Most people have paid their income tax by today. Some pay a lot and some don’t pay any. Some get tax credits for children they don’t have. News programs have been put on U Tube about how illegal aliens get income tax refunds for these phantom children. There are also news articles about how tough the IRS can get on tax cheats and certain right wing organizations.
The point is that the government has great control over the citizens and serious means to enforce their rules and regulations. The notice of a tax audit usually sends chills up and down the back of the recipient of the letter. Anyone who has gone through the audit usually ends up paying money, and most of the time it is deserved. However, there are examples of people who just end up writing a check to end the process because of fear and the inconvenience for challenging the power of the IRS.
People who like to study history can see what has happened since the country went from a colony run by the British to a Republic designed to be run by the citizens. At the beginning, the country had tariffs and then taxes were levied on alcohol which historians referred to as the Whiskey Rebellion. The government was very direct during that time to convince the distillers that what money they made was not all theirs. A good portion of the profits belonged to the government and the government did make the effort to collect what they figured the distiller owed. The government was successful, as they usually are.
Taxes accumulated. It became a profitable game for politicians to come up with creative ways to get money from the citizens. The really big source of revenue came during the administration of Woodrow Wilson who got the law passed as an amendment to the Constitution. Some historians question the way it was ratified by the states to pass, but questioned or not, it became law.
Some claim it was passed as a two percent tax on people making more than $100,000 a year and that the percentage would never exceed 10 percent. How well did that work out. As it progressed, the Democrats were very successful with their slogan of “soak the rich” and at one time the tax rate was 91 percent of a wage earner’s income.
Of course, there were tax shelters and other methods of reducing the total payment to the government, but eventually, a simpler way to collect the taxes took over and there have been adjustments up and down regarding deductions and shelters. In all cases the laws favored the government tax collectors.
Taxes continued. One of the easiest methods for governments to collect taxes is the property tax. It changed the concept of property ownership to one of leasing the property to the government. If a renter doesn’t pay rent, he is evicted. If a property owner doesn’t pay his taxes the government takes the home or property and sells it. That is a powerful motivation to pay the taxes and is very popular with politicians, especially those in New York.
The property tax also has a political advantage. A politician can brag about not raising the property tax rate as he runs for reelection. This could be very true, but the poor property owner ends up writing a larger check because the property was reevaluated and therefore the tax rate involved more money because the assessor thought the property was worth more than it was last year.
A major problem with that is when a person retires and the income drops (sometimes drastically) the property the owners thought would be an asset, becomes a liability. In some cases, the property tax could be the largest expenditure in a budget. So, even if there is a cap on tax rates, a creative assessor can produce more revenue to the local governments.
Therefore, an income tax is fairer than a property tax. If the income drops, the tax is reduced. However, homes keep increasing in value and taxes keep increasing. Figuring more creative ways politicians tap into the taxpayer’s pockets we can look at the sales tax. This is a reasonably fair way to tax because it focuses on purchases. Buy an expensive automobile and you pay a higher tax than if you buy a cheaper one. Usually food is exempt from a sales tax unless it is bought in a restaurant. If you can afford to eat out, the politicians believe you can pay a tax to support their spending.
Column space prohibits a rundown of the multitudes of other taxes like for services, utilities, energy and the “hidden taxes.” Going back to the income tax, getting married usually means the two people who choose marriage over cohabitation must pay a “marriage penalty.” Who was the genius who decided that this was a good tax to have? Maybe a governor?