Did You Know These Interesting Facts About Tax?

A tax is a compulsory charge or some other type of levy that is charged to a taxpayer by a government, to fund their spending and other public expenditures. A failure to pay tax or tax evasion is punishable by law. There are two types of taxes, direct and indirect taxes. The first know taxation dates back to Ancient Egypt around 3000-2800 BC. Almost all countries around the world have a tax system in place to pay for public, common or agreed to national needs and other government expenditures. Some countries levy a flat percentage rate of taxation on an individual’s personal income, but most countries scale taxes on the annual income of an individual. Most countries charge a tax on a person’s income and corporate income. Countries also impose wealth taxes, sales taxes, use taxes, estate taxes, inheritance taxes, property taxes, gift taxes, payroll taxes, and tariffs.

In economic terms, taxation is the process of transferring wealth from households, individuals, and businesses to the government. Taxation has positive and negative effects on the economic growth and economic welfare of a country. Hence, taxation is always a highly debated topic amongst economists all over the world.

Fun and Interesting facts about taxes!

The tax code is 74,000 pages long!

This is one of the most important reasons, why most people choose to hire a professional to help them out with their taxes. The actual tax code is very long. Even a fast reader may take up to 1,200 hours to go through all of it. This wasn’t the case back in the 1900s, as the code is just 400 pages long in 1913.

IRS employees also break the law

One may think that most tax evaders are only rich people, but according to a report from 2015, almost 1,600 IRS workers evade paying their taxes over the course of 10 years. Most of these IRS tax evaders weren’t even fired for it. But in reality, it is a very small percentage of workers every year. Only 160 out of 85,000 employees do this. Even the small percentage of these workers hurts the image of IRS workers.

There have been more than 4,500 changes to the tax code, since 2001

A major reason for the tax code being this long is that its rules have been constantly being updated. There have been more than 4,500 changes and adjustments made over the past 15 years. Some of these changes have been for the betterment of the taxpayer. And some have had a negative effect on the taxpayer.

Taxpayers lose out on millions every year

Many workers who don’t owe taxes tend to forget to file for tax returns, not realizing that several tax credits offer them tax refunds. Further, the Earned Income Tax Credit offers up to a $6,318 refund to people who don’t owe taxes. Yet 20% of eligible people do not take advantage of this code. Moreover, one should realize that they have over three years past the filing deadline to claim the refund from an unfiled return.

An average American will have to work over 114 days a year just to afford to pay their tax bills

A very depressing statistic has met the eye of economists all over the world. An American would have to work for 114 days a year just to lower their burden.

17% of workers violate several tax codes when filing their returns

The tax code is very complex and long. So it is expected that at least one-fifth of the taxpayers fail to comply with the tax code rules. Moreover, the majority of these mistakes are ignored by the IRS as honest mistakes. A mere 0.0022% of violators are actually convicted of tax crimes.

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