Celebrating (?) Income Tax Day

Thursday, April 15^th, is the day to settle accounts with the federal government.  It used to be March 15^th, but since Congress itself can never produce a budget by October 1^st (used to be July 1^st), our legislators blessed us with our very own procrastination opportunity. They also blessed many of us middle class folks by eliminating  the incentive to itemize. A big $17,000 standard deduction for a single person, $32,000 for a couple discourages itemizing.. It takes a lot of charity, medical bills and state taxes to claim that much, and it makes filing faster and easier.  The current income tax code also thoughtfully discarded the exemption for dependents, thus discouraging taxpayers from having children that the nation would have to feed and educate.  (At least the government doesn’t have to vaccinate them anymore.)

If we don’t celebrate sales tax day, or property tax day, or tariff day what’s so special about the income tax?  The answer is that it is the only tax that doesn’t demand a larger share of their income from the poor than the rich.  It is less progressive than it used to be but more progressive than any other tax.  In fact, most of the sources of federal, state and local tax revenue are regressive. Progressive means your tax bill is a larger share of your income as you move up the income scale.  Regressive taxes take a smaller share of your income as your income rises

Forty-one other states use income taxes, but mostare less progressive because they want to be atracitive to business location and high-income residents. are not very progressive—in fact, many of them have flat rates, and only some kind of standard deduction makes these states a little bit progressive.  The mainstay of many states (45) revenue systems is the retail sales tax..

The sales tax is regressive for two reasons.  First, poor people spend all of their income, rich people don’t. The part the rich salt away to invest or at least save does not pay any sales tax.  Second, even if the rich spend their money they spend more on services, and states tend to tax more tangible goods and relatively few

Think about being rich. There are limits to how much you can consume of food and clothing, but no end to the services you can enjoy. (Think gardeners, nannies, house cleaners, hairdressers, life coaches, tutoring for your wayward children, travel..)  Also, sales taxes of all kinds—regular sales tax, gasoline tax, alcohol tax, tobacco tax, tariffs, are all paid in small amounts in our daily rounds. They add up, but they never show up as visibly as   income tax withholding from your paycheck the end of the week or month. The income tax is not exactly a model of fairness, but we have to pay for government services somehow, and it is the least unfair of all the kinds of taxes humans have invented.  With that less than ringing endorsement, I invite you to gather your paper and visit your computer or your tax person and make your confession of what you owe the government,