Today is Tax Day in America. That means it is the last day for people to file their federal and state income taxes before they start adding fines and penalties. In honor of such an occasion, we’ll look at some history and interesting facts about the income tax, as well as some of the absolute insane things that our tax dollars fund.
Before 1913, Americans paid no income taxes. In fact, the founders saw taxes as one of the most important issues surrounding the revolution. It was, after all, impositions such as the Sugar Act, the Stamp Act, and the events leading up to the Boston Tea Party that riled up colonists enough to demand “No Taxation without Representation”, leading to direct confrontations with the British army. Until 1913, governments used tariffs, property taxes, and poll taxes to fund roads and infrastructure, railways, schools and colleges, etc. Even when the government was fighting wars, many taxes were raised only temporarily and lowered upon completion of the campaign.
Even when the income tax was instituted in 1913, the rate was remarkably low (about 1%) and most people didn’t make enough income to even qualify to pay federal taxes. It was also much easier to do your taxes. Per Mark Perry at Carpe Diem:
“For example, page 1 of the original IRS 1040 income tax form from 1913 appears above. There were only four pages in the original 1040 form, including: two pages of worksheets, the actual one-page 1040 form above, and only one page of instructions, view all four pages here. In contrast, just the current 1040 instructions for 2016, without any forms, runs 106 pages.”
And that complexity adds up big time. Per the National Taxpayer Advocate, an “independent” group within the IRS (no, seriously, stop laughing), estimates over 6 billion hours and $10 billion dollars are spent on tax prep each year. There is also a productivity loss of $131 billion dollars. This opportunity cost for income tax preparation is simply outrageous. The U.S. Tax Code is currently over 75,000 pages long. 75,000 pages of rules and regulations designed to confuse and intimidate taxpayers into submission.
Some additional interesting facts about the income tax:
- In 1987, the IRS started requiring social security numbers for dependent children. That same year, more than 7 million children mysteriously disappeared from the tax rolls.
- The U.S. is the world’s only industrialized nation that taxes citizens who live overseas, even if their income is generated in a foreign country and they never intend to return to America.
- If you report anyone who has cheated on their taxes to the IRS, you’ll be paid a minimum of 15% of the amount they owe to the IRS. (Perfect for encouraging brownshirt behavior.)
- The U.S. has the highest corporate income tax rate at 35%. (This is why so many American companies move overseas.)
Though many people complain about income taxes, in general, most people quietly resign themselves to the fact that if they don’t pay their taxes, they’ll be kidnapped and locked in a cage. There is a reason, for instance, that the day we pay taxes is on the exact opposite side of the calendar from when we elect our leaders. I have a feeling that if Tax Day was the day after our elections, many would have a different opinion on taxes and the people who force us to pay them.
Another reason outrage is generally low is because of mandatory employer withholding. As it stands, employers withhold taxes from employees’ paychecks for things like income tax, social security tax and the like. I imagine that if they were to eliminate automatic tax withholding and everyone had to send bi-weekly checks to the IRS to cover their tax burden, or better yet, one giant check in April, people would be much more outraged by the amount they are forced to pay and what it is spent on.
But at least our tax dollars fund all kinds of super-duper important initiatives and programs, right? So much so that there’s “nothing left to cut”? Well, not exactly. Over 66% of the almost $4 trillion-dollar federal budget is spent on mandatory payments like Social Security, unemployment benefits, Medicare/Medicaid, and interest on the federal debt. Of the remaining 34%, over 55% is spent on the military’s foreign adventurism.
Here are a few other programs that are apparently too important to cut:
- $3.5 million in grants to study why almost three-quarters of lesbians are obese.
- $5 million for students at the University of Tennessee could wear fruit costumes and promote healthy eating.
- $200 million for the construction of MidAmerica St. Louis Airport in Mascoutah, Illinois, which has just one airline operating out of it.
- $2 million for jazz playing robots.
- $300,000 for NIH to study which gender plays with Barbie dolls more.
That’s just five stupid ways the government blows taxpayer dollars. These are far from the most expensive or most ridiculous. The U.S. government has spent trillion of dollars prosecuting wars of aggression in Iraq, Libya, and Afghanistan. Literally, trillions of tax payer dollars going to casually murder millions of civilians in foreign countries because it is in the U.S.’s “strategic interest”. Of course, strategic interest always means whatever the government wants it to mean at that time.
So this year when you become painfully aware of your tax burden, remember what Rothbard said, “The state is a gang of thieves writ large.” and “Taxation is theft, purely and simply even though it is theft on a grand and colossal scale which no acknowledged criminals could hope to match.”