California's Tax Games

California has come up with a novel way to close this year's budget gaps:  it's increasing withholding from the paychecks of its citizens.  No, the government didn't actually increase taxes; it just raised the withholding.  They'll give any extra funds back to taxpayers in April, and presumably fewer people will have to write checks to the government on April 15th.

This is a terrible idea on many levels.  First of all, the government should not be taking forcible loans from its citizens.  Second of all, the fix is extraordinarily short term--people can start filing for refunds in four months.  What are they going to do for an encore?  Maybe, instead of raising taxes, governments can just start ritually raising the withholding regime every year, then mailing a check back at the end of the year, only to withhold even more the next time . . .

This article available online at:

http://www.theatlantic.com/business/archive/2009/11/californias-tax-games/29463/