Don't trust the government with your money

Financial planners tell us that getting large refunds back on your annual income taxes is a bad idea. The government gets an interest-free loan from you to keep your money during the year. But if that was not bad enough, what if the government decided not to give you your money back? According to this LA Times article, the state of California has decided to deal with its budget crisis by refusing to send out tax refunds. This means that thousands of people who were depending on the money won't be getting it for weeks or months.

If an individual taxpayer were to refuse to pay the tax money he owes, he would face interest and penalties. If he were determined to be grossly negligent, he could face harsh penalties and possibly jail time. But of course, the State of California won't face any of these problems. It might decide to pay a little bit of interest to each of the taxpayers, but it won't face penalties or jail time for what is clearly gross negligence.