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Quote from the Treasury: "it... greatly reduced the taxpayer's awareness of the amount of tax being collected, i.e. it reduced the transparency of the tax, whic

by mises 8y ago

Quote from the Treasury: "it... greatly reduced the taxpayer's awareness of the amount of tax being collected, i.e. it reduced the transparency of the tax, which made it easier to raise taxes in the future." (https://en.wikipedia.org/wiki/Tax_withholding_in_the_United_States https://en.wikipedia.org/wiki/Tax_withholding_in_the_United_...) Same reason payment plans are offered for cars and iphones. Technically, many people are payed by the hour; should they have to immediately pay tax? Yearly taxes were the norm for a long time, and helped keep resentment of taxes high. It also led to a drastically reduced paperwork burden, which was cheaper for the government, businesses, and consumers.

wutbrodo 8y ago
> Quote from the Treasury: "it... greatly reduced the taxpayer's awareness of the amount of tax being collected, i.e. it reduced the transparency of the tax, which made it easier to raise taxes in the future." Sorry, that may have been unclear. I don't doubt the psychological effect is greater when it happens in a lump sum. I'm saying that it's just as easy to say that people overestimate their taxes when they pay in a lump sum and accurately estimate them (at a per-paycheck level): there's nothing about once a year that's special and justifies privileging it. > Technically, many people are payed by the hour; should they have to immediately pay tax? No, they're not. Their pay is measured by the hour, but they are _paid_ on different schedules (eg once every two weeks), at which point they're debited for the tax (in that they receive net pay). I don't see how anything else wouldn't be the reverse of having a large refund: ie, an interest-free loan from the government to the taxpayer. > It also led to a drastically reduced paperwork burden, which was cheaper for the government, businesses, and consumers. This is belied in the part you elided from the quote you pulled. from the same sentence: > "This greatly eased the collection of the tax for both the taxpayer and the Bureau of Internal Revenue. However, it also greatly reduced the taxpayer's awareness of the amount of tax being collected, i.e. it reduced the transparency of the tax, which made it easier to raise taxes in the future" Also, I'm not making the claim that there's no pragmatic argument for annual payments (though I personally disagree). My complaint was that part of your argument rested on treating annual payments as arbitrarily natural and measuring the downsides of withholding from that flawed perspective.

by mises 8y ago

wutbrodo 8y ago

> Quote from the Treasury: "it... greatly reduced the taxpayer's awareness of the amount of tax being collected, i.e. it reduced the transparency of the tax, which made it easier to raise taxes in the future." Sorry, that may have been unclear. I don't doubt the psychological effect is greater when it happens in a lump sum. I'm saying that it's just as easy to say that people overestimate their taxes when they pay in a lump sum and accurately estimate them (at a per-paycheck level): there's nothing about once a year that's special and justifies privileging it. > Technically, many people are payed by the hour; should they have to immediately pay tax? No, they're not. Their pay is measured by the hour, but they are _paid_ on different schedules (eg once every two weeks), at which point they're debited for the tax (in that they receive net pay). I don't see how anything else wouldn't be the reverse of having a large refund: ie, an interest-free loan from the government to the taxpayer. > It also led to a drastically reduced paperwork burden, which was cheaper for the government, businesses, and consumers. This is belied in the part you elided from the quote you pulled. from the same sentence: > "This greatly eased the collection of the tax for both the taxpayer and the Bureau of Internal Revenue. However, it also greatly reduced the taxpayer's awareness of the amount of tax being collected, i.e. it reduced the transparency of the tax, which made it easier to raise taxes in the future" Also, I'm not making the claim that there's no pragmatic argument for annual payments (though I personally disagree). My complaint was that part of your argument rested on treating annual payments as arbitrarily natural and measuring the downsides of withholding from that flawed perspective.