Ah, springtime, when a young man’s thoughts turn to -- paying taxes.
This year, many of us will get a treat. Not long after we cut a check to the IRS on April 15, we’ll get a big check back from Washington. It’s a special “economic stimulus” package, passed in record time this winter by lawmakers who say they aim to bolster our economy -- and certainly hope to gain our vote in the fall.
How’s the government going to pay for this? Simple. It’ll just borrow the money from future taxpayers so it can “give” us all more money today. But this approach gets things exactly backward. The problem with our economy isn’t that the government “gives” us too little. It’s that Washington takes too much away.
Let’s consider a time, within living memory, when the country really was dealing with a crisis. A friend recently stumbled across a 1040 from the year 1943. There were a few things going on that year.
The U.S. was at war with Germany, Italy and Japan. Our troops led an allied invasion of Sicily in Europe, and battled the Japanese in the Aleutians, the Solomon Islands and on Tarawa Atoll. The three-day invasion of Tarawa killed 1,000 Americans and left another 2,000 wounded.
Back home, the government rationed fat, meat and cheese (so there would be enough to feed the troops) and implemented a freeze on wages and prices (to try to prevent inflation). In short, the entire country was mobilized in a fight it simply had to win.
That’s what makes reading this 1040 especially interesting. The taxpayer, who lived in Longview, Washington with a wife and two children, worked for Weyerhauser. He earned $2,635 (less than $52 a week) and paid $142.86 in taxes.
With the country hanging in the balance, this man’s tax burden was slightly more than 5 percent of his income, and that includes $38.86 for a special “Victory Tax.” There wasn’t a Martin Luther King Day holiday in 1943, of course (King was only 14) but if there had been, that taxpayer would have earned enough by that date in mid-January to pay his federal taxes for the entire year.
Compare that to today. According to the Tax Foundation, in 2008 the average American will work 74 days to pay federal taxes.
“We’re not being taxed, we’re being bled,” my friend points out. If he was paying taxes at 1943 rates, “I’d have saved an extra $15,000 a year for the last 6 years alone, and I’d be living in a house of my own and driving a nice new car.” But that’s not how it is. “Instead, I rent a very humble place, and drive a 14 year old minivan with 240,000 miles on it, trying to save enough to scrape up a down payment on something new.”