Menu
Categories
Horizontal Inequality
January 30, 2007 Uncategorized

Rather than just rant on and on about how complex the tax code is and how long it takes families to comply with a satisfactory completion of the state and federal tax returns, I wanted to highlight two simple facts.

My tax return software is able to tell me what the tax profiles of other families in my income category look like. For the 2006 tax year, my family ended up paying about $11,000 in federal income taxes. A “typical” family in my income range ends up paying about $7,000 in federal taxes. That’s right, two “similar” families can pay remarkably different taxes based on a number of absolutely insane factors. Buy a bigger house – get a bigger tax break. Claim you used more of your home for a personal business – get a bigger tax break. If you make home improvements that make the home more energy efficient – get a bigger tax brak. My wife and I were able to claim a $200 deduction for a new storm door we put on that really was meant to be pretty (it also made the house more efficient).

It is estimated now that some 52 million adult Americans have no net federal income tax liability. I imagine that the richer folks are financially savvy enough to save themselves a good amount of money on their taxes – leaving the rest of us suckers in the so-called “middle-class” to pay an increasingly bigger share of the nation’s taxes (that is not true statistically in the raw data – but it is true if one examines the taxes that would be paid if gross income were taxed without favor). Soon there will be little room left in the tax code for Congress to enact its social programs and favor its other pet projects. The current system is complicated and unfair and it is high time that real tax reform hits the agenda.

Leave a Reply
*