09 April 2006

Tax Foundation on American's Tax Feelings

The Tax Foundation released the results of their annual survey of US citizens regarding Federal taxes (PDF Link). The results are not all that surprising, I just wish that Congress would take a look at the results sometime.

52% of respondents said that they would be willing to give up some deductions to make the tax system simpler. However, 80% said the Federal tax system was overly complex and needed major adjustments (28% said "overhaul everyone else", apparently). 63% said it was unfair for one-third of all American taxpayers to pay no tax and that everyone should pay at least a little tax (that's the much-despised AMT!).

When it comes to raising taxes and Congressional spending the results are bad news. When asked if they would be willing to pay additional taxes to pay their share of the current-year U.S. deficit (approx. $2,470 per person), only 9% said they would pony up the cash. Of those that said they would pony up the cash, 63% said Congress would just increase spending with the raised taxes and wouldn't pay off a dime of the deficit.

Only 55% of respondents actually prepared their own taxes, either using software or on their own. 36% paid an outside tax preparer (more on that later this week). 59% said they paid too much in tax and 30% said they paid the right amount (the 1/3 that pay no tax?) and 66% said they get a fair or poor return on the money they pay in Federal taxes.

Federal taxes have never been popular. Everyone complains about them (some more than others) but the number of people unhappy with the current system will only get larger unless Congress does something about the complexity of the Federal tax system. Congress also needs a lesson in personal financial management in order to reverse the trend of people believing that Congress has no willpower to restrain spending.

Hopefully, we'll get more than lip service about reforming Federal taxes in the near future (certainly more than running on a platform of simplifying taxes while passing the most complex piece of tax legislation ever). I won't hold my breath.

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