2010 a year of record low income taxes

Sunday, September 1st, 2013 By

A Corvette from 1958

This is a 1958 Corvette, and when it came out of the factory, people paid higher income taxes than they do now. Image from Wikimedia Commons.

Tax Day has just passed by, and there has been customary grumbling in some circles about how awful income taxes are in the United States. However, most of the data on taxes indicate that Americans are actually paying the least they have in decades. The tax burden is lighter on nearly every segment of society.

Politicians wonder how we wound up with a deficit

The 1950s were an ideal decade to a lot of people. Wholesome and clean television shows like “Howdy Doody” and “Leave it to Beaver” ruled the airwaves; people pursued the American Dream with gusto and patriotism; and they paid more in income tax — before Medicare and Medicaid ever existed, according to USA Today. Average Americans devoted about 27 percent of their gross income to taxes from the 1950s until the 1990s, when the tax rate began to trail off. In 2010, it was down to 23.6 percent of gross income. Were taxes to be raised back to 1950s levels of taxation, it would raise approximately $500 billion. According to MSN, the Internal Revenue Service estimates that it issues more than $328 billion in tax refunds every year.

The beneficiaries

The people who have benefited, at least in some way, from lower income taxes and some generous tax breaks are poorer households, according to CNN. It was widely reported that the Tax Policy Center found that 45 percent of households did not or would not have to pay a dime in income taxes. Not having to pay taxes does sound attractive, but 68 percent of those people earned $50,000 per year or less. For people who earned $500,000 to $1 million per year, only 1.6 percent didn’t owe or have to pay any taxes, and only 1 percent of people who earned $1 million or more didn’t owe or have to pay. Still, the tax burden placed on the wealthiest seems disproportionate even to the wealthy. Charles Munger, right hand man to none other than Warren Buffet, said at a recent Berkshire-Hathaway conference that hedge fund managers paying lower tax rates than “professors of physics or cab drivers” was “demented,” according to the Motley Fool.

IRS not immune to fraud

The Internal Revenue Service is collecting less and paying more these days. The IRS wound up paying more than $12 million to dead people in a tax scam ring, according to MSN. More than 5,000 returns were filed fraudulently using the names and Social Security numbers of deceased individuals in the hopes of fooling the IRS into cutting a check to someone who wasn’t alivet. A man in Florida was ordered to apply for an Electronic Filing Identification Number, which was used by others after he received it to find recently deceased people and electronically filing tax returns using their identities. The IRS has recovered more than $800,000 from Bank of America accounts and more than $700,000 in Chase accounts used for this purpose.

Sources

USA Today

CNN

Motley Fool

MSN

Previous Article

« We all scream for Baskin Robbins 31-cent scoop night

We all love ice cream. If you like ice cream and contributing to charity, participate in Baskin Robbins 31 cent scoop night. READ MORE... Ice cream
Next Article

FDA cuts acetaminophen dose in prescription painkillers by half »

The FDA has limited the amount of acetaminophen allowed in prescription painkillers in an effort to cut down on overdoses and liver damage. acetaminophen overdose

Leave a Reply

Other recent posts by Sam Hoober

Consumers advised to avoid credit card protection plans

Credit card debt protection plans are great for credit card companies but end up being not very beneficial for people who enroll in them.
Credit Card

Plunging interest rates make mortgages low cost loans for now

Those who can qualify for financing could make a killing in the current real estate market. Low interest rates make mortgages low cost loans.
Home

Debt relief companies now subject to tougher regulation

Debt relief is getting a lot of advertising these days. Though tougher regulation is in place, there are still a lot of scams out there...
Jackalope