I love taxes!
No one has ever said that!
I like what taxes pay for – things like clean air, abundant natural resources (perhaps too abundant, which is why not enough people appreciate it?), schools, roads, and all that other good stuff.
Another thing I like is trivia. I love learning esoteric things because it helps me be the life of a party. Tax trivia is the best kind of trivia.
For example, did you know that residents of New Mexico who are over the age of 100 do not have to pay New Mexico personal income tax? Yes!
Colorado does not consider the lid of a scalding hot cup of coffee to be “essential packaging.” They tax nonessential packaging at 2.9%. The cup is essential. The lid, and your lap, is not.
OK – to be honest, some of these facts will not be a lot of fun. We will mix in some weird tax laws, esoteric tax history, and then mind-boggling stats that may irk you. But hey, it'll be a fun time overall. I guarantee it… or your money back!
Let's get this party started.
Strange & Weird Tax Laws
- Illegal Drug Tax Stamps – Marijuana may be enjoying its day in the sun but there are still many illegal drugs changing hands in the back streets of America. The tax man knows this and while the sales are illegal, they still need to be taxed. That's how they got Al Capone! In many states, you have to buy tax stamps and affix it to the packaging – here are the instructions from the Kansas Department of Revenue's drug tax stamp page!
- If the law sounds crazy, it's only because of the way it was worded. What usually ends up happening is that if you're busted with drugs, you're taxed on it. It creates a new revenue stream for the jurisdiction, which isn't all that bad. You can also snag a few dealers on tax evasion too when you throw the book at them.
- Jock tax – This is a tax on athletes who play in different cities and states. Did you know this first started in 1991 after California started taxing the earnings of Chicago Bulls players? It was in the 1991 NBA Finals when the LA Lakers played the Chicago Bulls in the Finals that year (which the Bulls won in 5 games). Illinois retaliated and soon nearly every state added their own version of this tax because they love money!
- Alabama has a 10 cent tax on a deck of playing cards.
- You may have read elsewhere that Nevada will give you a free deck of cards when you file a state tax return. I emailed the Commerce Tax team and they royally told me, with what I imagine was a straight face, that I can flush any thoughts of a free deck of cards down the drain. They can only “only offer our sincere thank you for your compliance by filing your return.”
- Blueberries from Maine are subject to tax of 1.5 cents per pound sold.
- New York levies an 8 cent tax on each sliced or toasted bagels!
- Texas charges a $5 per customer fee on each strip club pole.
- Soda taxes have been big news the last few years. Chicago recently repealed their own soda tax but a handful of jurisdictions still have soda taxes, usually in the penny per ounce range.
- Hipsters beware! Peter the Great in Russia once taxed beards. 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 of £147. The fee pays for state run radio, print and TV 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!?
- Known as the Constable's Dues, 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. No need for a ceremony though.
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.
- Tax Freedom Day was April 23rd in 2017. That is the day, based on total taxes collected, when you stop “working” for the Government and work for yourself. I think it's silly and it's always around the same time each year.
- 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 70,000+ in 2014 (depends on who you ask). 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… but still).
- The easiest form, the 1040EZ, has thirty-three pages of instructions.
- In 2016, H&R Block made $3 billion in revenue. Intuit made nearly $4.7 billion, 42% of which was from their Consumer Tax group ($1.975B).
- ProPublica has, for several years, reported how Intuit (makers of TurboTax) and H&R Block conitnue to lobby against simpler tax filing. Last year, Intuit spent more than $2 million and H&R Block spent $3 million. A drop in the bucket.
Tax Collection & Forms
- You don't like taxes. I don't like taxes. But the French really don't like taxes. 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 collecting!
- 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, <1% of e-file returns have errors; do your taxes electronically.
- In 2016, 74.2% of returns received refunds to the tune of $297B and the average tax refund was $2,750.
- 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 in every state could…
- But in 2017, only 87.1% tax returns were electronically filed.
- For each $100 that the IRS collects, it costs them just 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 in 2014.
- 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 nearly 80,000 employees at the IRS, that's more than the CIA and the FBI combined. For what it's worth, the CIA headcount is an “estimate.” 🙂
- According to the National Taxpayers Union, in 2015, 59.58% of all federal income taxes were paid by those earning $195,778 or more (AGI). Those between $79,655 and $195,778 accounted for an additional 27.04% of income taxes. That means 86.62% of taxes paid are by those making more than $79,655 – the median income in the United States (2017) is $59,039.
- The bottom 50% in AGI (<$39,275) for 2015 paid just 2.83% of the total taxes paid.
Corporate Tax Facts That Might Piss You Off
- A Goverment Accountability Office report in 2016 on corporate taxes discovered that 70.1% of US corporations paid no income tax in 2012.
- From 2008 to 2015, these 18 companies paid zero taxes: Pepco Holdings, PG&E Corp, Wisconsin Energy,
NiSource, International Paper, FirstEnergy, Priceline.com, Atmos Energy, GE, American Electric Power, Ryder System, Duke Energy, NextEra Energy, Xcel Energy, Ameren, CMS Energy, Sempra Energy, Eversource Energy. They had profits of $177 billion that period and paid an average rate of -4.0%. Yes that's negative four percent. From 2008 to 2015.
- Over that same 2008 to 2015 span, there were at least a hundred companies that paid zero tax or less in at least one of those years.
- Over that same 2008 to 2015 span, 25 companies received nearly $285B in tax subsidies.
- In 2009, you got $250 as a stimulus check and it was HUGE news.
Now that you're all fired up… I will leave with one final quote:
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.”
Find any facts you enjoy? Hate?