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There's a great slide from my "Taxes for Hax0rs" (SHDH 44) presentation http://www.transparentaccounting.org http://www.transparentaccounting.org regarding the

There's a great slide from my "Taxes for Hax0rs" (SHDH 44) presentation http://www.transparentaccounting.org http://www.transparentaccounting.org regarding the history of the Federal Income Tax. In a nutshell, the way it was originally written was meant to tax corporate income only and only the most wealthy Americans, not common folk. One needed to make >= $4000/year in deflated 1893 dollars to even be eligible to need to pay any taxes. Not sure, but one computation I came up with (adjusted) puts that around 100K in today's dollars. Imagine making anything up to 100K tax-free. The goal was always to tax corporations more heavily than people. Today even the poorest Americans likely end up short more than 2.4 percent (effective annual rate) in tax payments when their employers "withold" earnings. So when corporations go out of their way and spend a lot of money to accomplish tax avoidance, that seems kinda wrong.

camz 15y ago
Ironically, corporate taxes these days generates less than 20% of the fiscal revenues for the government. Generally, 1040 individual taxes still make up the bulk of the taxes paid. In addition, more than 35% of all taxpayers pay zero tax or pay no tax and get refunds. This number is constantly changing, especially recently with the economy. I've seen it go as high as 60%. Lastly, when the government talks about corporate tax breaks and etc. Honestly, they barely matter anymore because we've essentially marginalized the revenue generated from corporations and businesses already. So, the amount of revenue and savings potential in the greater scheme of things is almost non-consequential.
- gabrielh 15y ago
  Its important to note that if a person doesn't owe taxes directly, the probably do contribute through payroll tax. [1] [1] http://money.cnn.com/2011/04/14/pf/taxes/who_pays_income_taxes/index.htm http://money.cnn.com/2011/04/14/pf/taxes/who_pays_income_tax...
  - camz 15y ago
    That's a very good point. I should've pointed that out. Another thing that everyone should keep in mind, if your company fails to remit the proper amount of payroll tax (social security and medicare), then it is your responsibility to make up the difference on your 1040. The line for this item is on the second page of the 1040 under the Self-Employment tax. We're all paying into a system thats falling apart =/..
  - invalidOrTaken 15y ago
    Just saying they "contribute" doesn't get the whole point across. They do pay taxes, it's just not visible. Payroll taxes have to be the most ingenious method of hiding taxes from voters ever.
bzbarsky 15y ago
> Today even the poorest Americans likely end up short more > than 2.4 percent (effective annual rate) That really depends, due to the complexity of the tax code. In particular, depends on whether you're married, whether you have children, etc. You can see some historical data for 4-person families at the median, half median, and twice median income levels at <http://www.taxpolicycenter.org/taxfacts/Content/PDF/family_inc_hist.pdf> http://www.taxpolicycenter.org/taxfacts/Content/PDF/family_i.... Note the negative numbers in the "average tax rate" column in recent years for the half-median level (due to the making work pay tax credit, in addition to the preexisting earned income tax credit and child tax credit). But yes, before that the average rate was higher than 2.4%. And this is federal only, not counting state and local taxes. (And the part that really makes me mad about the numbers in this chart is the marginal rate on the half-median income level, by the way.) Of course if you're not married with children, your tax burden is definitely higher. For a single California resident in 2007 you can see a simple marginal tax rate graph at <http://www.dbaron.org/views/taxes-2007.html> http://www.dbaron.org/views/taxes-2007.html>; the average rate would just be the integral of the graph, which gets to be higher than 2.5% pretty early on.
brazzy 15y ago
The problem is that corporations are incredibly adept at finding and exploiting the kind of legal tax loopholes described in this article, and rapidly adjusting to any changes. It's a cat-and-mouse game where the tax collection agencies are always a few steps behind. Individuals, even most very rich ones, are much less able to avoid taxes, so over time they are taxed more and more in order to collect any taxes at all.

camz 15y ago

Ironically, corporate taxes these days generates less than 20% of the fiscal revenues for the government. Generally, 1040 individual taxes still make up the bulk of the taxes paid. In addition, more than 35% of all taxpayers pay zero tax or pay no tax and get refunds. This number is constantly changing, especially recently with the economy. I've seen it go as high as 60%. Lastly, when the government talks about corporate tax breaks and etc. Honestly, they barely matter anymore because we've essentially marginalized the revenue generated from corporations and businesses already. So, the amount of revenue and savings potential in the greater scheme of things is almost non-consequential.

gabrielh 15y ago
Its important to note that if a person doesn't owe taxes directly, the probably do contribute through payroll tax. [1] [1] http://money.cnn.com/2011/04/14/pf/taxes/who_pays_income_taxes/index.htm http://money.cnn.com/2011/04/14/pf/taxes/who_pays_income_tax...
- camz 15y ago
  That's a very good point. I should've pointed that out. Another thing that everyone should keep in mind, if your company fails to remit the proper amount of payroll tax (social security and medicare), then it is your responsibility to make up the difference on your 1040. The line for this item is on the second page of the 1040 under the Self-Employment tax. We're all paying into a system thats falling apart =/..
- invalidOrTaken 15y ago
  Just saying they "contribute" doesn't get the whole point across. They do pay taxes, it's just not visible. Payroll taxes have to be the most ingenious method of hiding taxes from voters ever.

bzbarsky 15y ago

> Today even the poorest Americans likely end up short more > than 2.4 percent (effective annual rate) That really depends, due to the complexity of the tax code. In particular, depends on whether you're married, whether you have children, etc. You can see some historical data for 4-person families at the median, half median, and twice median income levels at <http://www.taxpolicycenter.org/taxfacts/Content/PDF/family_inc_hist.pdf> http://www.taxpolicycenter.org/taxfacts/Content/PDF/family_i.... Note the negative numbers in the "average tax rate" column in recent years for the half-median level (due to the making work pay tax credit, in addition to the preexisting earned income tax credit and child tax credit). But yes, before that the average rate was higher than 2.4%. And this is federal only, not counting state and local taxes. (And the part that really makes me mad about the numbers in this chart is the marginal rate on the half-median income level, by the way.) Of course if you're not married with children, your tax burden is definitely higher. For a single California resident in 2007 you can see a simple marginal tax rate graph at <http://www.dbaron.org/views/taxes-2007.html> http://www.dbaron.org/views/taxes-2007.html>; the average rate would just be the integral of the graph, which gets to be higher than 2.5% pretty early on.

brazzy 15y ago

The problem is that corporations are incredibly adept at finding and exploiting the kind of legal tax loopholes described in this article, and rapidly adjusting to any changes. It's a cat-and-mouse game where the tax collection agencies are always a few steps behind. Individuals, even most very rich ones, are much less able to avoid taxes, so over time they are taxed more and more in order to collect any taxes at all.