With all the tax talk going around this week and four of my students moving out of state to “greener pastures,” let’s look at some common-sense tax considerations.
First, if you got a big refund, you just loaned the federal government your money for free. Far better to break even or owe a little. What??? That’s right. When your money is in your hands, you can invest, pay down debt, or save it on your own terms. This could benefit you financially. When you give the federal government excess money, they use your money to finance their projects. It’s best to adjust your deductions with your tax advisor’s help so that you keep your money under your control. I set aside the money in my own “tax fund” for possibly owing to the government on tax day rather than letting them use my money for free all year long.
Many Americans are moving to other states to save on taxes. States can tax you to run the government in any (or all) of these three ways:
property tax
sales tax
income tax
There is a movement by state legislatures to eliminate the state income tax and go to a flat consumption (sales) tax. Some states don’t tax retirement income. Beware. When a state doesn’t tax retirement income, it also can appear on the list of states that charge the highest property tax rates.
The states need a source of income, so while campaigning on a no-tax platform, be aware of what other sources they have to provide income. In our young adult years, my husband and I lived in Texas, where there was (and still is) no state income tax. At that time, the oil and cattle industries paid enough tax to cover state expenses.
If you live in a county where a large shopping mall is located, you may have no additional taxes because the mall covers them for you. However, malls are fading. The revenue that malls once provided may be drying up, as are the jobs that businesses provided area residents.
You’ve heard the slogan, “This tax is only for the rich.” Taxes are a cost to all of us, whether rich or poor. Costs get added to the price of goods and services. The more tax, the higher the cost to you. Prices go up. You have less money to spend. Foreign competitors get the business that we would have had because they pay far less to their workers and may produce inferior quality for a lower price. Americans are affected. So, “this tax is only for the rich, and then it’s coming for your wallet” is the accurate interpretation of those campaign tax slogans.
Americans want the highest quality for the lowest price and the least taxes. That’s called free-market capitalism. Shop around and consider where you live, work, and spend your money. Your money is best left in your hands.
This is Common Sense Civics and Citizenship.🇺🇸
