The Bottom Line:
- The current income tax was started in 1913.
- What is taller than a giraffe and weighs 145 lbs? The Tax Code (72,536 pages)
- Regression analysis predicts by 2050 the tax code will be around 140,000 pages.
- The Tax Code has 5 times as many words as the bible.
- Compliance costs are estimated between 300-500 billion dollars/year.
1. Brief History:
- To help pay for the War Between the States (aka Civil War and in the Dirty Dirty called War of Northern Aggression) the first income tax started in 1861, as part of the Revenue Act of 1861 (3% of all income over 800 dollars).
- The unconstitutional income tax was repealed in 1872.
- The next federal income tax was established in 1913, but required an amendment to the United States Constitution to make it legal (The 16th Amendment).
- The 1913 income tax only affected couples making $4,000 or more/year (which is $90,300 today w/inflation) at 1%. The tax return was only 1 page and the tax codes were 14 pages.
2. Historically Americans Hate Taxes:
Yes, it is ok to feel frustrated about our fecal blizzard we call the U.S. tax system. Heck, it is an American tradition from the Boston Tea Party, Whiskey Rebellion, to today’s Tea Party. Some interesting notes on the Whiskey Rebellion:
- The Whiskey Rebellion primarily started in Western Pennsylvania, but was supported in many parts of the Appalachia (MD, VA, NC, SC, GA).
- George Washington called for a militia to stabilize the situation. He selected General Harry Lee to command the efforts ( father of Robert E. Lee). Washington himself also joined the efforts.
- George Washington had one of the largest whiskey distilleries in America. I wonder if he paid the tax?
- Thomas Jefferson and the 1802 Congress repealed the Whiskey Tax.
3. The Federal Tax Code is 72,536 pages:
What is taller than a giraffe and weighs 145 lbs? The U.S. Tax Code.
- Assuming average thickness of paper = 0.0038 inches. The tax code is 276 inches or 23 ft. in stacked height, which is taller than a giraffe.
- Assuming each individual sheet was spread evenly (8.5 inches). The tax code length would be 616,556 inches, 51,380 ft., or 9.73 miles.
- Assuming 500 sheets=7lbs. The tax code weighs 145 lbs.
- Assuming 20 pages print in 1 minute. The tax code would take 3,626 minutes or 60 hours to print. I’ll bet you a G that your printer would crap out before it could all print out.
- Assuming 1 cartridge costs 20 dollars and prints 200 sheets (typical Dell home printer). The cost to print the tax code would be $7,253 or 363 cartridges (maybe you can find a good deal on ink).
- The Hong Kong tax code is less than 200 pages and has been around for 60 years.
4. By 2050, the Tax Code will be 138,000 pages:
Predicting future number of pages using Linear and Polynomial Regression from this chart data. Done by yours truly. I know there are many variables for predicting the future, but historic trends show my calculations have merit. I did not show exponential regression, because it will make your eyes bleed. Plus the graph was too large to post.
5. The Cost of Compliance ($300-$431 billion/year):
This economist (Laffer) says compliance cost $431 billion/year. For every dollar sent to the IRS, it costs 30 cents in compliance. Making the tax code as efficient as a three-toed sloth picking dingle berries.
6. The Federal Tax code has over 3.8 million words.
- 5 times the amount of words in the bible.
- The average person can read 250 words per minute. Assuming the average reader took no breaks, it would take 15,200 minutes, 253 hours, or 10.5 days to read the tax code.
- Atlas Shrugged has 645,000 words. The tax code has 5.9 times that amount.
7. U.S. citizens spend 7.6 Billion hours complying with the tax code:
So basically the time wasted doing taxes actually hurts government revenues. Just think, that 7.6 billion hours could have been used for something productive like working and producing more goods and services.
8. The IRS hot line is known to use inaccurate information and the wait time is redunkulous:
Facts from 2009 Government Accountability Office (GAO) report:
- 69% of callers received assistance.
- Average wait time was 8.4 minutes.
- Tax payer cost per call $25.75 (total 670 million). Now I recommend outsourcing to India.
- From the above video, if the IRS hot line gives bogus information you still get in trouble for filing your taxes incorrectly.
9. Raising Taxes on the Rich is Futile (Hauser’s Law):
Election season is coming up, politicians are getting all geeked out about dissing the rich for not paying their fair share. However, almost 50% of income filers pay no federal taxes at all.
Let’s take all their money:
If the U.S. confiscated all the income from millionaires and billionaires (the top 1%) it would equal 938 billions dollars. This is not even close to paying down this years deficit.
Basically you can fool with the tax code all you like, but the government is only getting around 20% of the GDP. You would think that the Federal Govt. should set their annual budget to be around 20% GDP. Well, they are an overly optimistic bunch.
After seeing all of this debt stuff:
For the love everything holy, please vote in people that will actually simplify the tax code. I don’t care if you swing left, right, up, or down. It isobvious that our tax code is a really bad joke. You can blame the IRS all you want, but Congress has the power to change the system.
I am a big fan of the Fair Tax, but any simplification will do: