Wednesday, April 18, 2012

Tax Time, happiness, and Donald Duck

Jack Dikian
April 2012

Just a few days ago it was Tax Day in the United States. In fact since 1955, for those living in the United States, Tax Day has typically fallen on April 15. So what you might ask. After all, you’re going to receive what you have overpaid in taxes throughout the year. Last year, for instance the Internal Revenue Service refunded $300 billion, or 25% of total monies collected. More than 80% of the 143 million returns filed resulted in a refund.

And even though paying more in taxes during the year than one actually owes amounts to an interest-free loan to the government, insights from behavioral economists suggest that many people, particularly lower-income Americans, use the tax system to force themselves to save. It shouldn’t surprise too many people that the Government is looking for ways to take advantage of what has been called “saveable moments” So it seems, for some families, tax time is a good time.

The other thing, filing a federal tax return wasn’t always an ingrained habit as it is these days. Most middle-class Americans didn't have to before World War II. The Revenue Act of 1942 made 15 million more people eligible to pay taxes. The Government explained this to the masses by commissioning Disney to make a short animated film using Donald Duck (click link below) that explained how to fill out a simple tax return, and why paying income taxes was so important.

Being a single drake with three dependents apparently got him a pretty sweet tax rate in 1942: Donald pays $13 in taxes on his $2,501 gross income. And this wasn’t just about Donald receiving a return but importantly, this was a propaganda cartoon with Donald exhorting people to pay their taxes on time or else risk giving aid and comfort to the Nazis. It was wartime after all.

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