April 15 Draws Nigh

[smstonypoint]

If you haven't finished your Federal income tax return yet, you had better "git er done."

AMENDMENT XVI Passed by Congress July 2, 1909. Ratified February 3, 1913.

Note: Article I, section 9, of the Constitution was modified by amendment 16.

The Congress shall have power to lay and collect taxes on incomes, from whatever source derived, without apportionment among the several States, and without regard to any census or enumeration.

The Constitution of the United States: Amendments 11-27

Here's an interesting graphic from Political Calculations: 2014: How Many Pages in the U.S. Tax Code? showing how the Federal tax code has changed since ratification of the 16th Amendment.

From Mark Perry: Tax deadline is approaching next Tuesday: Bring us back to 1913 (or better yet, bring us back to pre-income tax 1912) | AEIdeas

In a recent report to Congress, the National Taxpayer Advocate estimated that American taxpayers will spend 6.1 billion hours this year complying with the income tax code, based on IRS estimates of how much time taxpayers (both individual and businesses) spend collecting data for, and filling out tax forms. That amount of time spent for income tax compliance 6.1 billion hours would be the equivalent of more than 3 million Americans working full-time, year-round (or 2.2% of total US payrolls of 138 million). By way of comparison, the federal government currently employs 2.7 million full-time workers, and Wal-Mart, the world's largest private employer, currently employs 2.2 million workers worldwide and 1.4 million workers in the US (both full-time and part-time).

In the beginning when the US federal income tax was first introduced in 1913, it used to be a lot, lot simpler and a lot easier to file taxes; so easy in fact that it was basically like filling out your federal tax return on a postcard.
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 2013, without any forms, runs 207 pages.

Have fun this weekend.

Steve

 

[aczlan]

Got mine done and got my return a few weeks back. Also talked to the HR person at work to reduce my withholding as I would prefer not to make a interest free loan to the IRS next year.

Aaron Z

 

[mjarrels]

No... whats a refund? No need to worry about ID theft on a tax return... the ID thief would owe the IRS.

mark

 

[dusty3030]

I try to break even. I pay quarterly estimates and paid over for 2013 a little on Fed and way too much on state so I will just roll that into 1st Q payment to state and not have as crappy an April as normally do.

I'm with Willie as far as what I think of the IRS -

https://www.youtube.com/watch?v=o6QlgsolmCk

 

[CobyRupert]

Hey professor, what's your opinion of the argument that if I exchange an hour of my time for a dollar of wages, it's just that, an exchange. I spent as much as I earned, sum=0, income=0. Similar to I buy a stock for a dollar, no dividend, and sell for a dollar, there's no income.

 

[dave1949]

I did mine a month ago. Ha Ha Ha.

The original 1913 1040 was entertaining. Maybe we should just go back to that form and start over? Get rid of all the gobbly-gook deductions and exclusions, and the original tax rates would probably be about enough? Of course, that is one of those situations where one realizes they need the advice of an economist. :laughing:

 

[smstonypoint]

The original 1913 1040 was entertaining. Maybe we should just go back to that form and start over? Get rid of all the gobbly-gook deductions and exclusions, and the original tax rates would probably be about enough? Of course, that is one of those situations where one realizes they need the advice of an economist. :laughing:

You surely have days when you wonder about optimal tax policies. Invariably, you come back to the same old realization: "I need the advice of an economist. An economist would know how to answer my question."

And you would be correct. Remain calm and read Mankiw: http://scholar.harvard.edu/files/mankiw/files/optimal_taxation_in_theory.pdf.

Steve

 

[smstonypoint]

Hey professor, what's your opinion of the argument that if I exchange an hour of my time for a dollar of wages, it's just that, an exchange. I spent as much as I earned, sum=0, income=0. Similar to I buy a stock for a dollar, no dividend, and sell for a dollar, there's no income.

That argument is flawed. You exchanged an hour of your time for your hourly wage. Your pay is income for you and an expense for your employer. You spent all of your income on consumption this period (i.e, you did not defer any of your consumption to a later date by saving/investing). Your expenditures became income for the firms that provided the goods/services you consumed.

From Economics: The GDP.

For your stock example, you had no income from either capital gains or dividends. If you factor in your brokerage fees, you had a loss.

Steve

 

[smstonypoint]

Some more info on taxes.

Americans will spend 111 days working to pay off the combined $4.5 trillion federal, state, and local tax bill in 2014, according to the latest Tax Freedom Day report.

To offer some perspective on just how long 111 days really is, here are a few things you could accomplish in the time it takes the nation to reach Tax Freedom Day on April 21.

<snip>

(Y)ou could:

Run 17,462 miles, or 666 NYC Marathons
Watch more than three complete regular NFL seasons
Listen to the entire discography of The Beatles studio albums 210 times
Watch IMDB's top 250 movies 4.5 times
Complete 13 Apollo 11 missions or travel from the earth to the moon 98 times

What Could You Accomplish in the 111 Days It Takes to Reach Tax Freedom Day? | Tax Foundation

Steve

 

[Panik]

I realize that it is an info graphic so the representation needs to be taken with whole pillar of salt, but I'd be curious to see an analysis of why the sheer volume of tax law seems to be following an sigmoidal population growth curve.