Tax Day Surprise! Big Brother is Getting Bigger and Bigger

Only a fraction of tax cheats get nailed, while honest taxpayers tiptoe in fear.

By Rachel Alexander Published on April 14, 2016

As the deadline approaches for filing tax returns with the IRS, on April 18 this year, most Americans are dreading the experience. Taxes have become increasingly onerous and complicated, especially for the upper brackets and those living in blue states like New York. Americans cannot escape the absurd complexity of the tax system, which micromanages us at every turn.

The Organization for Economic Cooperation & Development calculates that the average American single worker earned about $50,000 and paid 25 percent of that in state and federal income and payroll taxes. Americans spend more on taxes than they do on food, housing and clothing combined. This year is going to be even worse than usual because of the huge Obamacare penalties for not having healthcare. It is $325 per adult and $162.50 per child, or 2 percent of household income, whichever is greater. The penalty increases in 2016 to $695 per adult and $347.50 per child, or 2.5 percent of household income, whichever is greater.

The federal income tax was implemented for individuals in 1913, making this its 103rd year anniversary. While the amount the poor pay has decreased over the years, the amount the upper brackets pay has increased. Single people with a taxable income of $9,225 or less pay have a tax rate of 10 percent. Those rates climb to 15, 25, 28, 33, 35, or 39.6 percent as income rises, though with the higher rates only applying to the higher portions of your income.

Despite how high taxes are, Democratic presidential candidate Bernie Sanders, who ran for the U.S. Senate in Vermont while living on unemployment and also reportedly stole electricity from his landlord, wants to increase the rate for the top bracket earners to 54.2 percent. Middle-income households would be hit hard too — not just the rich — paying $4,700 more on average. The Tax Policy Center refers to Sanders’ plan as the “largest peacetime tax increase in history.” Sanders even suggested he might increase the top bracket as high as 90 percent. The top one percent of earners already pay 35 percent of income taxes, and the top 10 percent pay 68 percent.

Sanders says he intends to use the extra revenue to provide “free” socialist single-payer healthcare for all and “free” college tuition for all. However, unlike the other candidates running for president, Sanders would greatly increase taxes on lower income earners too. A family of four making $30,000 would see their taxes more than quadruple with an extra $3,110. In contrast, presidential candidates Ted Cruz, Donald Trump and Hillary Clinton have proposed tax plans that would either reduce tax burdens or keep them about the same (Kasich has not proposed a plan). Curiously, or perhaps tellingly, Sanders refuses to release his full tax returns.

It is true the Bible teaches that paying taxes to the government is a responsibility. Jesus said, “Render to Caesar the things that are Caesar’s and to God the things that are God’s.” But this doesn’t mean the government is entitled to take more than its fair share, which is what has been taking place in recent years.

A combination of tax code uber-complexity, IRS misbehavior in targeting nonprofits and Tea Party groups, and the Republican congressional response in limiting funding to the IRS has created a perfect storm, where only a small percentage of tax cheats get nailed in a timely manner, but where honest taxpayers still tiptoe in fear of slipping up on prepping their byzantine tax forms and getting nailed.

The IRS is now unable to catch most tax cheats effectively. This is not a conservative situation we should celebrate; conservatives support the rule of law. The money the IRS spent wrongly targeting conservative organizations should have been directed at catching real tax cheats. Some, like presidential candidate Ted Cruz, advocate for replacing the income tax with a flat tax.

Individuals already pay plenty of other types of taxes in addition to federal income tax, including state income tax (in most states), sales tax, property taxes and payroll taxes such as Social Security and Medicare. Additionally, there are federal taxes on investing, the capital gains taxes.

On the bright side, taxes could be even higher. Out of the 34 mostly developed countries in the OECD, the U.S. tax rate for an average single American with no children ranks No. 17. However, taxes increased under the Democratic Obama administration, for the middle class as well as for the rich, despite Obama’s pledge in 2009 that he would not raise them on the middle class. If Sanders or Clinton becomes president, taxes likely will continue going up and that ranking could tank. When a Democrat complains about the Obamacare penalty, their ineligibility to claim the child tax care credit anymore, or higher taxes on cigarettes, remind them that they voted for the man who helped push through those taxes.

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