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    Three things you might not know about the tax code

    On Behalf of | May 31, 2022 | Tax Controversy, U.S. tax history

    If the U.S. Tax Code were a food, it would be toast. Dry. Dull. Not particularly appetizing. Yet despite being “boring” toast is a vital food. In cases of extreme nausea, toast may even save your life.

    Taxes show us what’s important

    In her book  “The Public Opinion” tax and social policy professor Anne Alstott states that our tax code is actually a reflection of what we value as a society. She goes on to explain how the U.S. tax system supports Social Security and Medicare. She covers a lot of ground. Three interesting points she makes that might not be common knowledge are:

    • Alstott describes the first income federal income tax in 1913 and how it was a mere 1% of the income of the very rich. It was not until after WWII when most working Americans were required to pay federal income taxes.
    • The average cost of one infant in daycare is $10,000 a year. The tax credit per child is only $1,000. Alstott muses whether this has kept up with the times and is at all effective, given the goal of the credit.
    • The tax code favors Investors and those whose assets are in real estate. These two groups of taxpayers (Warren Buffet included) tend to pay less in the long run than people who make their money simply by working (for example, Buffet’s secretary).

    Here’s a tidbit that might win your team a beer on trivia night: while the tax code changes yearly, it is in two volumes. One volume is about 1,400 pages. The second volume is 2,700 pages. Total this means it hovers around one million words. For comparison, the entire Harry Potter series is about that long. It would take you about 36 hours to read the entire code. It might take a few years longer to understand it.

    Why do we have taxes though?

    Oliver Wendall Holmes was noted to have said that taxes are the price we pay to live in a civilized society.

    An 1848 Ohio State Senate Committee Report communicated that taxes are what a citizen “yields up to the government in order to provide for the protection of all the rest. It is not to be wantonly levied on the citizen, nor levied at all except in return for benefits conferred” according to Quote Investigator.

    Of course, the most famous quote about taxes is by an up-and-comer named Ben Franklin: “Nothing is certain except death and taxes” in his 1789 letter to French scientist Jean-Baptiste Leroy. Maybe make that death, taxes and dry toast.

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