It's Not Fair

I upset a student the other day; she accused me of being unfair. I agreed with her. I tried to make it one of those teachable moments by pointing out that quite often life is not fair, so she should learn to deal with it. She was not impressed with my pedagogical technique. As she left the room angrily, I asked her to please make an appointment with my dean so we three could work something out.

I do not commonly have students leave my presence in such a disturbed state, but I am very familiar with the attitude that life owes everyone a fair shake. When someone complains about the lack of fairness in a situation I usually respond that life is not fair. It is not fair that a family is expecting a fatally deformed child which will die almost as soon as it is born. It is not fair that six people were shot dead in Tucson recently. It is not fair that thousands of children are missing a parent who made the ultimate sacrifice in Iraq or Afghanistan. It is not fair that millions of Americans are out of work because of an economic bubble that burst. (Was that Chinese eco-terrorism?)

There are countless examples of life’s unfairness. What irks me is the people who want to gain some benefit from achieving what they call fairness. Megan Kelly had a guest on her Fox News program this afternoon who decried the unfairness of our current income tax system. She said, naively, that if only the top one percent of people – the really rich people – would pay their fair share our economic woes would be over. First of all, she is just misinformed (or she is misrepresenting.) The last time I saw the figures, the richest five percent of taxpayers pay over fifty percent of all taxes. The poorest forty percent pay almost no taxes at all. If there is unfairness here, it is that the rich pay such a disproportionately large amount.

Regardless of her complete misrepresentation of the facts, it remains a fact that she believes rich people owe the rest of us something; she believes in the redistribution of wealth. She is not alone; most of the progressive Democrat politicians in the US believe in redistribution. President Obama said during his campaign for office that he does. What is national health care but a plan to make people who have money pay for the medical costs of those who cannot afford it. The thinking is that it is not fair that some people can afford insurance and some cannot, or that some can afford medical care and some cannot.

Either way, the underlying assumption is that everyone is owed medical care as a right. I have argued against that in this space before. All I will say about it now is that I cannot find health care anywhere in the US Constitution. Nor can I find unemployment benefits, or low cost housing, or food stamps or farm subsidies or corporate welfare or any of the hundreds of other government redistribution programs with which we are saddled. The fact is our founding fathers would be aghast at what the federal government is undertaking, this vast wealth redistribution scheme.

Read William Bradford if you dare. He describes an attempt by the early settlers in Plymouth to function as a wealth equalized system, otherwise known as socialism or communism. The community almost starved to death before they converted to a capitalistic system where individual effort was rewarded proportionately. “If a man will not work, let him not eat,” sounds cruel, but those words were spoken by the Apostle Paul to believers.

From the Genesis creation mandate to “dress, till and keep the earth,” down through the so-called Protestant work ethic, Christianity preaches one message. It also tells us that there will always be poor among us. Poor is a relative term implying that others will be rich. It is a fact of life – an unfair fact to be sure. But where is it written that life will be fair? Our founders declared that all men had the right to life, liberty and the pursuit of happiness. We are not being true to either the Scripture or the Constitution when we try to say all men have the right to equal outcomes – equal opportunities yes – equal outcomes no.

Tax Revolt, Anyone?

I know history is not a popular subject, and most of us have probably forgotten everything we learned in tenth grade anyway. But, almost everyone should remember the reason the colonists revolted against English rule and founded this country. There were many causes, I know, but the central issue was taxation without representation. The Boston Tea Party was a demonstration against the government imposition of a burdensome tax on the colonists' staple beverage.

Anyone paying even a little attention to the news recently should see a parallel in the current debate about taxing soft drinks, the modern day equivalent of colonial tea. Granted, the government proposing this tax is our very own (supposedly,) yet one wonders if Washington D.C. isn't as far removed from its constituents as King George was from his. Does the average U.S. citizen have the ability to influence the thinking, let alone the actions of his representative holding the reigns of power? Has the ability to vote for a representative voice lost its value in America today?

Closer to home, the governor of Michigan, Jennifer Granholm, has announced another cut in the state per child allotment to public schools. Her expression seemed pained as she spoke, and her plea to the legislature to find some way to reinstate the funds seemed genuine. But she made the cuts anyway. One wonders why the choice was made to cut school funding. The parents of school children have little power to influence Governor Granholm, but the Michigan Education Association certainly does. The MEA was one of Granholm's big supporters when she ran for office. They must regret that decision these days. Where is the influence they imagined they bought with their campaign contributions?

The last example of leadership disconnected from the people comes from my home county. A small school district is in financial trouble due to fiscal irresponsibility spanning many years. An outlandishly expensive new high school was built as a monument to a former superintendent, laying a debt burden on an already strapped budget. The current central administrative staff numbers four times as many as other county schools of comparable size, cronyism being the apparent explanation. The money spent on support versus instruction is the highest percentage in the county. Fearing state intervention because of budget shortfalls, the superintendent is making a unilateral attempt to close schools and lay off teachers, a move which has proved very unpopular with citizens. Here again, the people most directly effected feel powerless to do anything meaningful.

What is a concerned Christian citizen to do? Paul told his Roman audience to pay taxes to whom they were due. This, remember, was during the time of a government by a dictator who was violently persecuting believers. Paul's readers had no voice in their government like we do. First, no matter how much we dislike the policies of a federal, state or local government, we must assume that Paul's directive to the Romans applies to us today. We have every right to protest, but we must pay whatever taxes we owe. Period.

That doesn't mean we can't protest. Our form of government allows "tea parties" as long as they are civil. Our representative democracy also gives us a lever to pull in most cases. Our leverage, pun intended, with politicians is that we hired them and we can fire them as well. Most localities are getting ready to hold elections next month. Christians must not zone out during local elections. The mayor, councilmen and school board members have a more direct effect on daily life than most people in Washington D.C. Two years from now, those of us who are unhappy with the current crop of D.C. politicians will have the chance to dramatically alter the landscape there.

Finally, when decent Christians do run for office, we must support them any way we can. The Roman letter also commanded giving honor to whom honor is due. Let all concerned Christians honor those who are making the choice to work for a more representative government. If we don't get involved, we have no right to complain when we are taxed more heavily to pay for programs we disapprove of strenuously.

Tax Refund Analysis

“I always look forward to getting a nice big tax refund every year.” I don’t know how many times I have heard that, but it always amazes me that people say it -- and believe it is a good thing. There are a few situations which will result in people legitimately getting a refund of some of their withholding, but to expect, or even plan to get a sizeable refund every year is not good planning.

Let’s explore how the income tax withholding process came about. It was probably one of the most ingenious and, at the same time, sinister things the federal government ever did. Franklin Roosevelt had a theory that he could spend the country out of the Great Depression. The problem was the government didn’t have any money to spend. After hitting on the great idea of creating a tax on income, Roosevelt needed a way to be sure the money came into the federal coffers on a regular basis. The answer was to take the money from every wage earner every payday before he ever saw it.

The payroll withholding process allows the government to take money from every working citizen a little at a time, making the income tax easier to bear and more certain to be collected. This is good for government, but not all good for the citizens. Certainly, paying our income taxes a little at a time throughout the year is not as difficult or onerous as having to write a big check every April 15. But the downside of withholding is that we often don’t realize just how much we are paying or whether the amount is appropriate to our circumstances.

The federal income tax withholding tables are designed to take the correct amount from each paycheck to cover the expected tax liability for that individual in that tax year. The tables are complex because there are so many variables. Besides considering the amount earned, the tables have to take into account how the pay is distributed: weekly, bi-weekly, semi-monthly, etc. They allow for marital status and dependent exemptions as well. By selecting the correct categories on the W-4 form, an employee tells the payroll department how much tax to withhold each payday. In theory, the total withholding during the year should equal the amount of tax owed.

What all this means is that the person who is thrilled to get a tax refund in April is only getting back the excess tax paid throughout the year. At best, this might be thought of as an enforced savings program. While saving is generally a good thing, one should try to get a return of some kind for the investment. Although not very substantial right now, savings accounts pay interest to savers allowing their money to grow. Mutual fund money market accounts sometimes pay a little more than straight savings, and market type investments can pay quite a bit more. (They can also lose money in down markets.) The federal government pays nothing to hold excess tax collections for the year. This is a lousy investment for the tax payer.

There is another downside to letting the government use our money all year for free. In America today, there are few families who don’t have at least some consumer debt. The interest rates being charged by banks and stores for their credit are sometimes as high as thirty percent. Every withheld tax dollar that could have paid down debt costs the tax payer his debt interest rate.

If you want an eye-opening exercise, try this. In one column list all the consumer debt you have: mortgage, credit cards, store accounts, vehicle loans, etc. In the second column, list the interest rate you are paying for each item, then multiply the dollar amount of the balance times the interest rate. Write that number in the third column. Total the third column and divide it by the sum of the items in the first column. This is your average debt interest rate. Multiply your tax refund times your debt interest rate to see how much excess withholding costs you. Ouch?

The Bible instructs Christians to pay taxes to whom taxes are due. Fine. Scripture also teaches that we are to be faithful stewards of the resources we have been given. Leaving large amounts of money in the hands of Uncle Sam all year instead of using that money wisely in our own ways is not good stewardship. If you get a large tax refund every year, you should adjust your W-4 so that you come out as close to even as possible on April 15. This will give you the opportunity to make the most of every dollar you earn.