4 common myths about taxes

Source: usatoday.com

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The fourth myth: Corporations write the majority of Uncle Sam’s paycheck

Whether or not individual politicians are bought and paid for by the private sector is a fair question to ask, but Uncle Sam still works for the American people. At least, individual income taxes account for the vast majority of total government receipts.

This fiscal year to date, the government has collected (or withheld) $324.9 billion from the individual income tax and just $79.7 billion from corporation income taxes. As a share of the $694.6 billion receipts collected by the government this fiscal year to date (the government’s fiscal year begins in October), personal income taxes account for 46.7%, while corporation income taxes account for 11.5%.

For the full year, the Treasury Department estimates that it will collect $1.4 trillion in individual income taxes and $333.4 billion in corporation income taxes. If the estimate is accurate, individual income taxes will account for about 46.7% of total receipts, while corporation income taxes will account for about 11%.

At its peak, in the 1940s and early 1950s when the government imposed war-time taxes on corporate profits, corporation income taxes accounted for about 23% of total government revenue. Corporation income taxes have fallen dramatically over the past 40 years or so from an all time high of 52.9%, even though the Tax Reform Act of 1986 was designed to increase the share of government receipts collected from corporations and decrease the share collected from individuals.