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Taxes in America: What Everyone Needs to KnowR
Arguments about taxation are among the most heated- no other topic is as influential to the role of government and the distribution of costs and benefits in America. But while understanding of our tax system is of vital importance, the complexity can create confusion. Two of America's leading authorities on taxes, Leonard E. Burman and Joel Slemrod, bring clarity in this concise explanation of how our tax system works, how it affects people and businesses, and how it might be improved. The book explores what makes a tax system fair, simple, and efficient, why our system falls short, and whether the new tax law promises much, if any, improvement. Accessibly written and organized in a clear, question-and-answer format, the book describes the intricacies of the modern tax system in an easy-to-grasp manner. It has been revised and updated to both explain the Tax Cuts and Jobs Act (TCJA) in 2017, the most comprehensive reform of its income tax system since 1986, and to examine its likely effects on individuals, businesses, and society.
Among the questions discussed are: How much more tax could the IRS collect with better enforcement? How do tax burdens vary around the world? Why do corporations pay so little tax, even though they earn trillions of dollars every year? What kind of tax system is most conducive to economic growth? And, can taxes be fair?
Among the questions discussed are: How much more tax could the IRS collect with better enforcement? How do tax burdens vary around the world? Why do corporations pay so little tax, even though they earn trillions of dollars every year? What kind of tax system is most conducive to economic growth? And, can taxes be fair?
368 pages, Paperback
First published October 25, 2012
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February 2, 2014
Taxes in America: What Everyone Needs to Know by Leonard E. Burman and Joel Slemrod
“Taxes in America" is an accessible book on tax policy in America. Educational and informative this book does its darndest to engage the audience by taking a reader-friendly approach on how our tax system works by asking logical questions and answering them in straight-mannered fashion. Professors Burman and Slemrod with background in economics and specifically tax policy do an effective job of sharing their wisdom with the public. This informative 301-page book is broken out into the following three Parts: 1. How are we Taxed?, 2. The Costs and Benefits of Taxation, and 3. A Tour of the Sausage Factory.
Positives:
1. A well-written and accessible book on tax policy.
2. Great command of the topic.
3. Excellent format. Smart decision to ask layperson-styled questions and provide direct responses. Cartoon inserts help break up the monotony and add much needed humor to a dry topic.
4. Do a good of defining terms. “A tax is a compulsory transfer of resources from the private sector to government that generally does not entitle the taxed person or entity to a quid pro quo in return (that’s why it has to be compulsory).”
5. Some interesting tidbits of note, “In early 2011, antitax crusader Grover Norquist accused conservative Republican Senator Tom Coburn (R-OK) of breaking his no-tax-increase pledge by proposing an amendment to end a tax credit for ethanol. Norquist objected to the elimination of the credit because he views it as a tax increase, while Senator Coburn considered it to be a spending cut.”
6. The use of taxes as a form of regulation. “A cap-and-trade system can have similar effects to a carbon tax. Under this system the government sets a limit on total emissions, and then allocates or auctions a number of permits equal to that amount. The permits can then be bought and sold, which establishes a market price.”
7. Straightforward explanation of how taxes vary across the federal, state, and local governments. “The federal government’s revenue comes predominantly from individual income taxes (43.5 percent in 2009) and social insurance and retirement receipts (42.3 percent), while only 6.6 percent comes from corporate income taxes and about 3 percent from excise taxes.”
8. Standout facts. “The cost of government is measured much more accurately by what it spends than by what it collects in taxes.”
9. Payroll taxes in perspective. “Although it’s conceivable that consumers or capital owners could bear part or all of the tax burden, statistical studies have almost uniformly concluded that workers bear the entire burden of both the employer and employee portions of the payroll tax.”
10. The arguments for and against lower capital gains tax rates.
11. Interesting discussion on why we tax corporations and how some get away with paying no income tax. For example, the New York Times reported that General Electric, one of the largest companies in the world, paid no income tax in 2010 despite worldwide profits of over $14.2 billion and U.S. profits of $5.1 billion.
12. Did you know? “Oregon and Delaware are sales tax havens—they levy no sales tax at all.”
13. It goes over what seems to be a countless variety of taxes: use, luxury, excise, sin, Pigouvian, flat, estate, property...to name a few.
14. The most progressive estate tax is…” For sure, the estate tax is the most progressive tax in the federal tax system. The Tax Policy Center estimates that, in 2011, 97 percent of the tax will be collected from the estates of households in the top 5 percent of the income distribution, and 78 percent from the richest 1 percent. By comparison, only 58 percent of personal income tax revenues are collected from the top 5 percent and 34 percent from the top 1 percent.”
15. Strong conviction on what is not true. “It is not true that cutting taxes by itself will guarantee a spurt of growth. We know this by observing that some countries with substantially higher tax takes are doing quite well, thank you. We know that higher tax rates on the rich do not guarantee economic disaster, because in the 1950s and 1960s, when the U.S. top individual tax rates exceeded 90 percent, the U.S. economy performed very well indeed. Better than in decades since, on the whole, in the rate of growth of GDP and productivity. We know that lowering tax rates will not boost the economy so much that revenues will go up rather than down. We know this by observing that recent tax cuts in the United States and in other countries were inevitably followed by bigger deficits.”
16. Worthwhile quotes. “President Lyndon Johnson once said: “The most damaging thing you can do to any businessman in America is to keep him in doubt, and to keep him guessing, on what our tax policy is.”
17. Tax subsidies. “Tax subsidies add up to more than $1 trillion per year. That’s not chump change, but, until recently, it’s been off limits in any bipartisan budget negotiations in Congress because Republicans have been unwilling to consider anything that might be labeled a tax increase.”
18. One of the more interesting chapters, “Tax Administration and Enforcement”. Good stuff! “Overall, in fiscal year 2010, 1.1 percent of individual income tax returns, 1.4 percent of corporation income tax returns, and 10.1 percent of estate tax returns were audited.”
19. Reality. “While tax revenues are at the lowest level as a share of GDP in more than fifty years, they are expected to increase as the economy rebounds and the stimulus measures expire. However, population aging and rising health care costs will put unprecedented pressures on the federal budget. Unless Congress figures out a radical cure for health cost inflation, services would have to be cut drastically from current levels to balance the budget with the tax system of current law.”
20. Political reality. “The era of surpluses died because the younger Mr. Bush was not about to repeat his dad’s mistake. His vice president, Dick Cheney, growled that “deficits don’t matter.” Mr. Bush cut taxes by trillions of dollars while creating a huge prescription drug entitlement program, waging two wars, and increasing non-defense discretionary spending even faster than Mr. Clinton. Mr. Bush left office with a burgeoning deficit and record-low approval ratings, but both sides continued to embrace the two Santa theory. Candidate Barack Obama criticized Mr. Bush’s fiscal profligacy, but proposed new spending programs and tax cuts that would have increased the deficit almost as much as Mr. Bush’s policies. Candidate John McCain was more restrained on spending, but his huge promised income tax cuts would have led to even larger deficits.”
21. Links to notes and a helpful glossary of terms.
Negatives:
1. As hard as they try (and they do try), tax policy is a dry topic.
2. Tax policy can be very complex.
3. The authors provide some helpful charts and diagrams but I was hoping for more. As an example: tax policies by president, timeline of tax reforms and implications, to name a few.
4. Failed to take advantage of the more controversial aspects of tax policy. A chapter on the major scandals involving tax evasion would have added some spice to this book.
5. Some hot-topic buttons were purposely ignored or barely mentioned: income inequality, religious tax breaks, Affordable Care Act (does mention the 3.8% tax on investment income for individuals with income over $200,000, and couples with income greater than $250,000).
In summary, this is a very solid book on tax policy but no matter how you slice it, it remains a very dry topic. The authors do well in explaining the basics of how the tax policy works and how it might be made better. The book is well written, accessible and provides a helpful glossary of terms. The book lacks spice but it is a welcomed reference for us laypersons in tax policy. I recommend it.
Further suggestions: “Taxing Ourselves” by Joel Slemrod, “The Benefit and the Burden” by Bruce Bartlett, “Red Ink: Inside the High-Stakes Politics of the Federal Budget” by David Wessel, “White House Burning” by Simon Johnson, “The Price of Inequality” by Joseph E. Stiglitz, “Tax Havens” by Jane G. Gravelle, “Plutocrats” by Chrystia Freeland, and “Deficits, Debt, and the New Politics of Tax Policy” by Dennis S. Ippolito.
“Taxes in America" is an accessible book on tax policy in America. Educational and informative this book does its darndest to engage the audience by taking a reader-friendly approach on how our tax system works by asking logical questions and answering them in straight-mannered fashion. Professors Burman and Slemrod with background in economics and specifically tax policy do an effective job of sharing their wisdom with the public. This informative 301-page book is broken out into the following three Parts: 1. How are we Taxed?, 2. The Costs and Benefits of Taxation, and 3. A Tour of the Sausage Factory.
Positives:
1. A well-written and accessible book on tax policy.
2. Great command of the topic.
3. Excellent format. Smart decision to ask layperson-styled questions and provide direct responses. Cartoon inserts help break up the monotony and add much needed humor to a dry topic.
4. Do a good of defining terms. “A tax is a compulsory transfer of resources from the private sector to government that generally does not entitle the taxed person or entity to a quid pro quo in return (that’s why it has to be compulsory).”
5. Some interesting tidbits of note, “In early 2011, antitax crusader Grover Norquist accused conservative Republican Senator Tom Coburn (R-OK) of breaking his no-tax-increase pledge by proposing an amendment to end a tax credit for ethanol. Norquist objected to the elimination of the credit because he views it as a tax increase, while Senator Coburn considered it to be a spending cut.”
6. The use of taxes as a form of regulation. “A cap-and-trade system can have similar effects to a carbon tax. Under this system the government sets a limit on total emissions, and then allocates or auctions a number of permits equal to that amount. The permits can then be bought and sold, which establishes a market price.”
7. Straightforward explanation of how taxes vary across the federal, state, and local governments. “The federal government’s revenue comes predominantly from individual income taxes (43.5 percent in 2009) and social insurance and retirement receipts (42.3 percent), while only 6.6 percent comes from corporate income taxes and about 3 percent from excise taxes.”
8. Standout facts. “The cost of government is measured much more accurately by what it spends than by what it collects in taxes.”
9. Payroll taxes in perspective. “Although it’s conceivable that consumers or capital owners could bear part or all of the tax burden, statistical studies have almost uniformly concluded that workers bear the entire burden of both the employer and employee portions of the payroll tax.”
10. The arguments for and against lower capital gains tax rates.
11. Interesting discussion on why we tax corporations and how some get away with paying no income tax. For example, the New York Times reported that General Electric, one of the largest companies in the world, paid no income tax in 2010 despite worldwide profits of over $14.2 billion and U.S. profits of $5.1 billion.
12. Did you know? “Oregon and Delaware are sales tax havens—they levy no sales tax at all.”
13. It goes over what seems to be a countless variety of taxes: use, luxury, excise, sin, Pigouvian, flat, estate, property...to name a few.
14. The most progressive estate tax is…” For sure, the estate tax is the most progressive tax in the federal tax system. The Tax Policy Center estimates that, in 2011, 97 percent of the tax will be collected from the estates of households in the top 5 percent of the income distribution, and 78 percent from the richest 1 percent. By comparison, only 58 percent of personal income tax revenues are collected from the top 5 percent and 34 percent from the top 1 percent.”
15. Strong conviction on what is not true. “It is not true that cutting taxes by itself will guarantee a spurt of growth. We know this by observing that some countries with substantially higher tax takes are doing quite well, thank you. We know that higher tax rates on the rich do not guarantee economic disaster, because in the 1950s and 1960s, when the U.S. top individual tax rates exceeded 90 percent, the U.S. economy performed very well indeed. Better than in decades since, on the whole, in the rate of growth of GDP and productivity. We know that lowering tax rates will not boost the economy so much that revenues will go up rather than down. We know this by observing that recent tax cuts in the United States and in other countries were inevitably followed by bigger deficits.”
16. Worthwhile quotes. “President Lyndon Johnson once said: “The most damaging thing you can do to any businessman in America is to keep him in doubt, and to keep him guessing, on what our tax policy is.”
17. Tax subsidies. “Tax subsidies add up to more than $1 trillion per year. That’s not chump change, but, until recently, it’s been off limits in any bipartisan budget negotiations in Congress because Republicans have been unwilling to consider anything that might be labeled a tax increase.”
18. One of the more interesting chapters, “Tax Administration and Enforcement”. Good stuff! “Overall, in fiscal year 2010, 1.1 percent of individual income tax returns, 1.4 percent of corporation income tax returns, and 10.1 percent of estate tax returns were audited.”
19. Reality. “While tax revenues are at the lowest level as a share of GDP in more than fifty years, they are expected to increase as the economy rebounds and the stimulus measures expire. However, population aging and rising health care costs will put unprecedented pressures on the federal budget. Unless Congress figures out a radical cure for health cost inflation, services would have to be cut drastically from current levels to balance the budget with the tax system of current law.”
20. Political reality. “The era of surpluses died because the younger Mr. Bush was not about to repeat his dad’s mistake. His vice president, Dick Cheney, growled that “deficits don’t matter.” Mr. Bush cut taxes by trillions of dollars while creating a huge prescription drug entitlement program, waging two wars, and increasing non-defense discretionary spending even faster than Mr. Clinton. Mr. Bush left office with a burgeoning deficit and record-low approval ratings, but both sides continued to embrace the two Santa theory. Candidate Barack Obama criticized Mr. Bush’s fiscal profligacy, but proposed new spending programs and tax cuts that would have increased the deficit almost as much as Mr. Bush’s policies. Candidate John McCain was more restrained on spending, but his huge promised income tax cuts would have led to even larger deficits.”
21. Links to notes and a helpful glossary of terms.
Negatives:
1. As hard as they try (and they do try), tax policy is a dry topic.
2. Tax policy can be very complex.
3. The authors provide some helpful charts and diagrams but I was hoping for more. As an example: tax policies by president, timeline of tax reforms and implications, to name a few.
4. Failed to take advantage of the more controversial aspects of tax policy. A chapter on the major scandals involving tax evasion would have added some spice to this book.
5. Some hot-topic buttons were purposely ignored or barely mentioned: income inequality, religious tax breaks, Affordable Care Act (does mention the 3.8% tax on investment income for individuals with income over $200,000, and couples with income greater than $250,000).
In summary, this is a very solid book on tax policy but no matter how you slice it, it remains a very dry topic. The authors do well in explaining the basics of how the tax policy works and how it might be made better. The book is well written, accessible and provides a helpful glossary of terms. The book lacks spice but it is a welcomed reference for us laypersons in tax policy. I recommend it.
Further suggestions: “Taxing Ourselves” by Joel Slemrod, “The Benefit and the Burden” by Bruce Bartlett, “Red Ink: Inside the High-Stakes Politics of the Federal Budget” by David Wessel, “White House Burning” by Simon Johnson, “The Price of Inequality” by Joseph E. Stiglitz, “Tax Havens” by Jane G. Gravelle, “Plutocrats” by Chrystia Freeland, and “Deficits, Debt, and the New Politics of Tax Policy” by Dennis S. Ippolito.
February 9, 2020
It's a really good book for those who have very little understanding of how the US tax system works. Authors difine all the main tax concepts and explain why the whole system is so complex as opposed to those in other countries. The biggest outcome for me was to know about all sorts of taxes, deductions, tax credits, and tax breaks that may apply personally to me.
As a bonus I also leamed much interesting about the taxes in general, e.g.:
How IRS taxes global corporations who have offices overseas.
What is the difference between progressive and regressive taxes.
What are Pigouvian tax, sin tax, death tax, excise tax, capital gain tax.
What is tax expenditure.
Why don't we have only sales or only income tax.
Although the book isn't too long, It wasn't an easy read to me, primarily because taxes is not the most fascinating topic that one can imagine. However, the authors did a really good job describing everything clearly and precisely. That really helps.
As a bonus I also leamed much interesting about the taxes in general, e.g.:
How IRS taxes global corporations who have offices overseas.
What is the difference between progressive and regressive taxes.
What are Pigouvian tax, sin tax, death tax, excise tax, capital gain tax.
What is tax expenditure.
Why don't we have only sales or only income tax.
Although the book isn't too long, It wasn't an easy read to me, primarily because taxes is not the most fascinating topic that one can imagine. However, the authors did a really good job describing everything clearly and precisely. That really helps.
February 8, 2023
Good comprehensive overview of the tax system and tax policy, but not as in-depth as I would have liked.
January 2, 2013
I really learned a lot about taxes in this book, although I found some parts somewhat opaque. It's worth checking out the footnotes in the back, many of which are to documents on the internet.
This bit was brilliant:
It is not true that cutting taxes by itself will guarantee a spurt in growth. We know this by observing that some countries with substantially higher tax rates are doing quite well, thank you. We know that higher tax rates on the rich do not guarantee economic disaster, because in the 1950s and 1960s, when the U.S. top individual tax rates exceeded 90 percent, the U.S. economy performed very well indeed. We know that lowering tax rates will not boost the economy so much that revenues will go up rather than down. We know this by observing that recent tax cuts in the U.S. and other countries were inevitably followed by bigger deficits. (pg 143)
This bit was brilliant:
It is not true that cutting taxes by itself will guarantee a spurt in growth. We know this by observing that some countries with substantially higher tax rates are doing quite well, thank you. We know that higher tax rates on the rich do not guarantee economic disaster, because in the 1950s and 1960s, when the U.S. top individual tax rates exceeded 90 percent, the U.S. economy performed very well indeed. We know that lowering tax rates will not boost the economy so much that revenues will go up rather than down. We know this by observing that recent tax cuts in the U.S. and other countries were inevitably followed by bigger deficits. (pg 143)
October 30, 2013
An easy reading, comprehensive, balanced introduction to tax and tax policy in America. The authors stay as factual as possible, and while they aren't slaying straw men or sacred cows left and right, they shoot down some ideas and support others. For example, they critique the FairTax and the starve-the-beast approach to budgets (ideas conservatives tend to support), but they also emphasize the importance of saving to grow the economy and need to cut federal spending (things Keynesians and liberals tend to support).
Slemrod is co-author (with Jon Bakija) of another tax policy book ("Taxing Ourselves") that I believe is a longer, denser, more in-depth analysis of tax policy. This book is a good primer, and I plan on reading Slemrod's other book, and other tax books, in the future.
Slemrod is co-author (with Jon Bakija) of another tax policy book ("Taxing Ourselves") that I believe is a longer, denser, more in-depth analysis of tax policy. This book is a good primer, and I plan on reading Slemrod's other book, and other tax books, in the future.
March 28, 2013
One doesn't pick up "Taxes in America" expecting scintillating prose, but Burman and Slemrod do try to make the book engaging. It aspires to be a guide for "everyone" but does assume the reader has a working knowledge of economic jargon. The book as a whole, especially the first three chapters, would be greatly improved by more analogies, examples, illustrations, and an expanded glossary. Overall, it's a useful introduction to American tax policy.
March 31, 2014
This is an incredibly accessible, user friendly book about the US system of taxation. The format is question/answer, which breaks it down into small chunks. This is a very good book for those who would like to understand the system as it stands now as well as previous/current/future movements for code change.
March 11, 2017
Informative and easy to understand.
April 27, 2016
Great intro to tax policy in America. Very accessible for non-tax people.
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June 21, 2013336.20097 B962 2013
July 5, 2013
While in spots the book certainly explained certain concepts, it was quite dry reading.
Displaying 1 - 11 of 11 reviews