It’ tax day and this is the story of why I’m glad I paid more in taxes than most people earn in a year. Wouldn’t you love to have Bill Gates’ tax bill if it meant you also had his income? The flip side to this is that my tax refund was once so big that I got every penny that was withheld throughout the year back again.
First let’s start there, many years ago as I was spending money to start a business. The expenses were high with construction costs, rent, loans, payroll, advertising, utilities, and many more expenses with very little income. The amount of customers you have on day one is much less than the amount of customers you have six months later which is less than you’ll have a year later. Profits come slow, expenses come fast.
In that first year of operating our business we spent so much more than we earned that we had no income at all that year. Yes, we had a big refund but it was scary as we wondered if we would we ever have a profit? Would the business eventually make some money? Of course we were confident it would, but there’s a reason more people don’t start businesses — it’s a big risk.
Fast forward five years from then and we now have a big tax bill. The reason isn’t that the business is so profitable, it’s that the profit came all at one time, when we sold the business. That big influx of income pushed my income higher than ever and therefore my tax bill was big, really big.
This reminds me of the person who makes lots of money working overtime only to complain that the taxes are killing them. They made more so they paid more — that sounds about right to me. After all, they came out ahead just not as far ahead as they would like.
I did what I could to minimize the taxes, taking all the allowable deductions and donating a huge amount to charity but I’m glad my tax bill was big because it means I did something right. Next year will be back to normal and if I work things out correctly the taxes withheld from each paycheck will be the right amount so that next year I will neither receive a refund nor owe any additional tax.
This year, however, I’m glad I paid a lot because it means I earned a lot and isn’t that the real goal?