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: No Ransom Paid for Release of Hostages Held by IS Militants

President Erdogan hails release of hostages as diplomatic success but declines to be drawn on whether their release freed Ankara's hand to take more active stance against insurgents More

Audio Sierra Leone Ends Ebola Lockdown

Health ministry says it has reached 75 percent of its target of visiting 1.5 million homes to locate infected, educate population about virus More

US Pivot to Asia Demands Delicate Balancing Act

As tumult in Middle East distracts Obama administration, efforts to shift American focus eastward appear threatened 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.
Natural Gas Export Plan Divides Maryland Towni
X
Deborah Block
September 21, 2014 2:12 PM
A U.S. power company that has been importing natural gas now wants to export it. If approved, its plant in Lusby, Maryland, would likely be the first terminal on the United States East Coast to export liquefied natural gas from American pipelines. While some residents welcome the move because it will create jobs, others oppose it, saying the expansion could be a safety and environmental hazard. VOA’s Deborah Block examines the controversy.
Video

Video Natural Gas Export Plan Divides Maryland Town

A U.S. power company that has been importing natural gas now wants to export it. If approved, its plant in Lusby, Maryland, would likely be the first terminal on the United States East Coast to export liquefied natural gas from American pipelines. While some residents welcome the move because it will create jobs, others oppose it, saying the expansion could be a safety and environmental hazard. VOA’s Deborah Block examines the controversy.
Video

Video Difficult Tactical Battle Ahead Against IS Militants in Syria

The U.S. president has ordered the military to intensify its fight against the Islamic State, including in Syria. But how does the military conduct air strikes in a country that is not a U.S. ally? VOA correspondent Carla Babb reports from the Pentagon.
Video

Video Iran, World Powers Seek Progress in Nuclear Talks

Iran and the five permanent members of the U.N. Security Council plus Germany, known as the P5 + 1, have started a new round of talks on Iran's nuclear program. VOA State Department correspondent Pam Dockins reports that as the negotiations take place in New York, a U.S. envoy is questioning Iran's commitment to peaceful nuclear activity.
Video

Video Alibaba Shares Soar in First Day of Trading

China's biggest online retailer hit the market Friday -- with its share price soaring on the New York Stock Exchange. The shares were priced at $68, but trading stalled at the opening, as sellers held onto their shares, waiting for buyers to bid up the price. More on the world's biggest initial public offering from VOA’s Bernard Shusman in New York.
Video

Video Obama Goes to UN With Islamic State, Ebola on Agenda

President Obama goes to the United Nations General Assembly to rally nations to support a coalition against Islamic State militants in Iraq and Syria. He also will look for nations to back his plan to fight the Ebola virus in West Africa. As VOA White House correspondent Luis Ramirez reports, Obama’s efforts reflect new moves by the U.S. administration to take a leading role in addressing world crises.
Video

Video Migrants Caught in No-Man's Land Called Calais

The deaths of hundreds of migrants in the Mediterranean this week has only recast the spotlight on the perils of reaching Europe. And for those forunate enough to reach a place like Calais, France, only find that their problems aren't over. Lisa Bryant has the story.
Video

Video Westgate Siege Anniversary Brings Back Painful Memories

One year after it happened, the survivors of the terror attack on Nairobi's Westgate Shopping Mall still cannot shake the images of that tragic incident. For VOA, Mohammed Yusuf tells the story of victims still waiting for the answer to the question 'how could this happen?'
Video

Video Militant Assault in Syria Displaces Thousands of Kurds

A major assault by Islamic State militants on Kurds in Syria has sent a wave of new refugees to the Turkish border, where they were stopped by Turkish border security. Turkey is already hosting about 700,000 Syrian refugees who fled the civil war between the government and the opposition. But the government in Ankara has a history of strained relations with Turkey's Kurdish minority. Zlatica Hoke reports Turkey is asking for international help.
Video

Video Whaling Summit Votes to Uphold Ban on Japan Whale Hunt

The International Whaling Commission, meeting in Slovenia, has voted to uphold a court ruling banning Japan from hunting whales in the Antarctic Ocean. Conservationists hailed the ruling as a victory, but Tokyo says it will submit revised plans for a whale hunt in 2015. Henry Ridgwell reports from London.
Video

Video A Dinosaur Fit for Land and Water

Residents and tourists in Washington D.C. can now examine a life-size replica of an unusual dinosaur that lived almost a hundred million years ago in northern Africa. Scientists say studying the behemoth named Spinosaurus helps them better understand how some prehistoric animals adapted to life on land and in water. The Spinosaurus replica is on display at the National Geographic museum. VOA’s George Putic has more.
Video

Video Iraqi Kurdistan Church Helps Christian Children Cope find shelter in churches in the Kurdish capital, Irbil

In the past six weeks, tens of thousands of Iraqi Christians have been forced to flee their homes by Islamic State militants and find shelter in churches in the Kurdish capital, Irbil. Despite U.S. airstrikes in the region, the prospect of people returning home is still very low and concerns are starting to grow over the impact this is having on the displaced youth. Sebastian Meyer reports from Irbil on how one church is coping.


Carnage and mayhem are part of daily life in northern Nigeria, the result of a terror campaign by the Islamist group Boko Haram. Fears are growing that Nigeria’s government may not know how to counter it, and may be making things worse. More

AppleAndroid