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

Philippines, Muslim Rebels Try to Salvage Peace Pact

Peace process faces major setback after botched military operation to find terrorists results in bloody gunbattle between government forces, Moro Islamic Liberation Front fighters More

Republicans Expect Long, Expensive Presidential Battle

Political strategist says eventual winner will be one who can put together strongest coalition of various conservative groups that make up Republican Party More

Video New Wheelchair Is Easier to Use, Increases Mobility

Engineers have come up with a lever-operated design that makes use of easily accessible bicycle technology 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.
Liberia's Almost Last Ebola Patient Grateful but Still Grievingi
X
Benno Muchler
March 26, 2015 3:41 PM
Beatrice Yardolo was to make history as Liberia’s last Ebola patient. Liberians recently started counting down 42 days, the period that has to go by without a single new infection until the World Health Organization can declare a country Ebola-free. That countdown stopped on March 20 when there was another new case of Ebola, making Yardolo’s story a reminder that Ebola is far from over. Benno Muchler reports from Monrovia.
Video

Video Liberia's Almost Last Ebola Patient Grateful but Still Grieving

Beatrice Yardolo was to make history as Liberia’s last Ebola patient. Liberians recently started counting down 42 days, the period that has to go by without a single new infection until the World Health Organization can declare a country Ebola-free. That countdown stopped on March 20 when there was another new case of Ebola, making Yardolo’s story a reminder that Ebola is far from over. Benno Muchler reports from Monrovia.
Video

Video Cambodian Land Grabs Threaten Traditional Communities

Indigenous communities in Cambodia's Ratanakiri province say the government’s economic land concession policy is taking away their land and traditional way of life, making many fear that their identity will soon be lost. Local authorities, though, have denied this is the case. VOA's Say Mony went to investigate and filed this report, narrated by Colin Lovett.
Video

Video US, South Korea Conduct Joint Military Exercises

The Eighth U.S. Army Division and the Eighth Republic of Korea Mechanized Infantry Division put on a well orchestrated show of force for the media this week during their joint military training exercises in South Korea. VOA’s Seoul correspondent Brian Padden was there and reports the soldiers were well disciplined both in conducting a complex live fire exercise and in staying on message with the press.
Video

Video Space Program Status Disappoints 'Last Man on the Moon'

One of the films that drew big crowds last week at the annual South by Southwest festival in Austin, Texas, tells the story of the last human being to stand on the moon, U.S. astronaut Eugene Cernan. It has been 42 years since Cernan returned from the moon and he laments that no one else has gone there since. VOA’s Greg Flakus reports.
Video

Video Young Filmmakers Shine Spotlight on Giving Back

A group of student filmmakers from across the United States joined President Barack Obama at the White House this month for the second annual White House Student Film Festival. Fifteen short films were officially selected from more than 1,500 entries by students aged 6 through 18. The filmmakers and their families then joined the president and a group of celebrities for a screening of their films. VOA’s Julie Taboh reports.
Video

Video VOA Exclusive: Interview with Afghan President Ashraf Ghani

Afghan President Ashraf Ghani, during his first visit as president to Washington, gave a one-on-one interview with VOA Afghan Service reporter Said Suleiman Ashna, about his request for a change in U.S. troop levels, the threat from the Islamic State, and repairing relations with the United States and Pakistan. The interview was held at Blair House, late Sunday, in Pashto.
Video

Video California Science Center Tells Story of Dead Sea Scrolls

The ancient manuscripts were uncovered in the mid-20th century, and they are still yielding clues about life and religious beliefs in ancient Israel. As VOA's Mike O'Sullivan reports, an exhibit in Los Angeles shows how modern science is bringing the history of these ancient documents to life.
Video

Video Angelina Jolie Takes Another Bold Step

Hollywood actress and filmmaker Angelina Jolie has revealed she had her ovaries and fallopian tubes removed to lower her odds of getting cancer. Doctors say the huge publicity over her decision will help raise awareness about the importance of cancer screening. VOA’s George Putic has more

All About America

Circumventing Censorship

An Internet Primer for Healthy Web Habits

As surveillance and censoring technologies advance, so, too, do new tools for your computer or mobile device that help protect your privacy and break through Internet censorship.
More