Shlaes, Amity. The Greedy Hand: How taxes Drive Americans Crazy and What to Do About It. (1999, Kindle e-book)
Death and taxes. Depending on one’s personal philosophy, one can be pretty certain where death came from. But what about the various federal taxes that US citizens pay? Amity Shlaes’ short history of the various major individual income taxes is an intriguing look at the history and philosophy behind the taxes, and the problems with them. Although it is now twenty one years old, the book still rings true.
Shlaes was on the editorial board of the Wall Street Journal when she wrote this small book, and so was very familiar with the financial world at the time. I suspect this also opened some doors for her, although she wrote the book on her own, not for the newspaper.
Shlaes begins with the social security tax, the product of the New Deal. I was familiar with some of the story, but not that the first person to get monthly payments from Social Security got at least ten times what she had paid in. In fiction writing we call that foreshadowing, in non-fiction a precursor. Also, the life expectancy on average was 56, and payments started at 65. We know how that ended up. She also points out that we who pay the tax see only half of the actual bill (12.5% of one’s income). From there she moves to withholding, another trick used to conceal the bite taken from the paychecks of wage workers.
As the author works through the various bites taken from earnings (and inheritances) and how they affect people, she makes the important point that the system favors wage workers over independent contractors and the self-employed. It is much easier to deal with all the forms and paperwork when someone else does the withholding and so on, rather than doing quarterly up-front payments. The forms are far less complicated, too. One chapter is about the tax preparation industry, and how their role has expanded along with the tax code.
This isn’t a book to read if you are already in a bad mood, or on April 10th. 🙂 However, it is a very, very readable and good account of just how all the taxes that we US wage earners (and Social Security recipients) pay. If you know a young person who is going to be entering the work force soon, you might loan them a copy of this book, so they can see what a bite the feds take. And how poorly income, estate, and Social Security taxes [income tax charged on retirees who “make too much”] do the job they are supposed to. As tools for social engineering they do not accomplish the stated goals, nor do they bring in much revenue compared to what they were/are supposed to.
For most of us, this is not new, but the history and details are. Some things Shlaes describes have changed with various tax code revisions, and her comment about American prosperity will no doubt draw sour thoughts. However, the rest of the book remains a very useful overview of the individual income tax system.
FTC Disclaimer: I purchased this book with my own money for my own use and received no remuneration from the author or publisher for this review.