If you knowingly overpay your taxes each year, expecting a hefty refund in return, it may be time to revisit your W-4 withholding form. The Check’s (Not) in the Mail

If you’re one of those Americans who knowingly overpay their taxes each year, expecting a hefty refund in return, it may be time to revisit your W-4 withholding form.

The nation’s economic slump and runaway spending have left states across the country suffering from record budget shortfalls. According to the latest reports, the numbers are staggering: 45 states are a combined $40 billion in debt. That’s got tax collectors and legislators scrambling to find new ways to stop the bleeding.

In Missouri, which is $230 million in the red, the situation is so critical the government has stopped mailing out income tax refunds to more than 415,000 waiting tax payers -- amounting to more than $167 million in monies due. Not the best way for legislators to court re-election, but indicative of a new economic reality where the buzz-words-du-jour are "Hobson’s Choice."

Rather than work together to address the state’s budget woes, Missouri Governor Bob Holden and state legislators are locked in a no-holds-barred slugfest. Last week, Holden furloughed 6,000 state workers — nearly 10 % of the state’s workforce — and cut more than $100 million from education and elderly care budgets in retaliation for legislators blocking a proposal to tap the state’s rainy day fund to offset the deficit. As the monkeys-in-the-middle, Missouri taxpayers are fuming. "They ought to pay the taxpayers their rightful money," Tony Salvator told ABC News, "It’s not the state’s money; it’s the taxpayers’ money."

Missouri is not alone in resorting to what you might call involuntary citizen loans. While not completely withholding tax refunds, Illinois and Alabama have temporarily delayed payments to citizens and corporations for several weeks in hopes of some type of economic rebound. Harley Duncan, Director of the Federation of Tax Administrators, tells the LA Times other states may follow suit: "Opening the [tax return] mail can be slowed way down. That’s the crude method of delaying refunds."

"You can’t spend what you don’t take in," explains Missouri budget director Brian Long to the LA Times. According to Long, Missouri grossly underestimated its projected income tax revenue last year due to unforeseen events, such as September 11, and weakened investor confidence in the stock market resulting in fewer capital gains reported. That hasn’t stopped state legislators from considering a bill that would give $500 million in stadium subsidies for the Kansas City Chiefs and St. Louis Cardinals. (Forget the taxpayers; we may be broke but we’re gonna find some cash to build Dick Vermeil’s Chiefs some new lockers.)

As state House Minority Leader Catherine Hanaway puts it: "The state has a spending problem, not a revenue problem."

The whole sordid affair makes one wax nostalgic for Kansas City’s legendary political boss, Tom Pendergast.

Sure, there was plenty of corruption, but Pendergast kept the booze flowing during prohibition, gambling was plentiful, and half the state worked through the Great Depression at one of his tightly-controlled companies. Some say he was even responsible for handpicking Harry Truman for the U.S. Senate.

What was it that finally brought Tom Pendergast down? Tax evasion.

Apparently, he didn’t trust the state government with his tax money.

May 15, 2002
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