting from your paycheck, you could have done the same (in fact, better) with a bit of resolve and a bank account.

jlebar 8y ago
Not necessarily -- perhaps you're in debt day-to-day. This is the reality for many Americans.
kartan 8y ago
> That tax withholding is the only way that many Americans manage to save speaks more to a lack of self-control than anything else. I understand that it may seem so. But, when there is millions of Americans in that situation then it is a systemic problem not a personal one. There is a lot of on-line resources about this topic. e.g. https://www.google.com/search?q=the+cost+of+being+poor https://www.google.com/search?q=the+cost+of+being+poor
- shams93 8y ago
  Yeah there was a great breakdown of this when the representative from Irvine, California grilled CEO Jaimie Dimon, a bank teller who lives in Irvine makes $15 an hour, basically such a person if they have their own apartment will be forced to choose between having food and having a phone. We have kept salaries frozen for so many decades that we have impoverished the majority of working people to a ridiculous level. Asking people to go get more education is a joke when PHD's often live in their vehicle or live within homeless shelters as part time adjunct staff.
  - anbop 8y ago
    Why would you expect that a bank teller has their own apartment? Your own apartment isn’t some kind of birthright. I had roommates until I was 27.
    - WrtCdEvrydy 8y ago
      Someone who has full time job should have some semblance of independence. I'm dreading the day that homes are just owned by your employer so you can keep the slaves working for you forever.
      - iygghnkufdv 8y ago
        And then we will live in our cars, and they're already enforcing that as illegal too :)
        scarejunba 8y ago
        It's not "they" or "the rich" that are doing this. It's your fellow man that you probably vote along side. Support for the AMA, support for the insurance corporations, local regressive housing policies. This didn't come from some evil lizard overlord. It came from your friends and neighbours who have arrayed themselves against you. If you don't want to draw battle lines with them, fine, but right now you're fighting shadows.
        iygghnkufdv 8y ago
        If you were the one who downvoted me then it's a shame because we agree. Firstly, I am an anarchist. I don't vote for anyone. Secondly, anyone, be they politician or just voter, who is trying to enact these thoroughly horrific laws and policies is just flat out telling us how to live our lives while processing it. I have not had a lease in 3 years. I can't afford anything. So that's where I'm coming from.
        scarejunba 7y ago
        Just to answer one part: I follow /. etiquette. I don't vote in threads I participate in. Also the website does not permit downvoting responses so you know it wasn't me who voted your newer response down. So you can then conclude it's also possible that people disagree with your original post and that the voting was by someone else.
  - captainredbeard 8y ago
    Maybe they should move?
    - peteradio 8y ago
      That is the fundamental problem isn't it. Mobility.
  - toasterlovin 8y ago
    It’s rich that the representative from Irvine thinks hourly pay is the problem and not the cost of housing in CA. I am in the 96th percentile of earners and there is no way my family could afford to live in Irvine.
    - whoopdedo 8y ago
      Housing cost is a problem in California (and New York, and D.C.). But wage stagnation is a problem everywhere. That rents are too high in Irvine doesn't negate the fact that wages are too low as well.
    - TimothyBJacobs 8y ago
      If the company location is based in Irvine, and they have entry level positions, you shouldn't have to live 2 hours away to be able to afford to work there.
marmaduke 8y ago
There’s this idea about poverty and cognitive control competing. It may be harder to save when you’re already poor
- BurningFrog 8y ago
  You will also easier end up poor if you have bad cognitive control.
  - kartan 8y ago
    > You will also easier end up poor if you have bad cognitive control. My personal experience is that many middle class people has little control. But, the effect on them is small. That clothes that they do not need or that extra vacations are not going to make them poor. But, I am sure that in very extreme cases like gambling addiction middle class people can become poor.
    - gameswithgo 8y ago
      humans are gonna be humans, we need societies that work with actual humans and their faults rather than just wishing humans were perfect.
      - HeyLaughingBoy 8y ago
        tsk! Don't you realize that empathy and common sense are frowned upon?
neffy 8y ago
78% of American workers live pay cheque to pay cheque. I would suggest that of the two possible hypotheses, the one where the system itself doesn't let them do anything else, might be the one more worth examining than the one that betrays a complete lack of empathy with your fellow citizens.
- SamReidHughes 8y ago
  The bottom 78% of incomes varies widely, so we know it's a result of spending, not earning.
- MagicPropmaker 8y ago
  > 78% of American workers live pay cheque to pay cheque This is not true. 78% of _American_ workers live paycheck to paycheck.
burlesona 8y ago
It's not necessarily that simple. I would say that for most Americans who are cash poor, they intentionally do not optimize their taxes to break even, but rather to ensure they never end up owing the government money at the end of the year. The rationale for this is pretty simple. Even if you're poor, $50 a month in extra income isn't going to make or break you, but an unexpected bill for $600 in April can really mess you up. On the other hand, just going with max withholdings and discovering in April that you get $600 back from the government is a nice bonus. It's not the "optimal" decision from a finance perspective, but for a lot of people it works better in real life.
- usaar333 8y ago
  It is still better to save an extra $50 in your own bank account than let the government pay you 0% interest in it.
  - astura 8y ago
    Not if you'd otherwise spend the extra $50 each month.
  - burlesona 8y ago
    But not when - instead of being some arbitrary number like $50 - it’s a vague and unknown future liability. Most people end up with some mix of side income and tax breaks that are hard to predict in advance. If you’re wealthy and you’re off by $500, so what. But if you’re poor and you were off by $500, it can be devastating. So again, I think it’s rational behavior for some whose life is optimized around avoiding cash flow surprises than optimized amount maximizing return on capital.
rgbrenner 8y ago
You're forgetting about the Earned Income Tax Credit and other tax credits. Not all money paid out by the IRS is from wage withholding.

jlebar 8y ago

Not necessarily -- perhaps you're in debt day-to-day. This is the reality for many Americans.

kartan 8y ago

> That tax withholding is the only way that many Americans manage to save speaks more to a lack of self-control than anything else. I understand that it may seem so. But, when there is millions of Americans in that situation then it is a systemic problem not a personal one. There is a lot of on-line resources about this topic. e.g. https://www.google.com/search?q=the+cost+of+being+poor https://www.google.com/search?q=the+cost+of+being+poor

shams93 8y ago
Yeah there was a great breakdown of this when the representative from Irvine, California grilled CEO Jaimie Dimon, a bank teller who lives in Irvine makes $15 an hour, basically such a person if they have their own apartment will be forced to choose between having food and having a phone. We have kept salaries frozen for so many decades that we have impoverished the majority of working people to a ridiculous level. Asking people to go get more education is a joke when PHD's often live in their vehicle or live within homeless shelters as part time adjunct staff.
- anbop 8y ago
  Why would you expect that a bank teller has their own apartment? Your own apartment isn’t some kind of birthright. I had roommates until I was 27.
  - WrtCdEvrydy 8y ago
    Someone who has full time job should have some semblance of independence. I'm dreading the day that homes are just owned by your employer so you can keep the slaves working for you forever.
    - iygghnkufdv 8y ago
      And then we will live in our cars, and they're already enforcing that as illegal too :)
      - scarejunba 8y ago
        It's not "they" or "the rich" that are doing this. It's your fellow man that you probably vote along side. Support for the AMA, support for the insurance corporations, local regressive housing policies. This didn't come from some evil lizard overlord. It came from your friends and neighbours who have arrayed themselves against you. If you don't want to draw battle lines with them, fine, but right now you're fighting shadows.
        iygghnkufdv 8y ago
        If you were the one who downvoted me then it's a shame because we agree. Firstly, I am an anarchist. I don't vote for anyone. Secondly, anyone, be they politician or just voter, who is trying to enact these thoroughly horrific laws and policies is just flat out telling us how to live our lives while processing it. I have not had a lease in 3 years. I can't afford anything. So that's where I'm coming from.
        scarejunba 7y ago
        Just to answer one part: I follow /. etiquette. I don't vote in threads I participate in. Also the website does not permit downvoting responses so you know it wasn't me who voted your newer response down. So you can then conclude it's also possible that people disagree with your original post and that the voting was by someone else.
- captainredbeard 8y ago
  Maybe they should move?
  - peteradio 8y ago
    That is the fundamental problem isn't it. Mobility.
- toasterlovin 8y ago
  It’s rich that the representative from Irvine thinks hourly pay is the problem and not the cost of housing in CA. I am in the 96th percentile of earners and there is no way my family could afford to live in Irvine.
  - whoopdedo 8y ago
    Housing cost is a problem in California (and New York, and D.C.). But wage stagnation is a problem everywhere. That rents are too high in Irvine doesn't negate the fact that wages are too low as well.
  - TimothyBJacobs 8y ago
    If the company location is based in Irvine, and they have entry level positions, you shouldn't have to live 2 hours away to be able to afford to work there.

marmaduke 8y ago

There’s this idea about poverty and cognitive control competing. It may be harder to save when you’re already poor

BurningFrog 8y ago
You will also easier end up poor if you have bad cognitive control.
- kartan 8y ago
  > You will also easier end up poor if you have bad cognitive control. My personal experience is that many middle class people has little control. But, the effect on them is small. That clothes that they do not need or that extra vacations are not going to make them poor. But, I am sure that in very extreme cases like gambling addiction middle class people can become poor.
  - gameswithgo 8y ago
    humans are gonna be humans, we need societies that work with actual humans and their faults rather than just wishing humans were perfect.
    - HeyLaughingBoy 8y ago
      tsk! Don't you realize that empathy and common sense are frowned upon?

neffy 8y ago

78% of American workers live pay cheque to pay cheque. I would suggest that of the two possible hypotheses, the one where the system itself doesn't let them do anything else, might be the one more worth examining than the one that betrays a complete lack of empathy with your fellow citizens.

SamReidHughes 8y ago
The bottom 78% of incomes varies widely, so we know it's a result of spending, not earning.
MagicPropmaker 8y ago
> 78% of American workers live pay cheque to pay cheque This is not true. 78% of _American_ workers live paycheck to paycheck.

burlesona 8y ago

It's not necessarily that simple. I would say that for most Americans who are cash poor, they intentionally do not optimize their taxes to break even, but rather to ensure they never end up owing the government money at the end of the year. The rationale for this is pretty simple. Even if you're poor, $50 a month in extra income isn't going to make or break you, but an unexpected bill for $600 in April can really mess you up. On the other hand, just going with max withholdings and discovering in April that you get $600 back from the government is a nice bonus. It's not the "optimal" decision from a finance perspective, but for a lot of people it works better in real life.

usaar333 8y ago
It is still better to save an extra $50 in your own bank account than let the government pay you 0% interest in it.
- astura 8y ago
  Not if you'd otherwise spend the extra $50 each month.
- burlesona 8y ago
  But not when - instead of being some arbitrary number like $50 - it’s a vague and unknown future liability. Most people end up with some mix of side income and tax breaks that are hard to predict in advance. If you’re wealthy and you’re off by $500, so what. But if you’re poor and you were off by $500, it can be devastating. So again, I think it’s rational behavior for some whose life is optimized around avoiding cash flow surprises than optimized amount maximizing return on capital.

rgbrenner 8y ago

You're forgetting about the Earned Income Tax Credit and other tax credits. Not all money paid out by the IRS is from wage withholding.