Full disclosure I am NOT a CPA nor a certified financial advisor (or any other alphabet soup designation) and all of the information in this section is provided solely for educational purposes and does NOT constitute legal or tax advice. EVERYONE should consult their own financial advisors, CPAs and tax strategists to compile their own individualized plans.
As of 2014, the tax code was estimated to be over 74,000 pages long. A hundred years before, the tax code was less than a ream of paper (500 pages). With the recent Tax Cuts and Jobs Act of 2017 it is anyone’s guess as to how long the tax code is now.
There are only a few pages that outline what earnings are taxed, by how much and when. So why the need for a tax code in the tens of THOUSANDS of pages? Simply put, the rest of the tax code is full of incentives, to essentially dangle a carrot and encourage behavior that the government wants citizens, entrepreneurs, and businesses to engage in. If you know about those incentives, you can use them to your advantage and Hack Your Tax bill.
This may seem obvious, but I start this off to prove a few points. If you Google ‘tax’ you will get two definitions. 1) a compulsory contribution to state revenue, levied by the government on workers' income and business profits, or added to the cost of some goods, services, and transactions. 2) a strain or heavy demand. (ironically☺)
Over time, taxes have become an increasing strain on the average person. This table published by the Americans for Tax Reform shows
just how much more taxes affect us now than they did over 100 years ago, when the Revenue Act of 1913 was enacted and the first income taxes were assessed on Americans. And now it is not just income taxes! We have sales taxes, excise taxes, state taxes, FICA taxes, the list is practically endless. In fact, once everything is totaled up, it is not uncommon for some to pay over HALF their income to some sort of tax. There is even a Tax Freedom Day® tracked by the Tax Foundation! Simply speaking, the average American must work over 100 days every year to fulfill their tax obligations.
Read Next: Why Do We Pay Taxes?
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