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50 Fun Facts About Taxes

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It’s April 15th and today I will not write a single thing about last minute tax moves (you’re too late) or about the tax stimulus (just fill out a tax return and put in your direct deposit information) or anything boring like that. You don’t want to be like that guy to the right, right? Nope! Today will be a day of fun and we can start it off with fifty fun facts!

Some of these facts, I can guarantee, will not be fun. There will be a mix of tax history, some current tax laws, some mind boggling statistics that will likely piss you off; but at least we’ll start you off with some of the weirdest tax laws and funny trivia! You’ll read some of them and say, “Hmm… okay, kind of interesting, but not actually fun.” However, some of them will be fun or your money back! Let’s get started.

Weird Tax Laws

  • Drug Tax Stamps – In at least 23 states there is a tax on illegal drugs. When you buy an illegal drug, like marijuana or even moonshine, in Tennessee, you have 48 hours to report it to the Department of Revenue to pay your tax and get a stamp for the substance. No identification is needed, though there are a dozen cop cars sitting outside the office. (Just kidding about the cop cars, I have no idea)
  • North Carolina has had a illegal drug tax stamp law in place for 15 years, only 79 people have purchased stamps since 1990 (most of those were stamp collectors, or complete and utter morons).
  • If the law sounds absurd, it’s only because of the way it was worded. The real end result is that people are taxed on drugs found in their possession when they’re busted. This creates a new revenue stream for the state or county and I can’t say I can argue with that.
  • “Jock tax” – Levied on athletes who earn an income competing in a particular city or state. California first levied this tax on athletes from Chicago in 1991 after the Chicago Bulls beat the LA Lakers in the 1991 NBA Finals. What a bunch of sore losers.
  • Alabama has a 10 cent tax on a deck of playing cards.
  • Blueberries from Maine are subject to specific tax too, anyone who grows, purchases, sells, handles, or processes blueberries in Maine has to pay a penny and a half tax per pound.
  • “Fountain soda drinks” in Chicago are taxed at 9%, if it comes in a bottle or can then it’s only taxed at 3%.
  • Peter the Great in Russia once taxed beards (he doesn’t do much taxing anymore). There was also a tax on souls, hats, boots, beehives, basements, chimneys, food, clothing, birth, marriage, and burial.
  • In the UK, everyone under the age of 75 pays a TV license fee £126.50 for color TVs and £42.00 for black and white TVs (it in part pays for state run networks like the BBC). If you are legally blind, you only owe half that fee.
  • According to the UK’s Tax Avoidance Schemes Regulations 2006, “it is illegal not to tell the taxman anything you don’t want him to know, though you don’t have to tell him anything you don’t mind him knowing.” What!?
  • Royal Navy ships that enter the Port of London must pay a barrel of rum in tax to the Constable of the Tower of London. All visitors to my house must pay a case of beer in tax to me.

Tax History & Facts

  • The first income tax ever was in 1404 in England.
  • The first property tax in the United States was in 1798 and it was on land, houses, and slaves.
  • The first US income tax started during in the Civil War to help raise money back in 1862.
  • The first federal tax office in the US was the Office of the Commissioner of Internal Revenue in 1862, what a coincidence!
  • The 16th Amendment, ratified in 1913, established the first permanent US income tax.
  • Four states rejected the amendment: Connecticut, Florida, Rhode Island, and Utah.
  • Two never considered/discussed it: Pennsylvania, Virginia
  • Everyone pays income tax. :) [this fact is decidedly not fun, I concede this]
  • There are over 7 million words in the tax law and regulations. That beats the Gettysburg address, the Declaration of Independence, and the Holy Bible all rolled into one (269+1,337+773k).
  • There were 402 tax forms in 1990, by 2002 that number had jumped to a staggering 526.
  • My personal favorite is Form 6478 – Credit for Alcohol Used as Fuel. (I don’t think the IRS really counts beer as fuel, though it does keep me going sometimes)
  • According to CCH, the number of pages in the tax code and regulations went from 26,300 in 1984 to an astonishing 54,846 in 2003. Those 1.2M tax preparers are smiling every year.
  • The IRS sends out over 8 billion pages in forms and instructions every single year, that’s nearly 300,000 trees (now they use recycled paper).
  • The easiest form, the 1040EZ, has thirty-three pages of instructions.
  • Tax Freedom Day was April 23rd in 2008, a few days earlier than last year because of the tax stimulus rebate.

Tax Collection & Forms

  • You know how everyone hates the taxman? Did you know that in 1789, the start of the French Revolution, tax collectors were sent to the guillotine? Poor folks were just doing their jobs… it’s not like they enjoyed it!
  • Too bad those French tax collectors didn’t live in Greece a few thousand years earlier, back then the tax professionals were considered the most noble man in society (perhaps that’s why they were given the slice in France, the French Revolution wasn’t particularly friendly to “nobles”)
  • 21% of paper returns have errors, 0.5% of e-file returns have errors; do your taxes electronically.
  • In 2003, 78% of returns received refunds to the tune of $205B and an average of $2,073 per return.
  • The first e-file (electronic transmission of a tax return) occurred on January 24, 1986…
  • By 1989, taxpayers in 36 states could e-file their taxes…
  • By 1990, everyone could.
  • For each $100 that the IRS collects, it costs only thirty-nine cents. While you might hate them, tell me what other agency runs with such efficiency? The answer is probably none.
  • The Cato Institute estimates that there are approximately 1.2M tax preparers in the country.
  • AMT was designed to snag 155 wealthy taxpayers in 1969. (Yeah, they created a whole new tax to get 155 people!)
  • Technically, income tax is voluntary (but not optional)!
  • There are 114k employees at the IRS, that’s more than the CIA or the FBI.
  • According to the Joint Committee on Taxation, in 2006, 53.7% of all federal income taxes were paid by those earning $200k+. Those between $100k and $200k paid out 28.3% of income taxes. That means 82% of taxes paid are by those making more than $100k. (link)
  • Taken in aggregate, those earning less than $40k paid 0%.

Facts That Will Piss You Off

  • A Government Accountability Office report released in 2004 showed that…
    • 61% of US corporations paid no income tax between 1996 and 2000.
    • 94% of US corporations paid less than 5% their total income in taxes.
    • US corporations paid, on average, $11.88 in taxes for every $1,000 in gross receipts.
    • 38% of big companies ($250M+ assets or $50M+ revenue) paid no taxes.
    • in 1943, 39.8% of taxes collected came from corporations; only 7.4% in 2003.
  • From 1996 to 1998, these companies paid zero taxes: AT&T, Bristol-Myers, Squibb, Chase Manhattan, Enron, ExxonMobil, General Electric, Microsoft, Pfizer and Phillip Morris. (link)
  • In 1998, these companies received a total of $1.3B in rebates (despite making $12B in pre-tax profits): Texaco, Chevron, CSX, PepsiCo, Pfizer, J.P. Morgan, Goodyear, Enron, General Motors, Phillips Petroleum and Northrop Grumman. (link)

Now that you’re all fired up… I will leave with one final quote, most often mis-quoted (except right now, duh!). Benjamin Franklin, on November 13, 1789, wrote the following to Jean-Baptiste Leroy: “Our new Constitution is now established, and has an appearance that promises permanency; but in this world nothing can be said to be certain, except death and taxes.”

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25 Responses to “50 Fun Facts About Taxes”

  1. Phil says:

    For corporate income taxes, there are very good reasons why corporations don’t pay more than they do in income taxes (and, hence, have to be kept in context): write-offs!

    Besides being one of the highest corporate taxing entities in the world, the US also has a boat-load of incentives to help keep more taxable monies in CONUS as opposed to leaving the country. It’s a double-edged sword: “Let’s tax corporations at a marginal rate of ~35%, but let’s also make sure there are legitimate tax shelters and other facilities so that we don’t let all the money leave the country for better taxing jurisdictions.”

    Also, remember that a “corporation” is merely a piece of paper that says, “This happens to be a legal entity by the name of X set up as a Y.” Therefore, the corporation, per se, never actually pays taxes — taxes are, by definition, a cost of doing business, and are always passed on as an expense for the customer to pay.

    This is all to say that don’t complain that companies don’t pay “their fair share:” Any time their taxes go up, you’re the one who’s ultimately paying them!

    -Phil

    P.S.: Go FairTax!

  2. Actually, as per Supreme Court ruling, the 16th amendment gave no new powers of taxation. It *was* Congress’s intention of giving themselves this new power; however, they failed. As such, there is still no law that says you have to pay income tax. Just IRS agents with guns pointed in your face.

  3. jim says:

    Excellent point, I did not know that.

  4. saladdin says:

    26 U.S.C. § 7201 (2005).
    Under section 7201, it is a crime for a person to willfully attempt in any manner to evade or defeat any tax imposed by this title or the payment thereof. The PunishmentViolating section 7201 will constitute a felony, and the punishment for doing so is a fine of not more than $ 100,000 ($ 500,000 in the case of a corporation), imprisonment for not more than 5 years, or
    both.

    Ask Wesley Snipes if there are laws that require you to pay income tax.
    Of course there are, that’s why there are penalties, fines and even jail time.

    Are you one of those people who live on a “compound”?

    Did you get that from one of those “Tax Protestor” sites (the ones who end up in jail claiming the 16th amendment wasn’t ratified etc)?

    saladdin

  5. saladdin says:

    Contention: Payment of tax is voluntary.
    In a similar vein, some argue that they are not required to pay federal taxes because the payment of federal taxes is voluntary. Proponents of this position argue that our system of taxation is based upon voluntary assessment and payment. They frequently claim that there is no provision in the Internal Revenue Code or any other federal statute that requires them to pay or makes them liable for income taxes, and they demand that the IRS show them the law that imposes tax on their income. The stance that is taken is that until the IRS can prove to these taxpayers’ satisfaction, which is effectively impossible because they never will be satisfied, the existence and applicability of the income tax laws, they will not report or pay income taxes. These taxpayers reflexively dismiss any attempt by the IRS to identify the laws, thereby continuing the cycle. The IRS has issued Revenue Ruling 2007-20, 2007-14 I.R.B. 863, discussing this frivolous position at length and warning taxpayers of the consequences of asserting it.

    The Law: The requirement to pay taxes is not voluntary and is clearly set forth in section 1 of the Internal Revenue Code, which imposes a tax on the taxable income of individuals, estates, and trusts as determined by the tables set forth in that section. (Section 11 imposes a tax on the taxable income of corporations.)

    Furthermore, the obligation to pay tax is described in section 6151, which requires taxpayers to submit payment with their tax returns. Failure to pay taxes could subject the noncomplying individual to criminal penalties, including fines and imprisonment, as well as civil penalties.

    Link to IRS “debunking” site.

    http://www.irs.gov/taxpros/article/0,,id=159932,00.html#_Toc153765504

  6. Miranda says:

    An interesting discussion on whether or not paying taxes is voluntary. Apparently, it’s not :0) I also enjoyed all the trivia in the post. It was a lot of fun to read!

  7. fred@opc says:

    Very good article, Jim.

    You didn’t mention whether the corps that didn’t pay income taxes had any income for the year. I suspect the General (GM) hasn’t been paying much in income taxes lately either with all of us driving foreign cars.

    • Littlelady007 says:

      Please….they are still turning a huge profit. Those foreign cars you are talking about? Mazda is made by Ford, as are several other asian brands. There are plenty of european brands which are made here as well in US companies.

  8. Todd says:

    Very interesting information, but I probably could have gotten by without the list of millionaire/billionaire companies that haven’t paid taxes in the past. That just rubs salt in the open tax wound ! Thanks for the info, though.

    • Littlelady007 says:

      I just cut a feqw comapnies out of my normal business now knowing this. I may not put a dent in theor wallet, however if enough did…

  9. In the UK there used to be a tax on windows. Ther are quite a few houses that have bricked in windows as a result of this.

  10. Andrew says:

    Paying income taxes is voluntary in the sense that if you do not have income, you do not have to pay.

    Further, the key word no one has used is JURISDICTION. Do you pay taxes to Ireland if you earn income in the USA? Of course not. So the “IRS Code” (NOT A LAW by the way) only applies to those who have subjected themselves to the jurisdiction of the Code (Codes & Policies do not apply to everyone. Do you have to obide by GE’s Corporate Policies if you work for IBM? Of course not).

    Also, Income tax avoidance (Not evasion) is perfectly lawful. As I pointed out in the beginning of this post. Further, the Federal Government can not impose a tax on a private man who lives in a State (ie Not the District of Columbia), who does not act in inter-state commerce, who does not work for a corporation (ie a creature of the state), who does not have a Social Security #, and who uses Private Money (ie NOT Federal Reserve Notes but Gold, Silver, etc or better yet BARTER – and does not use a bank account). I’d like to see the IRS even be able to identify those who are able to go under the radar let alone claim they owe money. Actually, at the end of the day it doesn’t matter. What matters is who has the most guns. All governments are only able to maintain their power through force or the threat of force. Only “Self-governance”, ie a voluntary society where one is free to leave the system, is truly lawful. And that, went away w/ the Civil War.

  11. saladdin says:

    Maybe I’m missing your point but to me it seems you have stumbled across some of those “tax protestor” websites with incorrect information.

    Yes it is law. There are penalties, jail time etc. Avoidance within the rules is legal and is what these corporations (normally) do. That is why they have $0 tax liability.

    Can’t get any simpler then this. Just search the internet.

    “Federal tax law is governed by the Internal Revenue Code (IRC), which is the codification of the rules and regulations promulgated by the United States Congress, and enforced by the Internal Revenue Service (IRS).”

    As for jursdiction:
    26 U.S.C. 7201 makes it a crime (felony) for any person to willfully attempt to evade or defeat a tax imposed by Title 26. 26 U.S.C. 7203 makes it a crime (misdemeanor) for any person required under Title 26 to make a return (report) to willfully fail to make such return. These are just two of the many crimes listed in Title 26.

    The Criminal Code, Title 18 of the United States Code, grants federal district courts jurisdiction concerning criminal violations of Title 26, to wit:
    The district courts of the United States shall have original jurisdiction, exclusive of the courts of the States, of all offenses against the laws of the United States. 18 U.S.C. 3231. (In Part. Emphasis added.)

    It is law and federal courts have jurisdiction.

    saladdin

  12. saladdin says:

    Ask Wesley if the tax code is law.

    Snipes, who has starred in movies such as “Blade,” “Major League” and “Murder at 1600,” had been charged with felony conspiracy counts for participating in a scheme that rejects the legal foundation of the tax system.

    http://www.cnn.com/2008/CRIME/04/24/snipes.sentencing/index.html

    saladdin

  13. jim says:

    The lesson of the day is that you’re ultimately fighting against yourself, your neighbors, your local businesses and everyone else who pays taxes… you cannot possible win against the government. It’s unpossible!

  14. joe blow says:

    “tax imposed by Title 26″ are the key words here.

    Read the tax code. The only ones that have to worry about evasion live in DC or work for the federal government or informed the IRS that they are required to pay taxes on said money.

    The IRC redefines half of the words that it uses to mean the exact opposite of what it sounds like. They aren’t imposing any taxes on me. By filling out a W2 I am stating that I am liable to pay taxes on this “income” and that they are supposed to be imposing this tax on me. Don’t fill out a W2 and you’ve never volunteered to have that money taxed.

    The right to work an live and eat and find shelter is older than the United States. Read some history.

  15. James Luff says:

    “Everyone Pays Income Tax”…HAHAHAAA Not true.

    The bottom 38% of Americans pay no income tax. Soon to be the bottom 50% with Obama’s new law.

  16. Anonymous says:

    taxes are stupid

  17. Littlelady007 says:

    I persnally beleive if we were to stop coddeling the big businesses and force them to pay taxes like everyone else, as well as charge more taxes for them to go overseas, well one of two things are going to happen. A) we get out of a defict very quickly and corporate AMercia begins to once more respect the government a bit.
    B) Big companies fail, and smaller companies, such as mom and pop return.
    C) AMerica fails as the economy finally collapses with the first 2,500 US Dollar pencils.
    Did I say 2 facts? ah! I am making as much sense as the goverment….

  18. poop. says:

    i love tacos! :D i made friend last night in my deep fryer. im getting pretty good at this stuff. you all should be jealous!! ^.^right now, im going to sing you a song. here goes. “my president is black, my lambo’s blue, and i’d be ******* if my ***** is to…” im done, so buhhbye!!! :D DD

  19. Terry says:

    Any government employee (to include elected officials and US Service Members) who is over 12 months in default of tax payment should be terminated no later than the end of the 12th month, unless a repayment plan has been settled with the IRS.

    A friend of mine, and fellow service member, walked in the office the other day. He was outraged that the tax preparer notified him that he was barely in his tax bracket. He had considered getting a job delivering pizzas or something in 2013 for extra cash, and she told him that he would end up paying all of his increased income to the IRS, if he did…. The current system dis-incentivizes earnings and saving.

    To incentivize earning and saving, a tax on goods sold at the point of sale would be fair to all. It would encourage the streamlining of industrial processes. It would NOT have to be a very high tax to match that of the current Income Tax’s revenue. Rich people wouldn’t feel compelled to hide their money in off-shore accounts (making that money available to banks at home). Don’t tax staples (milk, bread, rice, noodles, etc), utilities to a threshold given an average home’s energy consumption, and the poor could live virtually tax-free. Even tourists, who visit this great nation and use its government-provided services, would be participating in the financial maintenance thereof. A blanket tariff at the same rate would need to be implemented on all imports to prevent those goods from unfair competition with domestic goods (again, a low rate). The entire IRS could be reshaped into sales tax enforcement (not altogether left unemployed). All of this could be introduced slowly over the next 10 years while income tax (personal and corporate) could be reduced to nothing. No more loopholes, tax evasion, etc.

    Also, I want to opt out of Social Security—now! As a US service member, I could even dump that money into TSP (other government employees know what that is). I don’t care if the government taxes my withdrawal, just let me invest what I have built up over the years into a retirement fund of my choosing.


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