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People Enjoy Paying Taxes??

I might as well be here to tell you the earth is flat, and in the near future we'll all commute via giant squids instead of cars. Because what I am here to tell is you is just as preposterous. As Roxanne Khamsi reported at NewScientist.com, "Paying taxes is a pleasurable duty." That's right -- the activity so many of us grouse about so much actually results in positive feelings.

A recent study was conducted at the University of Oregon in Eugene in which college students were given $100 and told some of the money would be used to pay taxes. They were then given 60 tax scenarios to read, each of which required a tax between $0 and $45. They were informed that one of the taxes would be randomly selected and subtracted from their $100.

Here's what happened: "As the participants viewed the tax scenarios, their brains were scanned using functional magnetic resonance imaging (fMRI). Surprisingly, whenever the students read the taxation scenarios, scientists saw a spike in activity within two of the brain's reward centers -- the nucleus accumbens and caudate nucleus."

What it means
The lead researcher suggests that these results may explain why so many of us routinely pay our taxes. We may grouse, but we rarely refuse to pay. Cornell economist Robert Frank has suggested the positive feelings that are generated might be tied to our desire to help others. We may not help others as much as we think we should, but by paying taxes, we feel we're at least doing something.

I'll also add another possible explanation: We believe in taxes. We may not like parting with our money, but we see that paying taxes is part of maintaining our civilization, which has much to admire. Tax dollars support fire departments, schools, and aid for the elderly. Tax dollars build buildings and repair roads. By paying our taxes, we contribute to getting a lot of good done in our country.

Later, the experiment was repeated with an interesting twist. Instead of losing some of their money to taxes, participants were told they could choose to give it to one of many charities. The result: even more significant positive feelings. The researchers concluded that because the donations were voluntary, subjects felt even better about the allocations.

Putting it to work
So how might investors use this information? Well, consider setting yourself up for more feelings of pleasure in any of the following ways:

  • Take greater control over your finances. Then when your money grows, you'll feel a pleasing sense of achievement.
  • Help others by encouraging them to be better savers, spenders, and investors. You might have the greatest success with your children.
  • Give money away to charities, and keep paying your taxes.

At the same time, remember that you probably don't have to pay as much in taxes as you do. Spend a little time in our Tax Center, and you'll probably come away with a few solid ideas for how to take more advantage of tax deductions and credits.

And finally, learn how to save lots of money and invest it effectively by taking advantage of a free trial of our Motley Fool Green Light newsletter, which aims to deliver at least $450 in savings ideas each month. The free trial will give you full access to all past issues.

You'll also find solid investment ideas within Green Light as well. Several months ago, we profiled the Dodge & Cox International Stock (FUND: DODFX  ) mutual fund. It sports five-year annualized returns of 24% and its recent holdings included GlaxoSmithKline (NYSE: GSK  ) , Novartis (NYSE: NVS  ) , and Total SA (NYSE: TOT  ) .


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Selena Maranjian
TMFSelena

Selena Maranjian has been writing for the Fool since 1996 and covers basic investing and personal finance topics. She also prepares the Fool's syndicated newspaper column and has written or co-written a number of Fool books. For more financial and non-financial fare (as well as silly things), follow her on Twitter...

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