What I think about taxes- all kinds of taxes

When I searched HD I was surprised how many articles and Forum posts I wrote about taxes, all kinds of taxes over several years. The topic is so universal and so complex it is never dull and never not controversial. 

These days social media is inundated with posts about taxes, the very great majority are nonsense or fake information. My favorite these days is seniors should be tax free because they “paid their dues.” Or, they should not pay property taxes if they don’t have a mortgage. That isn’t even logical. If you were paying property taxes and a mortgage isn’t it easier to pay property taxes when you don’t have a mortgage payment? You don’t need a spreadsheet to figure that out. 

I live in the highest property tax state in the country. I have lived here all my life, my family has lived here for nearly 200 years. I knew property taxes were high, I have paid them since 1971 when we bought our first house. I knew they would continue after I retired which is something every other person knows as well. Isn’t factoring that in part of basic planning for retirement, including survivor planning? 

Recently a comment on HD contained these words “tax averse.” That got me thinking. Should we be tax adverse? If everyone enthusiastically embraced that idea, think of all that could collapse – education, Social Security, Medicare, our communities, heck, our country. 

Like everyone else I pay income, sales, property and assorted other minor taxes. Add it all up and I would probably have 25 to 30% more to spend if there were no taxes. 

I would also have a lot less of the many things taxes provide.  It really upsets me when I read or hear that taxes are “illegal,” “a scam” or “the government or “they” are ripping us off.” People wonder out loud- “we don’t know how “they” spend our money. I think to my self or sometimes out loud “look it up.”

How does you local board of education, your town, your state spend money? You will find the vast majority of spending goes to services benefiting people. It’s not much different for federal taxes. Over 47% of the federal budget is directly for people – SS, Medicare, Medicaid and other health programs. 

Many people complain about loopholes, which are actually legal ways to be tax adverse. They complain when wealthy people use them, but in reality investing in a Roth or using municipal bonds, accepting tax credits etc. are a form of loophole as well. What is tax planning after all but seeking ways to minimize the taxes we pay. 

I am very bad at tax planning, I never did it. Some retirees even move to avoid income taxes, but in the end may find overall they are not saving money.  I use municipal bonds, but then it may not be my best financial move. I use QCDs too, certainly a loophole many retirees can use, but before I discovered them, we gave the same amounts to charity anyway. That’s the extent of my attempts at planning. 

Yup, our view of paying taxes is a curious thing. The most curious to me are the people who see no need for taxes at all or make no connection between taxes and the society in which they live. Documented taxes go back to 3500 BC and I bet there was grumbling when someone had to turn over a portion of their harvest for taxes and no doubt the person down the road was surely not paying their fair share.