Taxes Force Americans To Pay Many Ways

Implications: When ordinary Americans live beyond their means, disapprobation comes from every quarter, including the federal government. When our government lives beyond its means, bankrupting our children and grandchildren, we Americans avert the disapproving glance. Instead, we even elect government officials who promise to spend much more than we can possibly pay in taxes. Only in a country with a magnanimous population can such a government survive.

Analysis: Those who find themselves muttering about income taxes this week will not be alone. Although perhaps one in three Americans have no tax liability, most have taxes to pay anyway: More than 140 million tax returns, representing nearly 300 million Americans, will be filed this year.The miracle is not that Americans will collectively pay more than $1 trillion in personal income taxes this year, but that we will do so with seeming equanimity. Unlike many other countries, America is a land of law-abiding taxpayers. Why?It certainly is not behavior that dates to the Founding Fathers. They wrote a Constitution that specifically prohibited the expansive form of contemporary federal income tax. Only after the 16th Amendment was ratified in 1913 were federal taxes beyond wages constitutional. Only after the commencement of World War II was the payment of federal income taxes the norm rather than the exception.We do not pay taxes effortlessly. As recently as 15 years ago, a reasonably diligent taxpayer could prepare his or her own taxes by hand for all but the most complicated returns. No more. Tax returns have become the province of computer software and professional tax preparers. Preparing taxes is big business. Americans pay approximately $140 billion for tax preparation help, or $1,000 for every American family. While these figures may be skewed for large taxpayers, even returns with small incomes are costly to prepare. According to the National Society of Accountants, the average tax-preparation fee for a federal return with itemized deductions and a state return is $205, and the average fee for one with no itemized deductions is $115. Tax preparation software costs approximately $50.For many of us, the greatest cost of the personal income tax is neither the taxes paid to the government nor the fees paid to tax preparers. Rather, it is the tedious record-keeping and disproportionate anxiety about whether all necessary documents have been properly maintained and recorded.We have turned a nation of 300 million people into an army of unpaid amateur tax document archivists. During the second week of April we all search for misplaced documents: tax forms, charity receipts, records of various expenses. If America were a nation of tax evaders, its citizens would revel in hiding some documents from the government and inventing others. But as a nation of diligent taxpayers, we spend countless hours fretting over relevant tax documents. (to read the rest of the analysis, please go to http://furchtgott-roth.com/news.php?id=160)