I usually write about pop culture on this blog, but today I have something else on my mind. As an author who earns royalties from book sales, I know the pain of taxes in the way only business owners and investors do. The IRS considers my book royalties to be income from self-employment, and it taxes them at a higher rate accordingly. Worse, the IRS requires me to pay four times a year.
How did this get started? There was no income tax at all in the United States, never mind quarterly estimated taxes, until 1862 when an income tax was instituted to pay for the Civil War despite the fact that such a tax was prohibited by the Constitution. With the war over and reconstruction underway, the income tax was repealed in 1872. In 1894 an income tax was instituted again, but the Supreme Court found it unconstitutional and prohibited it in 1895.
Prior to the United States entering “the war to end all war,” the Sixteenth Amendment to the Constitution gave us an income tax in 1913, and we have had it ever since. Predictably, the income tax increased dramatically throughout the next 100 years as more and more wars needed to be paid for.
Rand Paul may be the anti-war candidate among Republican contenders, but the pacific Ben Carson stands out for his desire to reduce taxes to a flat rate of 10 percent. If tithing is good enough for God, then it should be good enough for government, he reasons. But why should government get as much as God? Consider that 1 Samuel 8: 10-18 warns the people of Israel against having a king because a king will want to take 10 percent of whatever they produce. In light of current circumstances, that sounds good to me. If only our income were merely decimated by taxes in America!
I would just be glad to hold on to my money until April 15. That would be a step in the right direction. Of course tax collecting has always been a difficult and unsavory business. But in 1942, motivated by the need for greater revenue to fund World War II, the American government started taking income taxes out of weekly paychecks to increase tax compliance. This practice was wildly successful in achieving the desired effect, and it has certainly made paying taxes less difficult. No one likes to see how much is taken out in taxes on their weekly paystub, but people get used to it.
It requires no activation energy and causes less pain to pay taxes via paycheck deductions. Imagine how people would wince and complain if they had to write a weekly, monthly, or yearly check for the full amount due in taxes. Can you feel the pain of those of us who hold on to the money we have earned for nearly three months before paying part of it in quarterly estimated taxes?
Human nature being what it is, far fewer people would pay their taxes if the bill were due in full just once a year, but that might be a good thing. I do not feel patriotic when I pay my taxes because they are spent on many things that offend me. So I should really practice civil disobedience by not sending in my estimated taxes. I am not that brave and not that foolish, however. My check is in the mail with the September 15 postmark.
In a sense, every day is tax day, but there is a reason that April 15 is about as far away from Election Day as possible. Politicians hope you will forget. Remember, though, that September 15 is tax day too, and it’s pretty close to the first Tuesday in November.
The next quarter’s estimated taxes are due January 15. If you would like to help me pay the bill, please pre-order my book The Free Market Existentialist: Capitalism without Consumerism.
William Irwin is Herve A. LeBlanc Distinguished Service Professor at King’s College in Pennsylvania. He is also the author of the forthcoming book, The Free Market Existentialist: Capitalism without Consumerism.