How Does the Government Get Our Money, and How Has This Been Changing?

A Joint Committee on Taxation report on the U.S. tax system has a lot of good historical summary information, including the following graph, which vividly shows the increasing government reliance on the payroll tax to fill its coffers:

since 1950, receipts from excise and corporate income taxes have dropped off, those from estate/gift taxes and the individual income tax have held steady, but the payroll tax has increased dramatically, from 10% to 40% of total receipts.

Janet Novack looks at a new report from the Treasury Inspector General for Tax Administration about self-employed tax filers in the United States and asks “are the self-employed tax cheats or financial failures?”

Of the nearly 19 million taxpayers who filed a Schedule C (showing profit or loss from a business) , 25% reported a net loss on the form and 65% reported a net profit of less than $25,000. Another 6% reported profit of between $25,001 and $50,000, leaving just 4% with net earnings above $50,000.

But even those who are ostensibly living off their self-employment earnings aren’t — as they tell it to the IRS — earning much of a living. According to the TIGTA report, 92% of the 2.5 million taxpayers who reported only income from self-employment (no wages, no interest, no capital gains) had total income of less than $25,000.

From the Milwaukee Journal, which is so folksy it hurts:

Pierre Will Not Pay His Taxes, Therefore He’s a Hero in France

by Edward Cornish

Pierre Poujade cheats on his taxes and it has made him a national hero.

The law says the handsome, 34 year old Poujade should be in the bastille. Instead he heads a movement of 800,000 Frenchmen and has travelled 45,000 miles in the last year preaching his creed — don’t pay.

Poujade will carry his revolution to the capital when he addresses five mass meetings in Paris expected to draw crowds of between 300,000 and 500,000.

That is something like 50 times the number of collectors in all France so it is understandable if the finance ministry looks the other way.

Cheating on taxes is, of course, nothing new in France. Artifices to that end are something of a national pastime. But never before had a Frenchman taken such a direct course as Poujade.

It started in his home town of Saint-Cere in southern France where Poujade ran a small stationery store to support his wife, three sons and daughter. He played on the football team, organized festivals and might have been a happy man except for one thing. Taxes.

“Mon dieu!” he would complain to his wife. “This cannot go on.”

Then, on , he got word tax collectors were coming again to check his books Poujade summoned his friends and soon the entire village had massed around his shop. They refused to let the collectors get near the store.

The collectors retired, muttering that they would be back. But with the whole town supporting Poujade, there was little they could do.

The movement snowballed. Tax men in small towns throughout the department found themselves accosted by surly mobs. Sometimes they were roughed up but generally they were allowed to leave unharmed but empty handed.

“South of the Loire (river) we are no longer masters of the situation,” a high official confessed.

Finance Minister Edgar Faure has been cagey. He promised that if taxpayers would file honest returns, he would lower tax rates. The shopkeepers replied that if the government would lower rates first, they would consider honesty.

Poujade has vigorously refused to connect his movement with any political party although the Communists, among others made overtures.

Poujade admits France must have taxes and so far he hasn’t come forward with any really constructive suggestions. He complains that there are 3,250 different tax laws for a little merchant.

“We want a tax system based on justice,” he says. “That means we pay our taxes when we buy our goods and from then we are through with all the worries and paper work. We are willing to pay more if we earn more but not as now when we pay more and more while we earn less and less.”

Already hailed as the “Robin Hood of the taxpayers,” Poujade plans to put pressure on the national assembly.

“It is their job to find a way out,” he says.

The whole newspaper is written like it was intended for an audience of grade schoolers.