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Ben Stein How Not to Ruin Your Life

Ben Stein, How Not to Ruin Your Life

Big Brother and Your Taxes

by Ben Stein

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Posted on Monday, April 20, 2009, 12:00AM
Here is a scary story for you.

Recently a friend of mine, who lives in a city in Northern California, called me, extremely upset. She said she had just received a letter from the California Franchise Tax Board, the ruthless entity that collects taxes in sunny California.

The letter referenced her 2006 taxes, asking her how she had the means to buy a certain very expensive car she owns. She was asked to document how she had the money for it and why they saw no sign of that income on her 2006 return.

The fact is that the woman in question was in a serious car accident in late 2005. Her prior car was totaled. So she got a lump sum insurance payment of about $30,000. Rather imprudently, she used that money as the down payment on an extremely pricey car -- the sort of car she really does not have enough income to afford.

That's her problem, and she will deal with it.

The scary part is that the California Franchise Tax Board knew what kind of car she bought and how much she paid for it, and they could and did compare those numbers with her earlier years' income.

The Servant Becomes the Master

This shows that information gathering by taxing authorities has gone way past where it should be. The whole incident reminded me of the beginning of ‘Terminator', when we learn that, at a certain stage, machines become self-conscious and have the will to take over the earth. The servant becomes the master. And since the master is a machine, it has no feelings other than the will to control.

If the taxing authority knows what kind of car a taxpayer has and how much it cost to buy, what's next? Can the state match up our credit card purchases with our social security numbers and then keep a total of how much we have spent in 2009? Can the IRS or the Franchise Tax Board then have a program that figures that if we spent X, especially on Y and Z items, then we must have had an income of A? Can it then send us a letter demanding to know why we did not pay tax on amount A?

More frightening, the taxing authority can slap liens on taxpayers, and sometimes the taxpayers don't learn about it until later. Can the IRS or the state authority compute what their machines "think" we owe, and then simply debit that amount from our bank or brokerage accounts? If there is not enough there to pay what they figure we owe, can they put liens on our homes and garnish our wages?

If the IRS really gets rolling, can they get an instantaneous, automated look at our checking accounts? Can they compute what the machines think we owe by the checks plus the credit cards, and then attach our wages or our bank accounts until we pay?

Soulless Machines

Our government, to some people, appears to be a fair-minded, careful body. And many bureaucrats do fit that description, although many do not. But what happens when soulless machines take over the tasks of tax gathering?

Then we humans have to gather our records and try to fight back as well as we can. How long until we go into an audit and don't even talk to a human being but instead have a machine scan our documents and then instantaneously give us an answer?

The answer, of course, will always be "pay up."

At present, only the top echelons of wage earners pay any meaningful amount of tax. But once the collection process is fully computerized, what is to stop the IRS or the states from collecting at least a few ounces of flesh from everyone?

The future liabilities of the government -- thanks to wild overspending by both the Democrats and Republicans -- are almost incomprehensibly large. The needs of the states are critical right now. What is to stop the politicians from making machines our oppressors to squeeze out every dime they can from us?

A Plea for Privacy

And what about some minimal amount of privacy? I am happy to pay my taxes. I like the fact that some of what I pay goes to the military and police and firefighters. But I don't want the government to know all the details of my life, which is what they are clearly on the way to knowing.

For years now, I have been hearing that we need a very large sales tax instead of an income tax, and I have pooh-poohed the idea as being too regressive. But now that I see where the income tax system is going, I am eager for a fresh look at a national sales tax, which would stop the government from prying into our lives.

Taxes are a basic part of life, and we all have to pay our fair share. But Big Brother is a lot closer than we think, via the tax system, and I don't like that one bit.

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217 Comments

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  • Kenneth - Monday, May 4, 2009, 11:32AM ET  Report Abuse

    • Overall: 5/5

    I like this story, however I'm not very happy with the responses from it. People have to understand that America is your home. Just like the structure you live in has a mortgage, so does this country. Don't complain about taxes! Our standard of living in this country far exceeds what you're paying into it. The opportunities that I have every day are much greater than anything I could ever contribute in taxes. I pay taxes like I pay my mortgage every month. It's not something I try to avoid. Mr. Stein makes it sound like the government is BAD for keeping track of peoples ability to pay. It's easy to assume that most people will screw uncle Sam if given the opportunity. Thank God there's some accountability. It wouldn't be fare to those who pay willingly. There's a reason why only 2% of Americans have a FICO score above 750 and only 2% of Americans make 98% of the wealth in this country. That's a choice! Being part of that 2% isn't a priveledge. I earned it. And anyone who says I should pay more taxes because I make more money, is just pathetic. It's a cop out. We all walk on the same sidewalk, drive on the same streets, and take advantage of the same system. Everyone should contribute! Keep in mind that it's the rich that employ you. And it's the government that bails you out. You want to stick it to the man, then we'll just stick it to you in return. Ben! Stop encouraging this type of behavior in your readers. This is precisely why we're in this mess right now. People have a since of entitlement that runs deep in the bloodline of this country. People need to take ownership of this country and stop complaining.

  • Yahoo! Finance User - Monday, May 4, 2009, 11:10AM ET  Report Abuse

    • Overall: 5/5

    Years ago, I knew a woman who moved here from Ireland, for the love of a good man. She owned a business in Ireland, and she sold her share of her business to her partner, but decided to keep her money in Ireland for the following reason. She said that in Ireland, you are taxed only once for your money. She said that here in the U.S.A., you are taxed when you earn it, when you spend it, when you save it, when you gift it, etc., etc. She said you are taxed so many times on the same dollar that it didn't make sense for her to bring her money over here. I have thought about her comments many times over the years, as the unfairness of our tax system keeps multiplying and increasing, and as the the wasteful spending of those hard-earned tax dollars keeps multiplying and increasing as well. When will it stop????? Or will it ever stop??????????

  • Yahoo! Finance User - Monday, May 4, 2009, 11:03AM ET  Report Abuse

    • Overall: 4/5

    For all you fools that think this isn't a problem, just wait till they come after you. It's not about a rich vs. poor, in the end once you give the gov't the power, we all lose. Even you liberals that think this kind of overreaching of the gov't is ok, as long as we only stick it to the rich. BTW, I'm not rich, not even close, but I do know that I'm not comfortable with the gov't overreaching, so give up the argument that I'm one of the rich, if that's your argument, you are nothing more than a FOOL, and I pity you.

  • thomasromancer - Sunday, May 3, 2009, 9:21PM ET  Report Abuse

    • Overall: 5/5

    Until the American people wake up and come out of their self absorbed stupor the government, corporations and utilities will all just make us pay and pay and pay and we will have no power to fight back. I guess Americans have to experience something first hand before they can realize just how screwed they are. Come on Americans, start thinking beyond just you.. It will take a nation to fight and change the system. It will take a focused, shared vision of what is fair and healthy for America to empower our community resolve and democracy.

  • goldgoldgold666 - Saturday, May 2, 2009, 2:30AM ET  Report Abuse

    • Overall: 1/5

    I love Big Brother.

  • Yahoo! Finance User - Friday, May 1, 2009, 9:50PM ET  Report Abuse

    • Overall: 5/5

    I agree with Mr Stein- I hope to never see the day when the only activity we can have is to work and pay taxes- social regulation has it's place but must be moderate as needed to limit the actions of those more intelligent and less moral than others.

  • John - Friday, May 1, 2009, 9:40PM ET  Report Abuse

    • Overall: 1/5

    You are so wrong Mr Stein about your friends experience. Your friend had a reasonable explanation and was able to prove it to the tax authorities, and they were satisfied with the explanation. Her record of purchase was reported to another state agency, the Department of Motor Vehicles, when she bought the car from the dealership. So it was simply a matter of one state agency sharing information with another and good auditing. California, along the Federal Govt, has a problem with people not reporting and paying tax on their income. California, along the Federal Govt, has a problem with people not reporting and paying tax on their income, thus not paying their share for the services the government provides. Indeed, if you friend had bought the car with unreported income and then had it stolen, would she refuse to attempt to recover her vehicle by reporting the theft to law enforcement because she did not pay tax to support those agencies? And should she refuse to drive the car on the state's highways or roads because she did not contribute income taxes to state fund to help pay for those road? Mr Stein, I am sure you are aware that wealthy persons like you and your friend receive a lot of benefit from the government by their protecting you wealth, providing a legal system to enforce contracts and protect your holdings from theft--more than a poor person who has very little to protect. So having the state use information provided to it to find government freeloaders and make them pay for the services they receive is a good thing.

  • Tom - Friday, May 1, 2009, 9:15PM ET  Report Abuse

    • Overall: 5/5

    A national sales tax need not be regressive. Simply exempt necessities like food and clothing and it becomes instantly progressive. Only the rich will be able to afford the highly-taxed luxury goods anyway. If you can afford a $500,000 boat, you can afford a $650,000 boat instead. Another benefit: it discourages consumption and promotes production.

  • Johnna - Friday, May 1, 2009, 9:05PM ET  Report Abuse

    • Overall: 5/5

    Finally I give you 5 stars. A national sales tax and/or a flat tax will never happen. The poor do not pay taxes and the poor will not allow themselves to pay these taxes either. A family of four (husband, wife, plus 2 kids) making $46,000 do not pay Federal income taxes using the short form with no special deductions. Do not believe me, check it out yourself.

  • John - Tuesday, April 28, 2009, 1:07PM ET  Report Abuse

    • Overall: 4/5

    Very scary Ben. Isn't the government also giving $8,000 tax credits to first time home buyers these days? The government giveth and the government taketh away. I guess I better act the way the government wants me to so I can get rewarded / avoid punishment as the case may be. It feels so nice to be reduced to a rat going after pieces of cheese.

  • RichardC - Tuesday, April 28, 2009, 11:20AM ET  Report Abuse

    • Overall: 5/5

    Only real tax (and return of power to the people) solution is the FairTax.

  • Kevin S - Sunday, April 26, 2009, 10:25PM ET  Report Abuse

    • Overall: 1/5

    Poor Ben Stein is in the wealthy 10% who aren't getting a tax break from the Dems and Obama. Boo hoo! And btw, the government can print as much money as it pleases. The problem for Ben is that the loads of money he has saved become worth less than before. Also, if regular people are getting extra money from the government, how is Ben Stein gonna buy some lovin?

  • Z E - Sunday, April 26, 2009, 9:20PM ET  Report Abuse

    • Overall: 4/5

    What is sad is that it takes the creation of an almost irreversible system (the tax system) and the election of a ridiculous spender (Obama) for the rest of this country to see where it is leading itself...to really scary times! The "national sales tax" would catch everyone, even the criminals (as long as they buy from legit vendors). It is an interesting idea, and it would help all of us spend less, closer to what we need and not everything we think we want (and don't worry, I am including myself here since I have bought some stuff I have really not needed). You know, I CAN afford going to the grocery store and buying more grain and beans and other imported or exportable commodities, even if I end up throwing half of a meal away because I am "full". But you know what, by buying more than I need, and too many of my neighbors in this country doing the same thing, I just raised the prices for everyone else in the world, even for my family living in that developing country I am from, who is buying just what they actually NEED, mostly because they cannot afford to buy any more. Now it is even more difficult for them to buy what they need, and now they have to choose between food and doctor's visits, or other things many of us take for granted. I have been guilty as charged, but I have decided to change that in my own life. What I hope is that we will stop this whole direction soon because we cannot afford this from a monetary and a safety point of view. A little off-point but, new legislation wants to put pastors in prison for exercising their freedom of religion and teaching what The Bible reads about homosexuality??? New legislation also wants to reprimand MEDICAL DOCTORS or even prevent them from ever practicing again if they refuse to perform an abortion, even if it is because of their core beliefs about life, perhaps even religious beliefs (freedom of religion, again), when there are plenty of other doctors who could and would perform the abortion? I do not wish evil on anyone, but I do hope we slow this down or we will not recover from this. This, the USA, is the country in which I saw the most promise of all in the world...and we are leading the way to moral and personal catastrophe. I hope we can stop it before it is too late. I hope so.

  • Wayne - Sunday, April 26, 2009, 5:28PM ET  Report Abuse

    • Overall: 4/5

    I am 100% for a national sales tax. You will be suprised at the support of a national sales tax from the working class Americans!! Ben, please pursue this further.

  • John - Sunday, April 26, 2009, 8:20AM ET  Report Abuse

    • Overall: 3/5

    Suspicious how you don't name the brand of car. Ferarri? maybe. So, we get drug dealers who claim little or no income, but have tons of cash, and buy a Jaguar or something, as teenagers, and look so obviously criminal on the street. I could picture YOU writing another article telling us how inept government is to not be able to " see these obvious criminal individuals". right? So, here people like that would get caught in a tax problem, just like Capone. All you friend needs to do is jot a quick note that she got a insurance payout, bought the car, and still owes (maybe too much) money on it. I would even add "since you know so much about the car, does anyone in the Tax Office want to BUY it from me, and take it off my hands? I don't think I can, or should , afford it!" They'll get a kick out of it! And maybe the car will have some added value , having been the subject of a Ben Stein article! Is this much more different than people becoming suspect of growing pot in their homes because of high utility rates?

  • Dennis - Saturday, April 25, 2009, 10:07PM ET  Report Abuse

    • Overall: 5/5

    Amen. Bigger and bigger government has a lot of people upset. The April 15th protests around the country were probably just the beginning. Indeed, we live in interesting times.

  • Yahoo! Finance User - Saturday, April 25, 2009, 1:50PM ET  Report Abuse

    • Overall: 1/5

    Don't listen to t

  • Yahoo! Finance User - Friday, April 24, 2009, 4:45PM ET  Report Abuse

    • Overall: 1/5

    Ben, your friend should dry her eyes and answer the letter with the explanation. Problem solved. The IRS is not the problem, here.

  • Yahoo! Finance User - Friday, April 24, 2009, 1:06PM ET  Report Abuse

    • Overall: 5/5

    Great to see some semblance of an anti-state, pro-liberty column here for once. The failed politician Whelan should take a few notes.

  • Yahoo! Finance User - Friday, April 24, 2009, 11:44AM ET  Report Abuse

    • Overall: 1/5

    This article is ridiculous. Ben, I have higher expectations of you. If one files their tax return timely and pays their taxes this kind of thing rarely, I mean really rarely, happens. Yes, FTB does have reporting from several agencies, inlcuding the DMV, that can flag an account for inquirey. A simple response explaining the issue is all that is usually needed to clear things up. There is a 6.3 billion tax gap in the state of Califorinia EVERY YEAR - that is the amount of taxes that should be paid that are not because of the underground economy. And so yes, the state is trying to find ways to discover and collect those taxes and this interagency reporting is part of that. Receiving a letter and the required follow up is small price to pay in my mind to discover the tax cheaters. And, keep in mind, the FTB is only the ADMINISTRATOR of tax law. Anything and everything they can do is mandated by the legislature. If you don't like the tax laws and the collection system, vote in different legislators who advocate tax law change.

  • jim n - Friday, April 24, 2009, 11:43AM ET  Report Abuse

    • Overall: 1/5

    Car purchases in CA are different from most all other purchases because of DMV taxes. Franchise tax board doesn't have some Big Bro Box, Ben that watches where ever you go like in the book 1984! This kind of PARANOIA is the same scare tactics that the Republicans use to scare the bible thumping populace into thinking that FEMA is preparing to set up concentration camp tents for the Anti-Christ Obama's evil master plan in order to scare up votes... What's the next Big Bro conspiracy Ben? Are Black helecopters going to be in cohoots now with the IRS: taking pictures of you at ATMs in order to track cash purchases for Taxing purposes?

  • Tony d - Friday, April 24, 2009, 11:08AM ET  Report Abuse

    • Overall: 5/5

    Ben, !!! WE NEED NO FEDERAL TAX !!! And we need a plan to end Federal taxes altogether. This lobbying for money and favors and failed banking and failed this will all be over. There's too much money in the hands of too few and "contributions" to congressional members buys what shouldn't be for sale, my tax dollars. Why can't these failed US companies make something someone somewhere wants to buy? Because begging and buying the right to take money has become the norm in the failed States of America. Ask youself this, how many days did I work for the Chinese this year, the Koreans, the Japanese, the Taiwanese. All have national healthcare, the best our money can buy.

  • Yahoo! Finance User - Friday, April 24, 2009, 10:32AM ET  Report Abuse

    • Overall: 1/5

    if Homeowners don't have to pay their mortgage; if GM doesn't have to pay its debt; if the Obama nominee doesn't have to pay his taxes; THEN WHY SHOULD YOU?!?! TEAR UP YOUR CREDIT CARD BILLS!! and ride that bear mkt rally..obama save america...

  • Yahoo! Finance User - Friday, April 24, 2009, 9:06AM ET  Report Abuse

    • Overall: 5/5

    Good article Ben. The level at which Big Brother can follow you around is getting scary. For those of you who don't believe about the power a government can grab, you should read Orwell's book Nineteen Eighty Four. Or you could rent the movie and svae yourself a bunch of time. The size of the government at all levels has gotten scary and will get worse under Barry.

  • Yahoo! Finance User - Friday, April 24, 2009, 8:56AM ET  Report Abuse

    • Overall: 2/5

    At last a relevant blog....Ben, you are always preaching that individuals are responsible for their personal choices in life. I agree with you on that, but also understand some people out there purposely cheat the system which hurts everyone else in the system. We have people in our government that get paid to minimize those cheats, and for good reason. Imagine if we had no way of knowing who earned what, or how they managed to pay for certain things with their income. Example: someone has been honest and earning a steady, modest income for the past decade or two, all of a sudden they manage to somehow purchase a Cadillac! How did they execute that? Through inheritance, a lottery win, or a second job? Our government needs to know that information just like they always.

  • eugene - Friday, April 24, 2009, 8:24AM ET  Report Abuse

    • Overall: 5/5

    Good job Ben. Just keep away from economic forecasts. Damn shame you did not do research in 2007 and report on the packaging of bonds with phoney AAA ratings, the insuring of that garbage by AIG, Goldman selling that garbage to dupes; then selling it short, the magnitude of credit swaps, the insuring of that garbage by AIG without charging an adequate premium, the insolvancy of Freddy and Fanny, etc.,etc. Where in the hell were you then Ben??? Were you asleep?

  • James - Friday, April 24, 2009, 7:50AM ET  Report Abuse

    • Overall: 2/5

    Ben gets two stars for not parroting Larry Kudrow, for once. Although this fear mongering article about "Big Brother" does nothing to make my life "less ruined". Again, Yahoo just gives Ben a soapbox for his own agenda with no supervision. I guess that Yahoo needs to more of a "Big Brother".

  • Once a patriot - Thursday, April 23, 2009, 10:52PM ET  Report Abuse

    • Overall: 4/5

    Ben, This is the very reason we must resist electronic payment systems. Remember when we were promised free ATM access??...if we would only use them. Then credit card fees, next universal default, now they lower your linit without! your knowledge, and charge you overdraft fees....this was on tahoo finance last week ! We are being heded towards the cliff. If you don't see where you are headed you will find out soon the hard way. Is there one hoest man left in this country? When will one man stand up ,and do what's right...it is getting downright scary where we are heading.

  • Al T - Thursday, April 23, 2009, 7:37PM ET  Report Abuse

    • Overall: 5/5

    This will be a hard fought war, to tear down the current repressive tax structure. The government will not be very eager, especially the lefty administration, to let go af any of the control they have now. We'll see.

  • erikh - Thursday, April 23, 2009, 6:33PM ET  Report Abuse

    • Overall: 1/5

    BS stands for Ben Stein... Since he is a failure at finance, he now is fanning the flames of paranoia as a science fiction writer... "beware the machines!" Where were you Ben, when the Bush administration you loved decimated civil liberties in the name of 'the war on terror?' And where were you when the Bush administration enacted tax cuts for RICH!!! Oh, now I see why YOU are paranoid... poor rich, BS, with all your real estate, etc. etc.

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