Once upon a time, when people in America wanted to save money and build up a little nest egg for the future, or to pass on to the kids, they used to work hard and be thrifty. A dollar saved here, a dollar earned there, and over the years most people could set a little something aside for a rainy day.
With today’s gas prices and wackiness in the housing market, lowering interest rates and a slow economy, it’s harder to plan for the future and harder yet to save for it. However, of all the factors that influence savings, it’s our crazy tax code that’s most important. In a world-turned-upside-down sort of way, postponing and avoiding taxes has become the number one inducement to save money.
Paying taxes was once something fairly simple and uncomplicated, and for some who are employed and don’t earn very much, it still is. However, for many others, tax preparation is a time-consuming and costly affair, requiring a professional. More and more, the professional advice is about postponing and avoiding taxes, and it is the government that has encouraged and created this weird situation.
I suppose nobody has ever enjoyed paying taxes, but it always seemed to me to be a moral obligation – ensuring that government had what it needed to fix roads, protect our coast and maintain safety and security. Helping in my own small way to make sure that happened felt fair. Even knowing that others might be paying less was fine; after all, I have more than enough of what I need for comfort.
Now in my 40th year of working for a living, I’m not sure if my wife and I have enough money saved to retire comfortably. Accordingly, we still work hard every day. Yet, it is discouraging to know that in order to save money, it is how we “work” the tax code that really makes the difference. Postponing or avoiding taxes, it seems to me, is a far less satisfying motivator to encourage savings than the pride of working hard and being thrifty, but our government seems to have concluded otherwise. By making IRAs, ROTH IRAs, 401(k)s and stock market investment the primary inducements available, the government has effectively disconnected us from the values of thoughtfulness, hard work and thrift. This, ultimately, has created a nation where tax avoidance makes good citizens; a twisted symmetry that is as confusing as it is just plain wrong. Rather than a virtue, thrift has been discarded in favor of obsessive consumerism fueled through usurious credit card debt. How crazy is that?
The savings rate in America is terribly low, and some argue that the current policies and philosophy of making taxes the key to stimulating savings is a brilliant plan. However, by using taxes as punishment for not saving money, the government serves to infantilize our adult population, reinforcing an image of citizenship as a childish role requiring the adult supervision of government. Mature qualities of self-reliance, inventiveness, common sense, industriousness and patience are discarded in favor of tax accounting gimmicks and playing with money. Such attitudes are reflected, sadly, in our economy as a whole, wherein we have abandoned the creation of tangible things of lasting value, and the wealthy accumulate additional wealth solely through the tax code.
