Taxes - do people really need force to save?
I’ve never been against taxes, because with taxes you get roads and public libraries, police departments and the FDA. Okay, tossed in the last one as a joke. Ha, funny, right?
One thing I’ve never understood are the people (the majority of Americans???) who use tax withholding as a forced savings plan. All year long, the feds take out a certain amount, and in the spring, you get a refund because you’ve overpayed.
By doing that, you’re allowing the government to keep your money and without paying interest. It just makes no sense except that it’s the only way some people can put some money aside, then get a refund check to buy a new TV.
I’ve held some weird jobs (most of them briefly) in my life, and most were jobs over the summer between high school and freshman year of college. I had a handful of jobs that lasted a few weeks each, but I got a lot of worldly experience.
When I was working on my Master’s thesis, my old college roommate suggested I join her company, a major insurance company. So I did, because she was making a fortune selling mostly life insurance, and I thought I could sell some insurance in my off time. I had the wrongheaded belief that if she could do it, so could I. I was a huge failure (I didn’t plan to fail, but failed to plan) because I suck at selling. And to be honest, I didn’t really believe in the product we were pushing, the whole life insurance plans.
Whole life is the kind of insurance where there’s a basic life insurance plan in there, but you’re paying extra that goes into the company, and then builds up dividends. Later, you’ve got money built up and you can borrow against it or cash it in. I’ve forgotten the details (believe it or not, I had to cram and take a test and get a license for this, plus annuities), but someone from the industry could fill you in and tell you why it’s beneficial.
I never thought it was. I thought it made more sense to carry the amount of life insurance you need by buying term insurance (bare bones life insurance with no bells and whistles) and then taking that extra money and putting it in the bank.
So I think in the six weeks I tried, I sold two policies. I was given the “you’re a nice person, but this job isn’t for you” speech and let go. It was actually a relief, because I knew I was no good at it.
But every job I’ve had is a learning experience, and this one was no different. One thing I learned was that whole life could be viewed as a “forced” savings plan. People didn’t have the discipline to put away a little something every month, but when it automatically comes out of your checking account, it’s like a bill you have to pay. And that was one of the selling points.
Maybe tax withholding is the same thing. Some people just have to be forced into saving, and if it’s out of your paycheck before you have your hands on it, it’s like it’s non-existent, and then you get a bonus in spring. Woo ha.
Would it not be better to open a Christmas Club account (do they still do those at banks?), where they automatically take out some money, put it into a little savings account, and come Christmas, you’ve got a little chunk to spend on presents. At least this way you’d get a little interest instead of letting the government have your money with no interest.
It’s hardly a surprise, then, that in Hawaii they’ve learned that people will take advantage of free health insurance provided by the state, even when they don’t need it. Except that it’s *not* free. Taxpayers paid the bill.
It’s looking like the government may stick its hands into other arenas after the election. This can’t be a good thing, because it’s going to be one more thing people “deserve.”
Do the majority of Americans really have to be forced into saving a little money and forced into buying health insurance?
