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11 charts that explain taxes in America

Getting taxes in

1

21 million people visit the IRS website in the week before taxes are due

US gov websites

The federal government keeps a live ticker of how many people are on government websites and which pages are getting the most traffic. In 2015, over the week before Tax Day, the IRS site had 21 million hits — way ahead of even the perennially popular Weather.gov. The most popular page on the IRS site? "Where's My Refund?"

Image credit: analytics.usa.gov

2

But the peak of tax preparation season is in February

tax preparer season

The Bureau of Labor Statistics tracks employment in the "tax preparation" industry (think H&R Block). Surprisingly, it found that employment actually peaks a couple of months before Tax Day — in February — and then falls in March and April. Apparently, the people who hire tax preparers are super-organized types who want to file as early as possible to get their refunds. (The worst time to go into the tax prep industry, apparently, is July.)

Image credit: Bureau of Labor Statistics

3

America's tax collection is pretty cost-efficient compared with other countries'

quartz tax efficiency chart

This chart, made by Quartz, shows how much countries spend collecting taxes versus how much they take in. The IRS does pretty well in international comparison — the money the US spends to collect your taxes is about 62 cents on every $100 it has left over afterward. Some countries are much less efficient — Poland and the Czech Republic, for example, spend $2 collecting taxes for each $100 they have left over.

Image credit: Tim Fernholz/Quartz


The taxes you've already paid

4

The IRS brings in almost as much revenue on payroll taxes as on income taxes

federal revenue

Payroll taxes — taxes on wages for Social Security and Medicare — account for almost as much tax revenue as the individual income tax does. Some payroll taxes are typically paid by employers, but economists agree they end up coming out of money employees would have earned.

Image credit: Tax Policy Center

5

Why politicians should stop focusing on the income tax

payroll income tax comparison

As Dylan Matthews wrote for Vox, "A report from the Joint Committee on Taxation found that most Americans (65.4 percent of filers) pay more in payroll taxes than income taxes. It's only once you start looking at folks making over $200,000 a year that most people are paying more in income taxes. Because so much of US social policy is structured as tax credits, a lot of people get more money back from income taxes than they put in ... but they still, on net, contribute billions to the federal government every year."

Image credit: Dylan Matthews/Vox



Taxes and inequality

6

The poor really do pay taxes, in one chart

ctj tax shares tax justice state local

If you look at all the taxes people pay — federal, state and local income taxes, and payroll taxes — the rich don't actually pay that much more than anyone else. This chart shows that while the bottom 60 percent of earners pay a slightly smaller share of all taxes than their share of income, and the top 20 percent pay a slightly bigger share of taxes, there's no tremendous discrepancy. For more on this, see Dylan Matthews's post: "Think the poor don't pay taxes? This chart proves you very wrong."

Image credit: Citizens for Tax Justice

7

Ronald Reagan simplified tax brackets — by ending higher taxes on the superrich

Static image of tax-bracket interactive Alvin Chang/Vox

Historically, the US had a lot of tax brackets — ensuring that the very rich paid a higher tax rate than the upper middle class. As this chart (from an interactive by Vox's Alvin Chang) shows, Ronald Reagan dramatically reduced the number of brackets, especially at the very top. Now someone making $416,000 a year pays the same tax rate as someone making millions. "Generally, politicians want to reduce the number of brackets because they believe it will simplify the tax code," Chang writes. "That said, tax brackets are among the easiest parts of the tax code, thanks to modern software and, well, math." Check out "100 years of tax brackets, in one chart" to learn more.

Image credit: Alvin Chang/Vox

8

What the candidates' tax plans would mean for you

This tax calculator from Vox's Alvin Chang lets you see how much you'd be paying in taxes under the presidential administration of Hillary Clinton, Bernie Sanders, Ted Cruz, or Donald Trump. The takeaway: Clinton wants to keep things mostly the same; Sanders wants to raise taxes on nearly all households, in exchange for much more expansive government services; and Cruz and Trump want to drastically reduce taxes on everyone — but cut the taxes on the wealthiest Americans the most.

If you're surprised by how high your taxes would be under any of the candidates, check out the explanation Chang got from Tax Policy Center director Len Burman.

Image credit: Alvin Chang/Vox



Tax breaks and refunds

9

Americans get $1.3 trillion in tax breaks...

pew tax break chart

According to Joint Committee on Taxation data analyzed by the Pew Research Center, the government gave up an estimated $1.3 trillion this year by giving tax breaks to people and companies. (This is actually a little low, because it only counts tax breaks that account for $50 million or more.) The biggest breaks are for employers providing health insurance, and the dividends and capital gains taxes (which tax income at lower rates than if people earned it as salary) each account for more than $100 billion in waived taxes.

Image credit: Pew Research Center

10

...but they don't think tax breaks are government programs

submerged state

A lot of middle-class Americans say they don't use any "government programs." But if you ask them about specific programs — especially middle-class tax breaks, like the mortgage interest deduction — it turns out they do. This chart goes policy by policy, and shows what percentage of people who used that policy originally said they "didn't use any government programs."

The problem here is that people don't think of it as a "government program" when the government takes less from you in taxes — they think of "welfare" as the government giving people money or benefits like food stamps. But the tax code is totally an instrument of social policy — it's a way for politicians to reward behavior they want to encourage and punish behavior they want to discourage, without getting into fights over "welfare."

Image credit: Suzanne Mettler/Perspectives on Politics

11

Americans say they're going to save their tax refunds

The National Retail Federation conducts an annual survey asking people what they plan to do with their tax refunds. Unfortunately for the retailers, their 2016 survey found that more Americans than ever planned to save their refunds (49 percent of all respondents who expected to get a refund at all). An additional 35 percent planned to use refunds to pay down debt. But some Americans do plan to spend their refunds — and 8 percent plan to use them to "splurge."

Image credit: National Retail Federation



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