States may hold on to tax refund checks!

[Fir]

Saw this over on USA Today

http://www.usatoday.com/news/nation/2010-03-11-tax-refunds_N.htm?csp=34

Everyone needs to adjust their W4 so they break even or get as little refund as possible.

They get an interest free loan and now want to delay re-payment! Ridiculous!

Yet if I called up my state and said excuse me I don't have the money do you take IOUs? Yeah they'd be over my house with the SWAT guys, guns drawn breaking my door down to take me away.

 

[IceBergSLiM]

its ok for the govt. to do this but if you do it its called racketeering and you goto jail.

 

[IceBergSLiM]

How is this different from theft/fraud/ ponzi scheme?

 

[Genx87]

I love this. If I tried this bullshit in the private sector charges would be brought against me or I would be fined.

 

[Linflas]

This is why withholding should be optional or done away with altogether.

 

[EagleKeeper]

List of those states that are or may pull this stunt

Officials in the following states say they have had to delay issuing refunds or consider doing so because the state might not have the cash on hand to cover the checks.

•Hawaii
•Alabama
•North Carolina
•Kansas
•Idaho
•New York

 

[IceBergSLiM]

I love this. If I tried this bullshit in the private sector charges would be brought against me or I would be fined.

Lets look at the facts here:

1) States promised services in exchange for taxes
2) States canceled or severely cut back promised services
3) States over charged for canceled or severely cut back services
4) States refused to refund overcharged canceled or severely cut back services.

What part of this isn't fraud and organized crime? Where is the class action lawsuits? why isn't the fbi involved? Why haven't the state leaders been indicted?

 

[EagleKeeper]

This is why withholding should be optional or done away with altogether.

Withholding is in place because is was demonstrated that people would not put away enough for the bill when it came time to pay it.

 

[GoPackGo]

Withholding is in place because is was demonstrated that people would not put away enough for the bill when it came time to pay it.

But its better to owe a $100 than than get a $5000 refund.

 

[MotF Bane]

And people wonder why the government isn't trusted...

 

[StageLeft]

It's not fraud/illegal because it's gov. That is the only reason, really.

I'm surprised CA isn't on this list. NY is, woot. Last year when CA did this I thought NY would be next but I wasn't getting enough of a refund to bother changing things up otherwise I would have. NY is fiscally fvcked, one of the top fiscally fvcked states.

How is it the states with the highest taxes seem the most fvcked? I know that answer, it was a rhetorical question.

 

[Linflas]

Withholding is in place because is was demonstrated that people would not put away enough for the bill when it came time to pay it.

Not really.

Before World War II individuals who owed federal tax on their income earned in a particular year paid the tax during the following year in quarterly installments. In those days relatively few people paid income taxes. As late as 1939 fewer than four million individual returns were filed, and the filers’ total tax bill came to less than $1 billion, or less than 4 percent of their net taxable income. When so few people paid income tax and the amounts due in most cases were so small, the system of deferred payment imposed no great burden and gave rise to few taxpayer complaints.

Beginning in 1940, however, the tax burden increased enormously. As the government began to mobilize for participation in a gigantic global war, its revenue demands grew apace. Federal spending burgeoned from $9 billion in fiscal year 1940 to more than $98 billion in fiscal year 1945. Although the greater part of this spending upsurge was financed by borrowing, huge increases in tax collections also took place. In 1945, 50 million individual income-tax returns were filed, and the filers owed more than $19 billion, or almost 20 times the amount that Americans had coughed up for this tax just five years earlier.

Milton Friedman was an economist at the Treasury during the early part of the war. In his 1998 memoirs, Two Lucky People, written with his wife Rose, he observed: “It was clear to all of us at the Treasury, as we set out to multiply the amount of revenue to be collected from the personal income tax, that it would be impossible to do so unless we could develop a system to collect the taxes as the income was earned, not a year later.”

The Treasury itself publicly acknowledges, in a fact sheet on the history of the U.S. tax system posted at its website, that wartime withholding not only “greatly eased the collection of the tax,” but “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.” Some evidence: in 2005 more than 130 million individual income-tax forms were filed, yielding the federal government $1,108 billion in revenue, and of that amount, $787 billion, or 71 percent, came from withholding.

Friedman, who admitted being “one of the architects” of the Treasury’s proposal for a withholding system, correctly noted in his memoirs that the system “would have been introduced had I been involved or not.” Withholding was an essential element of the government’s wartime revenue grab. “At the time,” concluded Friedman, “we concentrated single-mindedly on promoting the war effort. We gave next to no consideration to any longer-run consequences. It never occurred to me at the time that I was helping to develop machinery that would make possible a government that I would come to criticize severely as too large, too intrusive, too destructive of freedom. Yet, that was precisely what I was doing.”

Wartime Origins of Modern Income-Tax Withholding

 

[boomerang]

I'm surprised Michigan isn't there also. I know our Governor took stimulus money and used it to cover expenses instead of making cuts. Maybe she set some aside for refunds too.

It's her last term so why should she care?

 

[sapiens74]

Saw this over on USA Today

http://www.usatoday.com/news/nation/2010-03-11-tax-refunds_N.htm?csp=34

Everyone needs to adjust their W4 so they break even or get as little refund as possible.

They get an interest free loan and now want to delay re-payment! Ridiculous!

Yet if I called up my state and said excuse me I don't have the money do you take IOUs? Yeah they'd be over my house with the SWAT guys, guns drawn breaking my door down to take me away.

Hawaii says we won't be getting our money until at Least July!

I changed my withholding to one higher to balance out any taxes they are keeping.

 

[PokerGuy]

Of course this will backfire in a big way. Everyone's going to adjust their withholding to make sure they don't end up waiting again in the future, meaning the states will get even less of an interest free loan. Dumb politicians as usual.

 

[StageLeft]

The great thing about this is since they're using these funds to avoid having to pay out, if they do pay out on time for 2010 taxes they'll have paid out their yearly refunds more than once in the same 12 month period; i.e. if a state holds on five extra months and actually intends to pay on time next time (lol), then they'll have paid out refunds twice in 7 months.

 

[IceBergSLiM]

The great thing about this is since they're using these funds to avoid having to pay out, if they do pay out on time for 2010 taxes they'll have paid out their yearly refunds more than once in the same 12 month period; i.e. if a state holds on five extra months and actually intends to pay on time next time (lol), then they'll have paid out refunds twice in 7 months.

I want to know who made these decisions and where was the peoples vote on it?

 

[bfdd]

Seriously, we need to have a revolution already. We got rid of one king 200+ years ago, we did pretty good if it took 200+ years to get a new "king"

 

[Linflas]

I want to know who made these decisions and where was the peoples vote on it?

Most likely some unelected political appointee and your vote was for the governor who probably appointed him and the legislators that approved the appointment.

 

[GoPackGo]

More proof that war is used by both parties as a power/money grab

 

[Modelworks]

List of those states that are or may pull this stunt

damn, NC on the list.
Guess that lottery was a scam after all.

 

[Modelworks]

Seriously, we need to have a revolution already. We got rid of one king 200+ years ago, we did pretty good if it took 200+ years to get a new "king"

We need a bigger boat so it can accommodate all the democrats and republicans in office. Give them an island somewhere where they can bicker over who gets the last coconut.

 

[thegimp03]

Really surprised CA isn't on that list, considering the state is broke. Though, I'm not really worried about it if CA pulls this stunt as I'm not getting a refund.

 

[HannibalX]

No State income tax in Florida thankfully. I agree it's a load of BS though.

If you pay to little tax and make the government wait, they fine you but if you pay too much tax they get to hold your money all year interest free (while they earn interest on it) and then decide not to return it to you in a timely manner.

 

[Zebo]

I've never gotten a refund in my life. Don't give da govt da free monies. Back when I worked it was 21 exemptions. (you better know what you're doing here to avoid statutory fines... 9 in safer if you own a house)