You should be building a rough budget in your mind as we begin to move through these modules. In Part 5, we saw that we need to allocate a specific percentage to God and His servants right out of the chute. Next comes the government’s claim on our income. Remember “Render unto Caesar the things which are Caesar’s, and unto God the things that are God’s.” from Matt 22:21?
In creating a budget, we have to estimate the impact of certain claims on our money. Governmental taxes – unfortunately at four levels in the United States: Federal, State, County and Municipal. In Tennessee, not all income is taxed at the state level, but some is. Plus people who live in a municipality must pay both city and county real estate taxes. So if you own your home, you have at least three government entities with a claim on your money – and perhaps four!
Jesus was abundantly clear that he wants us to pay what we owe – period. If we don’t pay what we owe, we are in debt. The Apostle Paul said it succinctly, “Owe no man anything….” (Romans 13:8). So we need to pay our taxes, and ideally, like our church contributions, we pay as we go along. That way it is almost impossible to get in a bind.
Now frankly, I see a lot of abuse in this zone of taxes. The most dangerous is not paying what you actually owe in taxes by illegal tax avoidance. This behavior is rampant in our society, and Christians appear to be participating as well as non-believers. This is in direct disobedience to Jesus’ direction, and any time we veer of in direct disobedience…. Well, look out! It usually ends terribly because direct disobedience shuts the window of grace that God so desires to keep open in our relationship to Him.
There are two obvious dangers regarding not paying what you are due. The first is to not file your taxes even though your employer gives you an IRS related income statement. For the self-employed, the second danger is not notifying the IRS of your income – either by not filing properly or hiding your income by receiving all of your payments in cash. All I can tell you is that if you do this, you have a lifetime of trouble awaiting you, and I pray for God’s mercy because you are sure going to need it.
Another danger zone is not paying (or setting aside) at the time you receive income the amounts that you will owe when you actually file. We have to estimate these, but normally this is fairly easy to do because most people owe taxes in proportion to their income. If you work for someone who takes out for your taxes, this is pretty easy, but if you are self-employed, you have to take out for taxes yourself – which can be psychologically harder.
And then there are more dangerous taxable behaviors. Say for some reason you have to take money out of your retirement account and end up not being able to put it back in time, you will have a penalty charged in the amount of 10% of the amount you withdrew plus the ordinary income tax on the amount which will be due when tax season rolls around. Say you take out $10,000 from your 401-K retirement account (a 401-K retirement account is one of the tax deferred types of retirement accounts the Federal government recognizes). If you are in the 25% tax bracket normally, you will owe at tax time $2,500 in ordinary income tax PLUS $1,000 in penalty. All together that is $3,500 you will owe. If you don’t set aside the $3,500 then and there for taxes, you risk getting in a terrific bind come April 15th.
Let’s talk how these things actually happen. I am afraid one reason people get into trouble with taxes is plain greed – they don’t want to have their spending reduced by paying their appropriate taxes. The newspapers are filled with stories about very wealthy people who have cheated on their taxes. That’s just pure greed. We need to cry out like Proverbs 30: 7-9 outlines: “Two things I ask of you, LORD; do not refuse me before I die: Keep falsehood and lies far from me; give me neither poverty nor riches, but give me only my daily bread. Otherwise, I may have too much and disown you and say, ‘Who is the LORD?’ Or I may become poor and steal, and so dishonor the name of my God.”
But there is another syndrome at work when money is in short supply, and people are torn between meeting their perceived needs (and those of their family) and paying taxes on time. I feel sure they talk themselves into not laying aside adequate funds by hoping that somehow God will increase their income to make up for their tax and penalty. The problem with this is twofold. The behavior is presumptuous – that is, it presumes God will do something when there is no indication God will do so. Further, it puts God in a box – forcing God to take action. Guess what is the normal outcome? God does not specialize in accommodating our presumptions.
In summary, our second major budget priority is taxes. Remember Jesus’ admonition: “Render unto Caesar the things which are Caesar’s, and unto God the things that are God’s.”