David R. Henderson  

Don't Let the IRS Ruin Your Day

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In the last week, I've written checks to the IRS for about $9K (for 2015) and $6.2K (2016 quarterly estimated) and to the California state government for $2.5K (for 2015) and $1.4K (quarterly estimated.) I was shocked when I went to my accountant and got the news. I knew it was going to be bad but I didn't think it would be this bad. As I put it to a friend, "My wife and I each had a good year and, as a result, the IRS had a great year."

There were two ways I could have reacted. One is to play ain't it awful. The other was to move on and enjoy my life.

In choosing the second, I was helped by an experience I had had in Rochester in the spring of 1978.

I was the only faculty member (University of Rochester) in an Israeli folk dance group that performed at various events; the other members were undergrads. We had been practicing for weeks for a big Saturday night performance at the U. of R., the biggest performance of the season. We had a pretty good program set up.

That Saturday morning, I sat down to do my taxes. They were pretty simple in those days. I didn't itemize and I was too naive to understand just how many deductions I could take from my Schedule C business income. Still, I thought I would get a small refund.

Wrong. I computed that I owed the IRS an extra $800. This couldn't be right. So I computed again. Still $800. Third time's a charm, right? Wrong. Still $800. Then I figured it out. I had not taken account of the $2,000 that Bill Meckling's business school had paid me to show a series of films and lead discussions with undergrads. There had been no withholding on that.

I had been looking forward to the evening performance and now I felt almost sick. I had the $800 but it would deplete my fund for a down payment on a house by about 8%.

Fortunately, I had been reading a book by Wayne Dyer called Your Erroneous Zones. It had been helping me with my attitude to a lot of things. I thought: how could I apply this learning to the situation at hand.

I figured it out and came up with a mantra that I started chanting out loud: "Ok, IRS, you can take my $800 but you're not going to ruin my evening." I chanted it over and over.

I went to the performance and had a great time.


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COMMENTS (5 to date)

Israeli folk dancing! No kidding, I would not have guessed.

I've done some of that too — met my first good girlfriend Israeli folk dancing at SUNY at Buffalo in summer 1972. Three years later I was in a Russian performing group in Pittsburgh.

Then thirty years later, in a clogging group in Chapel Hill, they taught the Tennessee Walking Step, which I morphed, by skipping some of the four taps per beat, into my present favorite style which I call solo flatfoot tap.

MikeP writes:

Even if you don't believe that taxation is theft -- if you believe that there may be some level of income taxation that is legitimate -- you can still believe that taxation at the level you pay is theft.

At that point all marginal taxation is theft. Given that you've already learned to accept the marginal taxation you already suffer, any surprise that yields more marginal taxation need not be emotionally trying.

You have no control over what they take. They just took some more. What are you going to do?

Jeremy N writes:

Another reason to not be upset about owing the IRS money, is that they gave you a short-term interest free loan. You owed the money either way, but this way, you got to collect interest on it for several months.

Hit 'em where it hurts!

Floccina writes:

I wrote 2 checks to the IRS in the past week, one for 14,991 and one for 30,900 (which BTW added together is about what I spent last year excluding charity). I would not mind paying more than that but 2 things bug me. 1. the crazy complication for someone with my business interests. 2. The way that they spend the money.

Linked below is my blog post on how to cut the Fed budget:

Why Eliminating the Deficit is Technically Easy but Still Politically Impossible

Imagine what we could get for all our tax money if it was spent sensibly.

David R. Henderson writes:

@Floccina,
I wrote 2 checks to the IRS in the past week, one for 14,991 and one for 30,900
Wow!
I checked your link. Good proposals for cutting government spending.

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