Income Tax Shifting to “Earned Income” Tax

I stumbled on a good series of articles about the recent trends in U.S. tax policy over at Newsweek: Why Your Tax Cut Doesn’t Add Up: Behind the promises to save you money, a hidden agenda is at work, with a stealth tax to pay for it all. The gist of it is that the “income” tax has become a “salary” tax, with other forms of income (such as inheritance and investment income) escaping taxes. This shifts the tax burden to folks who have to work for a living, which, as we computer science types like to say, is “not a bug, it’s a feature!”

Another article, from Reuters, provides some details of how corporate income taxes have dwindled over the years:

Most firms operating in the United States paid no U.S. income tax at all in , according to a study by the U.S. Government Accounting Office released on . The GAO found that 71 percent of foreign-owned companies paid no tax on profits from their U.S. operations, while 61 percent of U.S. companies paid no tax.

Today, the Tax Foundation announced its calculation for “Tax Freedom Day” :

Tax Freedom Day is the day when Americans will finally have earned enough money to pay off their total tax bill for the year. Every dollar that’s officially called income by the government is counted, and every payment to the government that is officially considered a tax is counted. Taxes at all levels of government are included, whether levied by Uncle Sam or state and local governments.