Let's hear it for one of the most diabolically clever government inventions ever, withholding, which lets our income-tax payments disappear a liittle every paycheck instead of coming in one big bill that would lead to national ourtage. As a result, we've gone from a nation founded on revolt over taxes that were a relative pittance to a nation of whining but compliant muggees:
Which makes the U.S. tax system, ugly as it is, something of a marvel. It raises revenue without raising a ruckus. A simpler and more efficient system would undeniably serve everyone better, but the current hodgepodge is so entrenched as to have become a political third rail, and attempts to reform it almost always fail or are gradually reversed. Witness Ronald Reagan's Tax Reform Act of 1986.
[. . .]
Countless other minor features add to the tax system's near-immortality. For example, the mortgage-interest deduction, an economically unjustifiable bauble, pleases millions of homeowners, creating a natural constituency against change. But the most interesting phenomenon is the steady scale of the overall take. If federal taxes are lowered, then people will have more money to spend, and they will end up paying more in sales taxes. Because of this, and more explicit offsets, governments at all levels have for some time been taking a bit more or a bit less than 30 percent of income from a large fraction of taxpayers.
Which must mean that 30 percent is something of a magic number.
Comments
It is true that the total federal tax rate is about 30% and has been for a long time. The total federal tax rate would include the 10.6% SS-OASI tax, 1.9% SS-DI tax, 2.9% Medicare tax, income tax, inheritance tax and other taxes. What many people do not realize is that the Social Security and Medicare tax rates have risen from 2% in 1937 to 15.3% today and the base has risen from $3,000 in 1937 to over $97,000 today.
The last general budget surplus we had was in 1959. Over the past sixty years we went from paying our bills each year to shifting our general tax revenues to Social Security and Medicare tax revenues while our total general budget costs remain the same as a percent of GDP.
As Social Security and Medicare taxes increased, there was protest and congress responded by creating the EIC (earned income tax credit). What this did was compensate low wage earners that saw their Social Security and Medicare taxes increase in the 70
The very reason they will never wake up is because of withholding. It's relatively painless to the average American because they never touch it. If they had to write a check or hand it to their Congressman in cash, the impression would be much different.