Things We All Hate: Taxes

www.ozy.com [OZY]() Your World. Bold & Bright [Daily Dose]( Things We All Hate is the newsletter from OZY that explores how our shared dislikes can help bring us together in hard times. Apr 18, 2022 Things We All Hate Comedian Chris Rock once joked, “You don’t pay taxes — they take taxes.” And with Tax Day coming up soon in the U.S., many Americans will have to pay up once again. But paying Uncle Sam, or another state or national tax collector, is hardly the only source of frustration with the often daunting and anxiety-ridden task of filing your income tax returns. In this week’s Things We All Love to Hate, we chart the exasperating nuances and navigate the loopholes of the tax-paying experience and see if we can snag a refund on the other side. Why Does Tax-Paying Suck? Complications and Frustrations If the U.S. tax system seems to get more complicated every year, that’s because it does. On average, Congress enacted [420 changes]( to the tax code every year between 2000 and 2020. It can be a challenge for many taxpayers to navigate such a system by themselves, and getting help from the [understaffed IRS]( this time of year can feel like winning the lottery. In the past, the agency has resorted to using “courtesy disconnects” to hang up on [millions of callers]( when wait times are long. Havens and Cheats Not only do wealthier taxpayers have better accountants and plenty of tax loopholes to exploit, they also have more options for hiding their money, including a growing number of [offshore havens](. Some still can’t help skirting the rules. Case in point: Leona Helmsley, the billionaire New York hotel mogul who, thanks to tips from disgruntled employees, and an ambitious prosecutor named Rudy Giuliani, wound up being fined $8 million and spending 21 months in prison for tax evasion. The high point of her 1989 trial was the testimony of a housekeeper who recalled that Leona once boasted, “We don’t pay taxes; only the little people pay taxes.” Scams and Frauds Every year it seems like tax fraudsters design new and more effective [schemes]( to steal rebates and refunds from taxpayers. Infractions range from taking refund checks from mailboxes to sophisticated tax-related identity theft, including cases where thieves used the Social Security numbers of children as young as age two.. A few years ago, a single Bronx address received more than 100 tax rebates — all of them fake. [TAKE OUR POLL]( How Did We Get Here? Blame Europe In the Middle Ages, European nations warred constantly, and their soldiers needed armor and food. Hence the [need for taxes](. But Europeans proved so adept at avoiding them that monarchs had to get creative. In England, they tried taxing everything from hearths to chimneys to windows, and when those efforts failed (among other things, tax evaders blocked their chimneys and windows, a big fire hazard), they turned to income taxes. When It Was Illegal… Believe it or not, a federal income tax in the U.S. was [once illegal]( thanks to an 1895 case in which an all-star team of lawyers funded by mega-rich clients like the Astors convinced the Supreme Court that a federal tax on incomes was inherently unconstitutional. And so the whole idea was scrapped … for all of 18 years. The Role of Prohibition In 1913, the passage of the 16th Amendment reintroduced income tax to America, in part as a precondition to the 18th Amendment, which prohibited the production, importation, or sale of alcoholic beverages. Prior to this, most U.S. states relied heavily on excise taxes from liquor sales to fund their budgets, and Prohibition would cost the federal government $11 billion in lost tax revenue. So one of the [unintended consequences]( of America’s short-lived experiment with Prohibition was the increasing reliance of state and federal governments on income tax revenue. Fun and Frustrating Facts Legendary Compromise You might be surprised by what the IRS will take, or accept, as payment. In the [case of Willie Nelson](, it involved collaborating on the ultimate concept album. When the country music legend couldn’t pay a $16 million back-tax bill, the IRS claimed 15 cents from every $1 in sales from his next album,“The IRS Tapes: Who'll Buy My Memories?.” Nonpayment is NOT a Principle Actor Wesley Snipes, the star of “Blade” and “White Men Can’t Jump,” spent years in prison for failing to pay taxes on almost $40 million in income. At his [lengthy trial](, Snipes and his fellow defendants claimed they did not have to pay taxes because of an obscure provision in the tax code — a recurring yet erroneous claim often levied by “principled” tax evaders. Federal authorities made an example of Snipes and his bogus principle by sending him to the big house in 2010. Could Tax-Paying Be Improved? Getting Organized Some [tax experts]( suggest scheduling blocks of time to tackle filing, then separating the filing tasks and completing one task each day to make things more manageable. Ancient Tax Incentives Sometimes you have to incentivize the wealthy to pay more. Ancient Athens [honored its wealthiest citizens]( by asking them to either fund an elaborate religious performance or serve as a “trireme commander” by funding the operating costs of a warship. Many rich Athenians embraced the opportunity, and some even boasted about paying more taxes than required. An Evolving Landscape Countries are [constantly adapting]( to changing economic and market circumstances by creating different sources of tax revenue. Most nations tax gasoline and diesel, but those earnings are under threat as more and more people shift to electric vehicles. So some nations like Australia are taxing electric vehicle drivers, and also plotting ways to make Big Tech pay its dues. For example, Indonesia introduced a 10 percent value-added tax on earnings made by Facebook, Disney, TikTok and other digital firms in that country. WATCH LAURA BENANTI on [The Carlos Watson Show](, season 4! This Will Make You Feel Better ‘A Weird Kind of Heroism’ Nobody likes the IRS. But it’s important to distinguish between the organization’s purpose and the people who work there. As comedian John Oliver puts it in an [episode of “Last Week Tonight,”]( there is "a weird kind of heroism to doing jobs that are that boring." And functioning tax collectors are essential to a functioning society. Be sure to stay tuned for the Michael Bolton tribute song at the end. [TAKE OUR POLL]( Community Corner What do you hate about paying taxes? Share your thoughts with us at OzyCommunity@Ozy.com. ABOUT OZY OZY is a diverse, global and forward-looking media and entertainment company focused on “the New and the Next.” OZY creates space for fresh perspectives, and offers new takes on everything from news and culture to technology, business, learning and entertainment. [www.ozy.com]( / #OZY Curiosity. Enthusiasm. Action. That’s OZY! [TV]( | [PODCASTS]( | [NEWS]( | [FESTIVALS]( A Modern Media Company OZY Media, 800 West El Camino Mountain View, California 94040 This email was sent to {EMAIL} [Manage Subscriptions]( | [Privacy Policy]( | [Read Online](