Coined by an unknown author, "Born free, taxed to death" is a saying many of us have heard, but we could add "taxed after death" as well - at least our families might be. Americans have incurred so many taxes over the last 100 years, even the Internal Revenue Services (IRS) has a difficult time listing them all. Because of these taxes, it is now taking longer and longer for Americans to begin working just for themselves.
In 1900, the official Tax Freedom Day (the day individual citizens have worked long enough to pay their share of the taxes) was January 22. Tax Freedom Day in 1930 was February 12, and that date in 2011, was April 12. (For more on taxes, check out The History Of Taxes In The U.S.)
New taxes have been added recently that are based on new technology, attempt to protect the environment and pay for tighter security in an insecure world, and there are a few that have been imposed just to raise revenue. Here are five taxes that didn't exist just 40 years ago.
Airline and Airport Taxes
It almost takes the expertise of an accountant to read through all the added fees and taxes on an airline ticket. A sales tax has always been added to the purchase price of a ticket, but according to the U.S. Department of State, that price now includes a lengthy list of "other" taxes. It's difficult to find the actual ticket price. Environmental concerns and the events of September 11 ushered in an entirely new spreadsheet full of fees and taxes.
According to the NAtional Business Aviation Association here's a list of just a few of the new taxes:
- 9/11 security fee (tax) $2.50 per "enplanement"
- Ticket excise tax - 7.5% on domestic flights
- Flight segment tax - $3.80 within the U.S.
- Hawaii/Alaska Flight tax - $8.40 per flight / U.S.
International flight fees (taxes):
- Departure and arrival taxes - $16.10
- Agricultural inspection fee(tax) - $5.00 on arrival
- Customs user fee(tax) - $5.50 on arrival
- Immigration user fee (tax)- $7.00 on arrival
In addition, nearly every airport in the U.S. adds a "Passenger Facility Tax" of up to $4.50.
Illegal Drug Tax
At first glance, this seems to be one of the most absurd line items the IRS could include on the 1040 Form. It is, however a line item that has worked to put criminals behind bars.
Enacted as part of the re-vamped Tax Code of 1986's Money Laundering Act, this item has helped the IRS target otherwise untouchable drug dealers, and organized crime figures. Even criminals have to file taxes and if their lifestyle doesn't match their reported income, the IRS can audit them. The Illegal Drug Tax creates this line item enabling criminals to be prosecuted for tax evasion, even when they can't be tried for other crimes.
The IRS website lists how you should itemize your illegal drug income as: "Income from illegal activities, such as money from dealing illegal drugs, must be included in your income on Form 1040, line 21, or on Schedule C or Schedule C-EZ (Form 1040) if from your self-employment activity."
Stolen Property, Bribery and Kickbacks Tax
In the past 12 months if you received stolen property, were given a kickback by your less-than-ethical uncle or accepted a bribe, you must report that income on your 1040 Form.
The IRS requires you to record any stolen item's fair market value and report that as income on your taxes, unless you return the item(s) to their rightful owner before the end of the year. That is if the criminal can remember where they stole the item. Here is how you must claim that stolen property: "Line 21, Form 1040, Schedule C" is reserved for "kickbacks, side commissions, push money, or similar payments." Stolen property is considered by the IRS to be "self-employment activity" and is taxable income.
Nobel Peace Prize Tax
That's right. Income you earn by winning a Nobel Peace Prize is considered taxable income. So is winning the Pulitzer or any other prize where the recipient receives a monetary award or "prize of value." The only way not to pay taxes on these winnings is to donate them to charity (there are substantial requirements to meet for these donations, most do not qualify and will still owe taxes). If you solve world hunger, end global warming or find the cure for the common cold, you will be taxed on it.
The Bottom Line
For all of our nation's history, we've had to pay taxes. The tax codes, the percentages fluctuate and political parties promising reforms in our tax laws change, but taxes still have to be paid. Taxes must be collected for the country to "stay in business." How they are levied, whom they are levied upon and the methods behind those decisions are always up for debate.
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