Planet Money Summer School Intro Econ 6: Taxes & Donald Duck
Aug 12, 2020
Explore the surprisingly entertaining history of income tax and its purpose. Learn how income tax became a part of the American system through a fascinating story involving wars, a Supreme Court justice, and a famous duck. Discover the historical background of income tax in the United States and the economic implications throughout history. Understand the role of taxes in changing behavior and the importance of a simple tax code. Explore the relationship between tax payment, trust in the government, and the concept of over withholding taxes.
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Taxes and Government Revenue
- Taxes fund government services, both for itself and the public.
- Different methods exist for raising these funds, some more efficient than others.
Tariffs as Primary Revenue
- Early US government primarily raised funds through tariffs on imported goods.
- This simple method is effective unless trade is disrupted, such as during wartime.
Income Tax Complexity
- Implementing a successful income tax is complex, requiring individuals to track and honestly report earnings.
- Enforcing it necessitates a large administrative system to verify records, which can be unpopular.