News / USA

Americans Rush to Pay Federal Income Tax

April 15 deadline looms

Americans fill out forms at an Internal Revenue Service office in 1920, seven years after the personal income tax was introduced.
Americans fill out forms at an Internal Revenue Service office in 1920, seven years after the personal income tax was introduced.

Multimedia

Audio

It's late afternoon on a gorgeous spring day in New York, a time when many people might be expected to relax and smell the roses.

The taxman cometh

But not Jose Torres. He knows that Thursday is April 15, and he's worried about the deadline for filing his federal income tax return and paying the bill.

"And I'm not feeling good right now at all," he says.

Michelle has met the deadline. Still, she is also anxious about whether her tax forms were filled out correctly.

"People are always afraid of filing their taxes. Every year there are new tax laws, tax regulations. People aren't sure. So people are always afraid," says Michelle.

History of taxes

Personal income taxes were not always so complicated. In fact, there was no personal income tax at all until 1913. Before that, the federal government got its funds from customs duties, tariffs, and from excise taxes on alcohol and tobacco.

Professor Richard Sylla of New York University’s Stern School of Business has a doctorate in economics from Harvard, but even he finds the tax paperwork overwhelming.
Professor Richard Sylla of New York University’s Stern School of Business has a doctorate in economics from Harvard, but even he finds the tax paperwork overwhelming.

Economics professor Richard Sylla of New York University's Stern School of Business says that when the U.S. Congress first established the federal income tax, only the wealthiest 10 percent or so of Americans had to pay it, and then, only at a rate of just six percent of their gross income, or less.

"The rates went up a little bit in World War I, but came down in the 1920s. Then they began to go up in the 1930s and the Depression when Franklin Roosevelt came in and thought the rich ought to pay a bigger share," says Sylla. "But the real gain in the income tax came in World War II. In the war, the rates went up to very high levels, as high as 90 percent. It was done as a sort of wartime measure, but it stayed on ever after and made the income a greater source of government revenue."

Complicated forms

According to Sylla, that is when the tax code began to get complicated.

"Some of those high rates were perceived by people who paid them and government officials as confiscatory, taking too much money from people. And so then Congress began to add a lot of loop holes so nobody really paid the 90 percent. They got oil depletion allowances and all kinds of special rates for capital gains," he says.

"And congressmen, they do the bidding of their constituents. And sometimes they get campaign contributions from very wealthy constituents, and so they sneak special breaks into the tax code that helps some of these wealthy constituents, and they are rewarded with campaign contributions and things like that. It's just the way our system works."

Edgard Rico runs a neighborhood tax preparation business on Manhattan’s Upper West Side in New York City.
Edgard Rico runs a neighborhood tax preparation business on Manhattan’s Upper West Side in New York City.

That system has become so complicated that Sylla, who boasts a Ph.D. in economics from Harvard, often made mistakes in figuring out how much income tax he owed. Today, he relies on a computer program to help him out, while others turn to national tax preparation chains like H&R Block.

Added responsibilities

Sylla notes that the business of the federal government itself has changed radically over the past two centuries. During most of the 19th century, state and local governments were far larger than the federal government, which used about four percent of gross domestic product to provide its services.

"But in the 20th century, as the US became a superpower, fought major wars and became the main source of defending the world against the Communists — and now, sort of policing the world in a way — the U.S. government grew to be a bigger fraction of the GDP," says Sylla. "So that now the taxes take about 20 to 25 percent of the GDP, and government spending at the federal level is at 20 to 25 percent of the GDP."

Most federal tax revenue goes to pay for programs such as Medicare health insurance for seniors, road building and national defense. It's a price many everyday New Yorkers like Jimmy are willing to pay — sort of.

"Well, I think it's a necessary thing for society. It's supposed to help with public things — sanitation, police, things that other people need. So I think it's a necessary thing," says Jimmy. "I just think it's too high. There is a lot of waste."

Where does it go?

A huge proportion of federal taxes go to pay the interest on the national debt, which according to the U.S. Department of the Treasury stands today at almost $13 trillion.

Professor Sylla says the deficit itself is rooted in the contradictory ways Americans view government and its proper role.

"I think there is a bias in this system where government spending programs are popular but the taxes necessary to pay for those programs are unpopular so we don't raise our taxes enough to pay for what we want government to spend. And then we have more debt. We can't continue to have this disconnect between large spending programs and an aversion to taxes to pay for them."

Thoughts for everyday Americans to mull over this tax season, as they stand in line at the post office waiting to mail the government its annual due before the April 15 midnight deadline.

You May Like

Turkey's Controversial Reform Bill Giving Investors Jitters

Homeland security reform bill will give police new powers in search, seizure, detention and arrests, while restricting the rights of suspects, their attorneys More

Audio Slideshow In Kenyan Prison, Good Grades Are Path to Freedom

Some inmates who get high marks could see their sentences commuted to non-custodial status More

'Rumble in the Jungle' Turns 40

'The Champ' knocked Foreman out to regain crown he had lost 7 years earlier when US government accused him of draft-dodging and boxing officials revoked his license More

This forum has been closed.
Comments
     
There are no comments in this forum. Be first and add one

Featured Videos

Your JavaScript is turned off or you have an old version of Adobe's Flash Player. Get the latest Flash player.
Victorious Secularists Face Challenge to Form Government in Tunisiai
X
Henry Ridgwell
October 30, 2014 11:39 PM
Official results from Tunisia show the Islamist Ennahda party has failed to win the second free election since the so-called "Arab Spring" uprising in 2011. Ennahda, which handed power to a government of technocrats pending the elections, lost out to the secular party Nidaa Tounes. Henry Ridgwell reports from London that the relatively peaceful poll offers some hope in a volatile region.
Video

Video Victorious Secularists Face Challenge to Form Government in Tunisia

Official results from Tunisia show the Islamist Ennahda party has failed to win the second free election since the so-called "Arab Spring" uprising in 2011. Ennahda, which handed power to a government of technocrats pending the elections, lost out to the secular party Nidaa Tounes. Henry Ridgwell reports from London that the relatively peaceful poll offers some hope in a volatile region.
Video

Video Africa Tells its Story Through Fashion

In Africa, Fashion Week is a riot of colors, shapes, patterns and fabrics - against the backdrop of its ongoing struggle between nature and its fast-growing urban edge. How do these ideas translate into needle and thread? VOA’s Anita Powell visited this year’s Mercedes Benz Fashion Week Africa in Johannesburg to find out.
Video

Video Smugglers Offer Cheap Passage From Turkey to Syria

Smugglers in Turkey offer a relatively cheap passage across the border into Syria. Ankara has stepped up efforts to stem the flow of foreign fighters who want to join Islamic State militants fighting for control of the Syrian border city of Kobani. But porous borders and border guards who can be bribed make illegal border crossings quite easy. Zlatica Hoke has more.
Video

Video China Political Meeting Seeks to Improve Rule of Law

China’s communist leaders will host a top level political meeting this week, called the Fourth Plenum, and for the first time in the party’s history, rule of law will be a key item on the agenda. Analysts and Chinese media reports say the meetings could see the approval of long-awaited measures aimed at giving courts more independence and include steps to enhance an already aggressive and high-reaching anti-corruption drive. VOA’s Bill Ide has more from Beijing.
Video

Video After Decades of Pressure, Luxembourg Drops Bank Secrecy Rules

European Union finance ministers have reached a breakthrough agreement that will make it more difficult for tax cheats to hide their money. The new legislation, which had been blocked for years by countries with a reputation as tax havens, was approved last week after Luxembourg and Austria agreed to lift their vetoes. But as Mil Arcega reports, it doesn’t mean tax cheats have run out of places to keep their money hidden.
Video

Video Kobani Refugees Welcome, Turkey Criticizes, US Airdrop

Residents of Kobani in northern Syria have welcomed the airdrop of weapons, ammunition and medicine to Kurdish militia who are resisting the seizure of their city by Islamic State militants. The Turkish government, however, has criticized the operation. VOA’s Scott Bobb reports from southeastern Turkey, across the border from Kobani.

All About America

AppleAndroid