Life

Why you may be paying more income tax than you should


Getty/gawriloff

Getty/gawriloff

Springtime brings many things, from proverbial showers to birds chirping and warmer weather. It also signals tax season is upon us once more.

Every year 140 million U.S. taxpayers spend countless hours gathering receipts and statements, filling out a variety of schedules and forms and submitting their 1040s and various other supporting documents to the Internal Revenue Service. This year the deadline is April 17.

As an economist, I wondered whether this tax filing burden results in us paying more taxes than we should. What I found is quite surprising and should be especially disturbing for those of you who still haven’t filed.

A choice of deductions

Income taxes represent the government’s largest source of tax revenue and involve about US$1.54 trillion, or 8.3 percent of GDP, being transferred from our wallets to the federal Treasury every year.

Research into the transaction costs of saving shows that people frequently leave money on the table, such as in saving for retirement and claiming government benefits. I wanted to know if the same thing was happening when we file our taxes.

…read more

Source:: Salon – Life

      

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