Tax Refund Deception

From Wall Street Journal blogger-extraordinaire James Taranto:

“Tax refunds are evil, because they fool people into thinking they’re “getting” something from the government, when in fact all they’re receiving is their own money, months late. If the private sector tried this–say, your insurance or power company “borrowed” money by tacking $20 on to your monthly bill and refunded it, without interest, the following year–it would be a pretty clear case of fraud.”

Beyond the obvious hyperbole of “evil”—on this blog we would say “unethical”—is there any good argument against Taranto’s analysis?

2 thoughts on “Tax Refund Deception

  1. Congratulations on your new blog, Jack. It is a bit easier to engage than your old website commentary system, despite the great value of Ethics Scoreboard.

    “Evil” is such an unambiguous word. You know, the American tax system has many problems, and truth be told, the government is less likely to characterize a refund as a financial boon than many accounting and tax preparation companies who, high in their mystical towers, wield their sorcery to divine the secrets hidden in our Byzantine tax code.

    Is the government “fool[ing] people?” Well, probably not those who refuse to be fooled. This reminds me of your commentary about the lady who left AIG and demanded that the company for which she had just become CFO actually know something about the investments it was holding.

    Imagine if the American people (especially now, Californians) demanded to know something about the tax code they were subjected to rather than allowing government to take an interest-free loan. In the California case, the people have no choice, but that isn’t so in the federal or most state tax codes. Getting refunds are completely voluntary, and most who are averse to loaning governments money interest free can do something about it by adjusting withholding, a relatively simple process.

    So is the “refund” idea “evil?” I would submit that deliberate ignorance and self-deception is a greater evil, and the government does little that is actually deceptive — they are much more subtle than that. They encourage tax preparers to perpetrate the “refund is good” fiction so they don’t have to.

    By the way, we really do need a preview system here. 🙂

  2. Thanks, Glenn. Wow, I was so excited that I have a preview system for my posts that I didn’t realize that there wasn’t one for commenters. I’ll check into it. I know there are all sorts of devices and widgets I need to get up, but if I waited until the site had everything, it would have been launched next July.

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