Jay Evensen: Some tax facts for Independence Day

Published: Thursday, July 4 2013 12:00 a.m. MDT

Of course, there are many other taxes to worry about besides income taxes. The poor tend to be disproportionately affected by sales and property taxes because those aren't tied to income levels.

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I've often noted how fortunate it is for politicians that Election Day doesn't coincide with tax day. By the time April 15 rolls around, people have forgotten all the slogans and half-truths about who pays more and who ought to pay more.

All they care about is how much they have to pay. It would harder to sell certain slogans in the voting booth if taxes were due in early November.

But it's probably just as well that tax day doesn't fall near the Fourth of July, either, just because it would put a damper on all the festivities. Something about the word "independence" would seem a little inconsistent with the numbers 1040.

So forgive me if you're preparing to munch hotdogs or light some aerial projectiles before reloading for Pioneer Day. Here are some tax and income facts presented recently by the Tax Foundation, a non-partisan tax research group in Washington. You may find them interesting:

When it comes to how much Washington taxes us, this is certainly not the best of times. However, it's far from the worst of times, as well.

Top marginal tax rates have yo-yoed all over the place since Americans amended the Constitution 100 years ago to allow for an income tax. Today, Americans who earn $400,000 or more qualify for the top marginal rate, which recently was raised to 39.6 percent. That led to a lot of people using the word "socialism" as a weapon. But the highest marginal tax rate ever in this country was 94 percent, which is pretty much synonymous with the word "confiscation."

That rate was established during World War II, when everyone was expected to pitch in for victory. However, after the war the top rate came down only a little, to 91 percent.

Given what that sort of rate does to the desire to earn money and create jobs, it's little wonder a bunch of loopholes developed during that time.

By contrast, when the income tax first began in 1913, the top rate was 7 percent. When you account for inflation, you had to earn the equivalent in today's dollars of $11,595,647 to qualify for that rate.

Even at that, you might not have needed an accountant to fill out the tax forms. They were fairly simple.

Incomes have grown during recent decades. If you wanted to be in the 1 percent in 1980, you would have needed an income of $210,402 in 2010 dollars. By 2010, you would have needed $369,691.

Along with incomes, buying power has grown in ways the Tax Foundation doesn't attempt to calculate. Clothing is cheaper today. For many young people, it's almost disposable (not to be confused with dispensable). You can buy DVD and Blue-ray players much cheaper now than in 1980, mainly because they hadn't been invented yet.

And despite what "occupy" protesters would have had you believe a few years ago (whatever happened to those folks, anyway?), the rich are paying more in taxes today than 30 years ago.

In 1980, the top 1 percent paid 19.05 percent of all federal income taxes collected. In 2010 they paid 37.38 percent.

On the other end of the scale, the bottom 50 percent paid 7.05 percent of the pie in 1980, compared to only 2.36 percent in 2010.

Of course, there are many other taxes to worry about besides income taxes. The poor tend to be disproportionately affected by sales and property taxes because those aren't tied to income levels.

Also of interest, the Tax Foundation refers to an essay a few years ago by tax analyst Joseph Thorndike on the origins of the Boston Tea Party. He reminds us that a large reason for that revolt was not individual tax bills but tax breaks the British had given to the East India Company, which gave it a monopoly on tea sales and undercut local merchants.

American like fairness, he said. "Loopholes and tax preferences are a powerful source of antitax activism."

That's worth remembering as you think of all the breaks local, state and federal governments give to certain businesses, even if you won't enter a voting booth for awhile.

Jay Evensen is associate editor of the Deseret News editorial page. Email him at even@desnews.com. For more content, visit his website, www.jayevensen.com.

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