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In the U.S. this "withholding" happens as well. Regular employee paychecks already lose a chunk of nominal income attributed to various buckets, federal and st
by nwatson 5y ago
In the U.S. this "withholding" happens as well. Regular employee paychecks already lose a chunk of nominal income attributed to various buckets, federal and state and maybe local level. Toward the beginning of the next year comes the grand reconciliation though, where what you "really owe" gets computed, only roughly matching what already is withheld. There are so many rules, exclusions, exceptions, additions. They individually make some sense, or did at some point, but are very confusing, with implications that sometimes stretch over many years.
- PaulDavisThe1st 5y agoThe US uses its tax code(s) to try to implement policy. Increase taxes on something to try to discourage people from using/buying/participating in it. Decrease taxes or offer tax credits to try to encourage something. On the face of it, this is not a bad idea, but cumulatively it gets pretty messy (especially when, as you note, some of the policy-as-tax-code has implications over more than just a single tax year).
- ghaff 5y ago>some of the policy-as-tax-code has implications over more than just a single tax year Yes, as my finance professor used to say, make all of your decisions based on after-tax. Which is very relevant on a personal level to, say, someone buying a house in the US with a sufficiently large mortgage to itemize deductions is going to be... unhappy if that deduction suddenly gets snatched away. "Rules" obviously do change but there are good reasons to exercise restraint with respect to established rules that led individuals to make substantial commitments on the basis of that rule.
- xeromal 5y agoYou're not wrong with this take. One of the biggest policies is encouraging having children through all the various credits and writeoffs you can do with having children.