Buried Planet

The “tax refund” is near and dear to my heart because I never tire of seeing how the media (and ordinary people) treat it as sweet manna from government, like free money from their Fairy Godmother. Ironically, the idea of paying your taxes over time, with each paycheck was pioneered by one of my economic heroes, Milton Friedman. He reasoned that it would be better for government to receive a consistent stream of tax revenue, and it would be easier for citizens to budget themselves. The alternative is to make out one huge check for the government and pay your taxes in a ‘lump sum’.

Unfortunately, this has allowed the government to ‘boil the frog’ as it were, by making tax increases so incremental that they are not noticed by most citizens.

And then there’s the question of overpayment. People jump for joy when they get their ‘tax refund’ which is really just their own money that they’ve given to the government as an interest-free loan over the course of the previous year. It’s your money folks, it’s not a ‘gift’ from the government. If you had been allowed to keep that money and put it in a CD over the course of the year you’d have even more of it.

Need more proof that government uses these ‘refunds’ as interest-free loans? California has announced that tax refunds will be delayed several months.

ABC News has learned that tax refunds are now on hold in California for the first time in state history, according to the state controller’s office.

“Unfortunately, we have asked the California Franchise Tax Board not to send over tax refund claims beginning today because we will not be able to process them and have them out the door by Feb. 1 when a 30-day delay in tax refunds goes into effect,” Hallye Jordan, spokeswoman to California State Controller John Chiang, tells ABC News.

During the 30-day delay, the controller’s office estimates that a combined 2.74 million California individuals and businesses will have their tax refund delayed.

The controller’s office estimates that the delay in tax refunds will free up $1.99 billion over the next month to pay for education, debt service, and other payments that legally have first claim to state funds.

California has had no money in its general fund for the past 17 months, and has been paying its bills by borrowing from Wall Street and special internal funds.

Pathetic.

Notice, the state’s creditors have ‘first claim’ to state funds. And if California goes bankrupt, what then? I guess the overpayment of taxes to the state by citizens will never be repaid. The snake has just about gotten its own tail in its mouth. We’ll be bailing out taxpayers soon! How a state as populous as California gets into financial straits like this is incredible — the government has been spending tax dollars like a pimp with one week to live.