Americans pay taxes to the government basically everyday. Whether it is at the store or the income tax withheld from their paycheck throughout the year. No one enjoys paying taxes and when tax season rolls around it can become an extremely stressful time. However, at the end of the day, taxes are a vital part of how our country functions. Despite taxes having such a large influence on our lives, many people do not know much about them.
Check out some of these interesting facts about the American tax system and learn how you fit into the tax system as a whole:
- The IRS is the U.S. government agency that is responsible for collecting taxes and enforcing revenue laws. This agency is part of the U.S. Department of the Treasury.
- Every year the IRS receives over 140 million individual tax returns. In total, they collect over $950 billion in taxes.
- Over $325 billion in tax refunds are paid out each year. The average tax refund is $2,953. Keep in mind that a large tax refund suggest that you had to much money withheld from your pay or you made estimated tax payments that were too large. In a sense, it is money that you loaned to the government interest free.
- More than 40,000 Californian residents reported over $1 million in income, the most of any state. Vermont, on the other hand, has less than 300 millionaires.
- Electronic filing is now nearly a universal practice. Almost 90% of individual tax returns are e-filed.
- The tax code is extremely wordy, with about 4 million words in all.
- The tax code is continually changing. There has been more than 4,500 changes since 2001.
- The biggest tax deductions are those for taxes paid to the state and local governments. After that, taxes paid for interest is the next highest, especially on home mortgages.
- The word ‘tax’ derives from the Latin word taxo, which means “I estimate.”
- Around 90% of Americans who employ a housekeeper and babysitter cheat on their taxes.
- The United States has a progressive tax system. This means that the more money a person makes, the more he or she pays in income taxes.
- As a whole, Americans spend over $27.7 billion each year doing their taxes.
- Americans spend over 7.6 billion hours complying with federal tax requirements.
- The top 20% of all income earners in the United States pay about 86% of all federal income taxes.
- The United States is the only nation in the world that tries to tax citizens on money they earned in foreign countries.