About two-thirds of Americans, 68 percent, say they paid the same or more in taxes for 2018 than the previous year, while less than a quarter said they paid less, according to a new Hill-HarrisX survey.
I get it. We had to pay when we filed our taxes this year. Last year we received a refund. However, despite making more money and having fewer deductions available to us, the total amount of federal taxes we paid was less than last year, close to 10% less. Without the comparison to last year, I might have felt like I paid more this year, despite the facts.
The main reason for this discrepancy is that we took more of our paychecks home rather than surrendering that income to the IRS. Taxes have been withheld from paychecks since WWII, and have had an insidious effect.
Think about it for a minute. The federal government gets your money before you get your money. They are the first recipient of the fruits of your labor. You are second. As a result, over the past two or three generations, the American people have grown so accustomed to this arrangement that most people probably don’t even know how much of their pay goes to the government.
Even when the federal withholding of taxes from paychecks goes down, the generations of conditioning means that Americans don’t even know they’ve got more money. So despite the fact that most Americans had a lower tax bill for 2018, most Americans did not recognize that they paid less in taxes. Earnings and taxes have become a theoretical construct of sorts.
Contrast the federal income tax to the hotly debated property tax here in Texas. For years, the State Legislature has been trying to fix the property tax system. I am only guessing, but for most working people in Texas their property tax obligation is less than the income tax they pay throughout the year – far less in many cases. Yet there is more complaining about the unfairness of the property tax than there is about the income tax.
Property taxes happen in one lump sum for those without a mortgage or an escrow account managed by the mortgage company. When I write that property tax check every year, it physically hurts. My hand cramps up, sweat beads along my brow, my heart races, and my mouth gets dry. It takes a couple of shots of good whiskey to calm me down once the envelope is sealed.
People with their own businesses and those that are self-employed probably saw the benefit of last year’s tax reform almost immediately. For those of us receiving paychecks, an extra few bucks in the paycheck probably didn’t feel like a relief, especially when we had to pay a little more on April 15th.