Out of Control Policy Blog

The Income Tax-Prohibition link

Here's Don Boudreaux:

    Did you know that the modern federal income tax in the United States was a chief cause of alcohol prohibition here (from 1920 through 1933)? ... [Prohibition's repeal] had next to nothing to do with prohibition's ineffectiveness and almost everything to do with Uncle Sam's desperation, in the early 1930s, for additional tax revenue.

More here.

And from Jacob Sullum's latest column:

    How is a mugger different from the Internal Revenue Service? Both take your money, but the mugger doesn't make you fill out forms.

    Every year the Tax Foundation calculates the cost of this added indignity. Since it's hard to put a dollar figure on annoyance and anxiety, the Washington-based think tank sticks to estimating the time involved in keeping records and completing returns: some 6 billion hours in 2005.

    The group's analysts multiply these hours by the average hourly compensation for professional tax preparers or, for the share of taxpayers who file their own returns, the average hourly compensation for U.S. workers. The resulting figure represents the cost of complying with the federal income tax, which the Tax Foundation projects will be $279 billion this year.
    ...
    Not surprisingly, compliance costs have increased as the tax code has become more complicated. The number of words dealing with income taxes in the Internal Revenue Code and IRS regulations rose nearly tenfold between 1955 and 2005, from 718,000 to more than 7 million.

Seems like a good time to visit the The Wine Commonsewer. He'll give you tax advice and then sooth the pain with a nice pinot (actually he probably won't supply you with the good stuff but he can make recommendations).

Ted Balaker is Producer


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