Sunday, July 18, 2010

Wakeup suckers: Here's how you've been had all these years!

EXCERPT FROM Toll In 'Temporary' Taxes: $1.4 Trillion
The Revenue Act of 1932 enacted a "temporary" tax on gasoline. After passage the Senate Finance Committee reported, "It would be entirely appropriate, therefore, for this committee, which originated the federal gasoline tax as a temporary expedient, to recommend its repeal."

Not so fast. After $125 million in collections, politicians were intoxicated with this new stream of revenue and they retained the levy. Motorists who have paid more than $1 trillion in gas taxes since 1932 are somewhat familiar with the pricey vestiges of Congress' "temporary" tax.

The gas tax is not the only "temporary" tax hike from the Revenue Act of 1932. In response to massive budget deficits (only 4.6% of GDP, compared to more than 10% in 2009), Congress enacted 24 excise taxes, including the gas tax. Some of the measures, taxes on chewing gum, brewers' wort and malt, and toilet preparations, expired as scheduled. Others, the tire, sporting goods and firearms tax, were extended.

Today, every hunter pays the firearms tax, which includes shells and cartridges.
This measure has cost taxpayers more than $2.8 billion (inflation adjusted) since its inception. The levy, like other manufacturers' excise taxes, was scheduled to expire in 1936, but Congress continued the tax.

The tax on sporting goods initially included cameras and lenses, but it is now limited to bows, arrows, and fishing equipment. (Congress appears to have it out for hunters and fisherman.) Taxpayers continue to pay millions for a tax that was scheduled to expire generations ago.

Finally, the Revenue Act of 1932 also instituted an excise tax on tires. Congress continues to collect the tax and Americans have paid more than $3.8 billion in 2010 dollars since 1932.

The granddaddy of the temporary tax zombies is the telephone excise tax. It was enacted in 1898 to finance the Spanish American War, and supposedly died in 2007, but the government is scheduled to collect $2.3 billion over the next five years. During its inglorious history as a revenue generator, taxpayers have paid $360 billion (inflation-adjusted) in telephone taxes.

This "temporary" tax was scheduled for repeal in 1990, but a $277 billion budget deficit prevented its expiration. In 2006, in response to legal challenges, the Treasury Department announced an end to the long-distance telephone tax. The government issued over $2 billion in phone tax refunds in 2007, but taxes on local service were not part of the government's refund, so a form of the tax persists.

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