Penalizing Prudence

Discretion and common sense are sinful qualities when the taxman cometh.

One of the Cardinal Virtues is under intense fire this week.  Prudence -- the ability to govern and discipline oneself while using skill and good judgment in the use of resources -- is a foreign concept to the U.S. tax code.  As my wife and I filed our returns recently, we were particularly painfully reminded this year how our federal and state governments scam the prudent professionals of this country.

And when we finally looked at our tax advisor in despair with how much we owed, he sighed with the following piece of advice for next year: "Don't work so hard, buy a house, and have lots of kids."

Working hard has worked for us this year.  It has allowed us to save for emergencies.  It has given us the opportunity to plan for the future.  It has provided advancements in education and licensing.  And it has been a blessing to donate to charities more of a percentage of our wealth than Mr. Obama and Mr. Biden have ever even considered donating -- combined.  Working hard should be a good thing, right?

But pursuing passions and laboring diligently can result in maddening depression upon a closer look at the numbers.  Turns out, every dollar I earned educating the youth of America went directly to covering my wife's tax burden.  That's correct.  Grading endless papers, doing independent research, and never missing a single minute of class all added up to a disgustingly rotund zero.  I happened to garner exactly 25% of my wife's income for the year, which landed us directly in the 25% tax bracket.  Therefore, I worked this year solely to pay off my wife's penalty for success.

Obviously, when we look at each paycheck, the respective amounts deducted every pay period add up to the total taxes contributed.  But when those numbers are viewed as a sum that is wholly compared to total income, it is a saddening revelation.  One person has just worked an entire year with no real dollar amount to show for it.

And because my wife is very good at what she does, and the market in which she works continues to flourish, hard work is only going to cost us more next April.

But it's the deductions that really turn the knife.

Because we happen to live in one of the most expensive real estate markets in the country, housing in safe and practical locations (e.g. close to work) is hard to come by.  Therefore, the tax incentive for buying a home this year does nothing for us.  The only places we could afford a home is either in a dangerous part of town, where our car insurance policies and personal safety risks would rise, or somewhere on the outskirts of our enormous metropolis, where fuel costs, car insurance, and personal safety risks from extensive highway driving would, again, all rise.  So, President Obama, to take advantage of the prized home deduction, we would need to put our personal safety in jeopardy, spend more money on insurance and fuel, and harm the precious planet with increased emissions?  Is that the plan?

What our tax code does not recognize is that home buying is not the solution for all citizens in all places.  Hasn't the collapse of Fannie and Freddie taught us anything?  For my wife and me, renting closer to work to keep down all other expenses and saving for the future is the smarter decision. 

But reason and logic have no place in federal law.  The child exemption policy is very expensive proof of that.

Again, our tax code does not recognize that having children is not the solution for all citizens at all times.  Because my wife and I are not financially or personally ready to have children, we are not allowed any exemptions to reduce our tax burden.  Even though we have no kids our tax dollars go to public schools, Medicaid, and welfare.  These institutions are filled with children of parents who did not show the restraint and wisdom of not having children until being completely prepared.  But we did.  And we pay.

We are the walking, breathing, and voting examples of why a consumption tax is the proper system for our nation.  Those of us that live wisely by saving, investing, and planning for future expenditures, while prudently governing our personal lifestyle choices, should benefit the most.  We are not the ones spending frivolously or procreating foolishly.  We are the ones that work the hardest and the smartest.  We are the ones providing increased stability to our nation's markets and decreased dependency on government programs.  We are the spine of American freedom and responsibility, yet and we are the ones facing paralysis.

So what will you do next year to decrease your tax burden?  Start popping out babies like a Pez dispenser?  Collect houses like plastic Monopoly pieces?  Take more days off from work, or slack off a little more at the office?  Those all sound like good ideas for keeping the economy strong.  But, if those don't suffice, I hear blaming TurboTax works, too.