Federal Tax Revenue

OK, but when I filed my first tax returns in the late '50s, early '60s, state taxes were almost an afterthought. Now congress mandates stuff and leaves it to the states to fund it. My NYS return is now as complex as the Fed and as high.
As an aside, sometime back in the '60s or 70s, when tax forms were perceived as too complicated (though very simple compared to today) congress required that the code be simplified. For some years it worked but has since grown far worse. Is that law no longer in effect?

Was federal tax revenue spent more wisely in 1955 than now?

Here’s what I take away from this:[ol]

[li]the wealthy were willing (however unhappily) to endure sky-high taxes if it was to fend off threats to the global free-market system: fascism in WW2, communism afterwards.[/li][li]It has to be remembered that once upon a time, there was very little besides defense that the Federal government was empowered to spend money on. Strict federalism (the idea that the federal government has no powers not explicitly granted it) was largely upheld until the Roosevelt era, and even then outlays were comparatively modest until the Great Society era. Perhaps not coincidentally, this is when complaints about tax rates and federal spending started getting louder.[/li]If aliens were to invade our solar system, we’d have colonies on the Moon and Mars faster than you could say “Manifest Destiny”. :p[/ol]

Cecil wrote, “In 1980 [we had] one of the the highest percentages of funding ever for the Department of Education, at 6 percent” (note the surplus “the”). The department had just been founded the year before, and only began operating in May 1980. I guess it’s all been downhill (budgetarily, at least) since then: United States Department of Education - Wikipedia.

He also wrote, “In 2010… The postal service, which took 26 percent of the budget in 1910, is pretty much a nonentity.” The USPS became an independent federal agency in 1971 and, according to Wiki, “has not directly received taxpayer-dollars since the early 1980s with the minor exception of subsidies for costs associated with the disabled and overseas voters.” For more: United States Postal Service - Wikipedia.

Fixed fixed the the.

What is this state income tax you speak of?

Very few taxpayers in New York pay as much in state income tax as they do in federal income tax. Do you perhaps live in New York City or Yonkers? Or is your income under $20,000?
Powers &8^]

Thanks thanks!

Something to be aware of, is that about half of the defense budget goes to the VA. So, when you think about it, during and after each war, the defense spending will be really high. So, the 1900 figure makes sense as that was not too far behind the Civil War, the Spanish-American War, and some others.

The defense budget will also be high for quite some time due to this last escapade. Going by how they are realigning VA education benefits, I’m loosing more and more every year.

I’m not sure what you mean by this. The “code” (the Internal Revenue Code) is Chapter 26 of the United States Code (USC). It consists of the compiled tax laws that Congress has enacted. The only body that can simplify the code is Congress. The only way to simplify the code would be for Congress to repeal or amend some or all of it. It would be a meaningless gesture for Congress to pass a law requiring itself to write simpler laws.

I do remember when Form 1040A was first introduced. It was one side of one sheet of paper. But it kept growing until now it seems like a complete waste to me: It’s just Form 1040 minus a few lines that most people leave blank anyway. I would argue that its existence just complicates things because all publications and instructions have to include stuff like “use the amount on line 37 of Form 1040 or line 35 of Form 1040A.”

Too late to edit my previous post:

I meant Title 26, not Chapter 26.

Also, if you are applying for college aid for yourself or your children, there is some rule that gives an advantage to families who file Form 1040A rather than Form 1040. This is not part of the tax code or a tax regulation, but rather some arbitrary rule that the FAFSA people set up.

The marginal rate of 91% during the Eisenhower era does not mean that taxes were higher then. All that it means is the marginal rate of that one tax was higher then.

To compare apples to apples, you have to measure total tax burden in the US. This is often expressed as “Tax Freedom Day,” the day when the average American has earned enough to pay all his/her taxes for the year.

In 1900 total tax burden, including all federal, state and local taxes, was 5.9%. Tax Freedom Day was January 22.By 1920 it was 12%. In the run-up to WW II, it rose to 17.9% in 1940. By 1950 it was 24.6% and Tax Freedom Day fell on March 31. The average American worked 1/4 of the year just to pay his taxes. By the time Reagan was elected the total tax burden was 30.4%. Tax Freedom Day was April 21. Despite the Reagan ‘tax cuts’ the total tax burden remained at 30.4% in 1990.

It has fluctuated one or two percent ever since. The highest tax burden borne by Americans was 33% in 2000. Tax Freedom Day was May 1. When Bush left office, the tax burden was 26.6%, the lowest it had been in decades. It has risen steadily under Obama ever since, with one caveat:

The Affordable Care Act requires everyone to purchase health insurance. Although the federal government argued before the Supreme Court that this is a tax, the Tax Foundation has not yet included it in the total tax burden, possibly because no one has actually had to buy health insurance until this year. Plus, the implementation of the personal mandate has been delayed indefinitely for both individuals and businesses. If fully implemented, the Affordable Care Act is the largest tax increase in the history of the United States.

At the same time, however, the Affordable Care Act is also an object lesson in what taxes really are: they are enforced consumption. Basically, the electorate ‘chooses’ to spend money on roads, health care, defense, education, assisting the poor, etc, instead of choosing to buy big-screen TVs, nice clothes, or someone to cut the grass. Taxes are consumption, just like buying a car or a cell phone, but instead it is the government that is telling you what you will buy instead of allowing you to choose for yourself. As a case in point, the Affordable Care Act requires you to buy insurance to cover pregnancy even if you are 90 years old and had a hysterectomy 50 years ago. It should not be surprising that some people object to that.

In this sense, taxes are no different than requiring people to buy airbags or child seats for their cars, whether they want them or not and regardless of whether they can afford them or not.

Most voters can get behind the idea that fixing roads, educating children, and defending the nation are a good thing. It gets shakier when you tell a voter that she must donate a month’s wages to foreign military adventures or to support a welfare queen who spends the money on illicit drugs and big-screen TVs that the taxpayer cannot afford for herself.

It is galling when you live in a beaten down trailer in the middle of the woods to watch your property taxes spent on low-income housing that is far better than what you will ever be able to afford for yourself. Or to feed prison inmates steak that you will never be able to buy. This is how revolutions are born.

Add to that the perception that the government is always introducing new regulations that make it harder to earn a living in the first place, and eventually you get a large proportion of the populace that is extremely disgruntled.

Anyone who handles tax money would do well to reflect on the parable of the widow’s mite, and remember that all those trillions of tax dollars come from the mites of many, many, widows and orphans. It seems that government bureaucrats could benefit from learning a little humility and gratitude at what is entrusted to them.

Back when the top bracket was 91%, the tax code also allowed a great many more deductions than it does now. Very few people actually paid the top rate. The real top marginal rate back then was probably about 40%. After that, the many deductions for allowable expenses cut back considerably on those top brackets.

Bottom line: the liberal is correct in saying that the top bracket was higher in Eisenhower’s day. The conservative is correct in complaining that he is spending a great deal more of his income on government now than he did in Eisenhower’s day. Both sides are telling the truth. I leave it to the student to decide which truth is actually more meaningful to taxpayers.

That was actually their second backup argument - DOJ relied primarily (and properly, I think, given the interstate nature and size of the healthcare industry) on the Commerce Clause: Solicitor General’s Third Backup Argument Is a Winner in Health Law Case. The Supremes eventually decided it amounted to a tax, though.

Interestingly enough, I find that most of the people who use the phrase “welfare queen” usually have no idea what it’s like to actually be on welfare.
Powers &8^]

Which, you’ll note, is still higher than even the highest nominal tax bracket today, even before deductions etc. (which do still exist).

Yup. And any proposal that we instead maybe get some tax dollars from the rich who can afford it gets shouted down by the right wing.

My tax law professor very wisely once said, “A tax can be simple, or it can be fair. It cannot possibly be both.” A simple tax will hit some people much harder than others, and thus be unfair. A fair tax must take into account all of the differences in taxpayer status, and thus will not be simple.

Nonsense. What it comes down to is this: Anything that makes OTHER people pay taxes is ‘fair.’ Anything that makes ME pay taxes is ‘unfair.’ You will find this at the base of every argument of whether a tax is fair or not.

Heh. Reminds me of George Carlin on driving: “Everyone who drives slower than me is a moron. Everyone who drives faster than me is a maniac.”