Harris Sherline: Whose Money Is It, Anyway?

The mindset of people in government was recently highlighted by a proposal that the British equivalent of our Internal Revenue Service had made for collecting taxes: The paychecks of working Brits should be paid directly to the taxing authorities who would deduct the amount of taxes due and then either forward or via bank transfer send the net amount on to the nation’s taxpayers. The British Revenue & Customs Department “stressed the need for employers to provide real-time information to the government so it can monitor all payments and make a better assessment of whether the correct tax is being paid.”

Excuse me, but whose money is it, anyway?

George Bull, head of tax at the international accounting firm Baker Tilly, noted that there are some major concerns, such as “if HMRC has direct access to employees’ bank accounts and makes a mistake, people are going to feel very exposed and vulnerable,” pointing out that the government does not have a good track record with large computer systems.

Even the British tax collector described the plan as “radical” and noted that it would change the current system, which has been in place for 66 years.

I would add that if the Brits’ experience is anything close to ours, once the government has the taxpayers’ money, chances of ever getting it back or getting their account straightened out are slim to none.

The IRS is notorious for taking an inordinate length of time to respond to taxpayer inquiries. The process can be so difficult to navigate that taxpayers often simply give up and stop trying to get a refund.

Unfortunately, everywhere we turn we see evidence of this same mentality throughout Europe as well as America. It has been a creeping dysfunction for generations that has resulted in increasing government control and nonstop growth of bureaucracy.

The following headlines are just some of the many that highlight the perception that those in government think tax money belongs to them, to be dispensed as they see fit:

» “Mounting State Debts Stoke Fears of a Looming Crisis” (The New York Times, Dec. 4, 2010)

» “California Ranks 48th in Business Friendliness” (Jan Norman on Small Business, The Orange County Register)

» “Brown Says State Budget Worse Than Ever, Mum on Proposed Solutions” (The Sacramento Bee, Dec. 9, 2010)

» “Schwarzenegger Proposes $9.9B in Cuts” (CBS Los Angeles, Dec. 6, 2010)

» “UK Proposes All Paychecks Go to the State First” (Robin Knight of CNBC, Monday, Sept. 20, 2010)

The news is routinely filled with stories about our politicians and bureaucrats at every level of government — federal, state and local — laying claim to an ever increasing share of workers’ income, under the guise of making the system more fair by “taxing the rich” to pay for what the public perceives as out-of-control spending.

The rise of the Tea Party and the sweeping election of Republicans to Congress in November 2010 was a direct result of the public’s reaction to the unbridled spending of Congress since Barack Obama became president in January 2009.

Instead of dealing with the problem of overspending, politicians continue to look for more ways to extract money from taxpayers. For example, some states are now looking at the potential of collecting sales tax on goods that are sold over the Internet, an idea that is fraught with complications, including the possibility of double taxation — that is, two or more states taxing the same sale. Currently, there is a federal rule that Internet sellers cannot be required to collect sales taxes without a physical presence in a state. However, I’m not particularly comfortable with this protection, knowing how politicians scheme to find a way to overcome such limitations on collecting taxes.

Another notion that has been gaining favor is to tax the use of the Internet itself, perhaps some sort of utility tax, which has the potential of producing huge revenues at almost every level of government.

For my money, these are all bad alternatives because they merely perpetuate the attitude of people in government that the solution to every budget problem is taking more money from taxpayers.

We hear very few people urging that government budgets be reduced and that taxpayers be allowed to keep their own money.

So, whose money is it — the governments’ or the taxpayers’?

— Harris R. Sherline is a retired CPA and former chairman and CEO of Santa Ynez Valley Hospital who has lived in Santa Barbara County for more than 30 years. He stays active writing opinion columns and his blog, Opinionfest.com.