Like it or not Uncle Sam isn't getting what he used to

By Dian Vujovich

Okay, we all know people like to bellyache about taxes. The subject can be an oh-so emotional one yet it always seems to be a major theme come election time. Any election.

During the started-way-too-early 2012 campaign for president, taxes have taken center stage as one hopeful candidate sees a 9-9-9 solution to our fiscal problems and another suggests a 20 percent flat tax.

What troubles me is while cutting taxes seems to be a nice idea, I really don’t know how effective that would be given the fact that Uncle Sam isn’t collecting what he used to in income tax revenues.

Earlier this week, the Tax Foundation released study No. 285. It’s a report focused on individual tax data for the year 2009.

Filled with numbers and charts, I found it all a bit confusing and wished I’d had the talents of Raymond, the savant in Rain Man to help me make ense of it. But I don’t so I muddled through.

One reason why I found the report confusing was because it wasn’t easy to make clean-cut comparisons when reading through the charts. That’s because comparing current adjusted gross income (AGI) data with info from the mid-1980s is like comparing apples and oranges. Or, as is stated a number of times in the report, “Tax Reform Act of 1986 changed the definition of AGI, so data above and below this line not strictly comparable.”

But two things I did learn centered around the number of filers and the total amount of taxes paid into the system.

In 1980, for instance, there were over 93.2 million individual tax returns filed. Twenty-nine years later there were close to 50 percent more: 137,982,000 individual returns were filed in 2009.

Even though the number of filers has swelled, 2009 wasn’t the year with the highest numbers of filers. That happened in 2007 when 141,071,000 individuals filed individual tax returns.

But wait there’s more. In 2008, the number of filers fell to 139,961,000 and one year later, 2009, that figure was lowered by nearly two million.

Because the number of individuals filing income taxes fell by roughly three million in two years (between 2007 and 2009) it ought to come as no surprise that fewer filers translates to less money coming in for The Uncle.

According to the report, “The amount of individual income tax paid steeply declined by $166 billion, (in 2009), twice the decline from 2007 to 2008.”

So I’m trying to figure this out: With fewer tax returns being filed and less money going into government coffers, how can any-sized tax cuts make sense?

If you know the answer, please let me know.

In the meantime, you may download the entire Tax Foundation No. 285 report at:
http://www.taxfoundation.org/files/ff285.pdf