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Today is Tax Day in America. The 4% Growth Project has highlighted tax policy as one area where major reform could yield strong economic growth. To provide some context about the current state of taxation in America, below are 35 interesting tax facts: 1. The U.S. federal income tax was introduced in 1913. 2. In 1913 the tax code was 400 pages long. Today it is approximately 70,000 pages long. 3. The U.S. ranks 72nd out of 183 countries on ease of paying taxes, according to the World Bank’s annual “Doing Business” report. 4. American taxpayers and businesses spend about 7.6 billion hours a year complying with IRS filing requirements. 5. U.S. taxpayers spend $193 billion a year complying with income tax requirements, the equivalent of 14% of the total amount they pay. 6. Approximately 60% of Americans pay a tax preparer to file their returns. 7. An additional 22% of Americans purchase tax software. 8. There were approximately 4,430 changes to the tax code from 2001 through 2010, an average of more than one a day. 9. The top U.S. corporate tax rate of 39.2% (combined federal and state) is the highest of any industrialized nation. 10. The U.S. corporate tax rate (39.2%) is nearly 10 percentage points higher than the weighted average for developed nations. 11. Canada’s corporate tax rate was 27.6% in 2011. 12. Ireland has the lowest corporate tax rate among developed countries at 12.5%. 13. Iowa has the highest maximum state corporate tax rate at 12%. 14. Nevada, South Dakota, and Wyoming do not have a state corporate tax. 15. The states that have no sales tax are: Alaska, Delaware, Montana, New Hampshire, and Oregon. 16. In 2009 New York had the second highest tax burden (12.1%) of any state, but achieved the second highest growth rate at 5.1%. 17. Massachusetts had a tax burden of 10.0% in 2009 while still achieving a growth rate above 4%. 18. 107: The average number of days that Americans had to work in 2012 to earn enough money to pay their taxes. 19. 90: The average number of days that Tennessee residents had to work in 2012 to earn enough money to pay their taxes, the fewest number of days out of any state. 20. 125: The average number of days that Connecticut residents had to work in 2012 to earn enough money to pay their taxes, the most days out of any state. 21. The maximum federal individual income tax rate is currently 35%. 22. When the income tax was introduced in 1913 the maximum rate was 7%. 23. In 2009, 51% of American households paid no federal income tax. 24. The top tenth of a percent of the highest earning Americans paid approximately 17.1% of the nation’s federal individual income taxes in 2009. 25. The top 1% highest earning Americans paid 36.7% percent of all federal income taxes in 2009. 26. In 2009, the top 5% highest earning Americans paid more in individual income taxes than the bottom 95%. 27. Hawaii has the highest maximum state individual income tax rate at 11%. 28. Seven states have no state individual income tax. 29. The states that levy no income tax are: Alaska, Florida, Nevada, South Dakota, Texas, Washington, and Wyoming. 30. Tennessee and New Hampshire tax only interest and dividend income. 31. The maximum tax rate on capital gains is 15%. 32. The payroll tax rate is 13.3%. 33. The United States is the only major industrialized country without a value added tax. 34. The U.S. is the only major industrialized country to tax corporate income on a worldwide basis, meaning income earned abroad is taxed twice. 35. The last time there was a complete overhaul of the tax code was 1986.
Matthew Denhart is an expert on immigration policy and is the author of the Bush Institute’s America's Advantage: A Handbook of Vital Immigration and Economic Growth Statistics, now in its third edition. He currently serves as executive director of the Calvin Coolidge Presidential Foundation and is a founder of the Coolidge Scholars Program which provides full-ride merit scholarships to America's most promising college students. A summa cum laude graduate of Ohio University, Denhart has written and spoken widely on a variety of policy topics including the economics of higher education, labor, and taxes. He has contributed articles to numerous national publications including The Wall Street Journal, Forbes.com, CNN Opinion, and Bloomberg View.Full Bio
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