The Complexity of the U.S. Tax System

As you already know, the U.S. tax system is complicated. Just consider this: in 1913, the tax code consisted of 400 pages. Today, it’s 70,320 pages long. But instead of me rambling about the subject for hours, I thought I would explain the complexity of the U.S. tax system in a visual format.


What do you think about the U.S. tax system?


  1. I wouldn’t mind knowing how the 16.3% avoid paying taxes during the year. They must live off of tax free investments, cheat, or shelter their income in some way.

    • A lot of people cheat the system… it’s just a matter of time before they get caught.

      • The truth of the matter is, a tax cheat is not likely to be caught unless they’re appointed to a cabinet position and the press takes a close look at them. The IRS just picks people at random to harass to keep everyone else scared.

        • It’s a a great technique that obviously works. Someone unfortunately needs to be an example.

        • SEO Results :

          That is gratifying to know. They also like to go after the flashy pretenders. If you get yourself a quiet little cabin in the woods you go live in obscurity into perpetuity. The small fish can escape the net much more easily than the big fat ones.

      • Many were caught as they were appointed by Obama to his administration. Even Rangel, who rights the laws has been caught cheeting.

        • Corrupt only begins to describe some of the techniques being used by some lawmakers lol.

          • This post again reminds me of the saying: “Don’t steal, the government hates competition”!!! I think this is the most appropriate post for this harsh reality 😀
            The truth is that people are often incapable of paying their taxes, and not they are really trying to cheat the system. You can’t cheat the system because the system cheats us all!!!!

            • lol, that’s one way to look at it. Just hire someone you can trust and show them what’s going on with you and let them take care of it from there.

            • “Don’t steal, the government hates competition”

              Love that line.

              • SEO Results :

                Amen to that. Especially when infrastructure and basic services are falling apart, and the fat cats that got “voted” into office are plundering the coffers.

    • And some of that group are the people that use what the IRS calls “frivilous” arguments to avoid paying or having taxes collected from them.

    • I’m sure most of it is as pedestrian as people not reporting income or making so little as to not report it.

      • It’s really a mix and diverse group.

        • With the poverty rate in the US equivalent to around 1 in 8 (and rising), I suspect many cannot afford to pay their taxes. But I also wonder for how many the amount of tax is simply not worth putting IRS’ tax-collection machine into motion. Auditors do not come cheap.

    • I’m pretty sure by evade they meant, pay less taxes than due, most likely by undereporting income or overreporting deductions.

    • Eric Tedford - Chittenango, NY :

      They cheat because it’s a resume enhancement to get in bed with the Obama administration.

      • The IRS reports a common way of “cheating” is subcontractors who don’t have withholding and underreport by overclassifying personal income as business expenses, etc.. Lots of people “cheat” and don’t know about it… paying someone for services out of pocket almost always results in underreported revenue.

        • There are a lot of under reported streams of revenue out there… and yes it’s a huge and favorable technique for most business owners and entrepreneurs.

      • lol…. yeah that maybe a good way to look at it 😉

    • no no no steve,they just DONT FILE the following years alota folks do that trust me….ive seen the lines at the cid(criminal investigation division) of irs building!

      • I’d suggest you just talk to a professional when it comes down to taking action on anything tax related.

  2. It is really disgusting 🙁

  3. Great visual interpretation of the US tax system.

    Yep, I’m one of the 60% who have someone else prepare my taxes. It’s worth it if it’s saving me 24.2 hours. It also gives me piece of mind to know that someone who specializes in tax preparation will back me up just in case the IRS comes knocking on my door.

  4. Joe @ Small Business Ideas :

    Nice picture/ Diagram. Its interesting how people view taxes so differently and what “tax time” means to different people.


  5. No wonder i see so many new tax places quickly sprout up at this time.. I bet most of them will close shortly after April 15th.

    • A lot of them are temporary or seasonal… they spring up around nov-dec and close down may-jun… A lot of people even have this as a second job.

  6. eBay Money Maker :

    Wanna hear something crazy? I haven’t paid a single penny in federal income tax since getting married… 14 years ago. In 2009 I earned more money than I ever have in my life (about a third of which was from self employment), yet had enough tax credits that I still didn’t pay one cent in income tax. In fact, I’m getting the biggest “refund” (a misnomer since I never paid into the system) that I’ve ever gotten… more than double the average refund as indicated by your graphic. And it’s not like I’m poor and must therefore rely on social programs to get by (though I have been there and done that). I make enough money that I own a (modest) home, two cars, and am able to comfortably support my wife and three kids. An interesting addition to your graphic would be the number of “taxpayers” like me who don’t pay taxes.

    • It’s because of people like you that Americans can’t have nice things.

    • Wanna hear something else thats crazy? By not paying into the tax system, you help increase the massively growing national debt, because our government system fails to understand that by spending less they can make more, which your sticking onto your kids. What a great dad, shafting your kids financial future and proud of it.

    • So we are all to believe that not only did you “not pay” into the system, you are so clever that you managed to get the IRS to GIVE you over $5400 on top of your earned income?!? Math FAIL, moron. Go back to 1st grade and get a refresher on subtraction.

      It’s quite clear that you are nobody special, doing nothing special. Taxes were taken out of your pay, you have lots of write-offs (including a gaggle future math FAIL moron ankle biters, I’m sure), and now you’re getting some of your tax money back. Whoop-dee-doo. Welcome to America.

      Here’s a fun exercise for you: Have someone add up all the money you made last year, then divide by the number of actual hours spent earning it. Knowing how time consuming and little profit there is to be made on eBay, I would guess you averaged about $10/hour last year for your trouble. Idiot.

      • lol… the math calculations definitely didn’t add up.

      • Well it’s a perfect example of why the government loves withholding so much 🙂

      • eBay Money Guy :

        Wow! Well, I caused quite a ruckus, didn’t I? I’m not bragging about it, and I’m not the one that wrote the tax laws. And I never claimed to be anyone special. All I did was buy Turbo Tax and plug in my numbers. At what point did I claim to be this special guy you talk about? I stated that I thought it was crazy, and had a question which I thought to be completely innocent. Didn’t realize I was calling the wrath of presumptuous angry people upon me. Sheesh! I’ll take cover next time I make a statement or ask a question on here *breaks out steel umbrella*

    • It’s not very crazy, there are certain things you’re doing which may benefit you, but badly hurt others… I’d be careful.

      • eBay Money Guy :

        I’m a regular guy with a regular job who gets a regular paycheck with withholdings based on what I fill out on my W4 each year (my website is a side project and I’m lucky to make $50/year from it — in a past life I sold over 10,000 items on eBay, and I created my website years ago just to share my knowledge after I quit selling online). So no, I’m not anyone “special” nor have I ever claimed to be.

        Well, turns out that if you are married, have one income and three kids, you have 12 exemptions. So that’s what I claim each year. While I pay state tax, medicare, social security and obviously pay property tax, sales tax, gas tax etc., I haven’t, since marrying, had federal income tax withheld from my paycheck.

        Each year I buy TurboTax and plug in my info. Each year it says I don’t owe any federal income tax. Each year, I’m “poor” enough to claim EIC. Each year I claim my 3 kids for the child-tax credit. There have been a couple years I paid a self-employment tax, but that’s it. So I guess if you count that, I have paid income tax a couple of years, but not enough to cancel out the credits.

        It’s only been a few years ago that I was below what the government considered the poverty line, so I’m very glad to not be there anymore, and I keep expecting at some point that I’ll start paying a federal income tax. But every year the IRS adds a new credit. Like I said, I think it’s crazy. But if the IRS says I don’t owe, well, then I’m not going to pay. It’s not out of spite.

        I didn’t write the tax laws. So to say that I’m the one hurting people by doing my taxes the way the law says to do them, well, perhaps we ought to vote for better lawmakers.

        • Interesting point…. I know what you mean. I agree with the actual “lawmakers” being the ones who need to make a change.

  7. Matthew Krawse :

    Awesome visual! Great job in presenting such complex (and wordy) material into an easy to read (and fun) format. This is so outside the box I love it.

  8. Yup.. That’s why I support the FairTax. My first website was

    Another thing that would be interesting is how much is paid to get someone else to calculate their taxes and how many jobs could be used other places.

    • Thanks for the link… a system like that would definitely alter the way we live today. Implementing such a system will probably never happen unfortunately.

    • Brian Armstrong :

      I’d support something like that…or the alternative minimum tax (AMT). No doubt the tax system in the U.S. right now is severely broken.

  9. Startup Videos & Advice :

    Easily understandable. btw did u do the graphics or hire someone?


  10. Excellent graphic, I hope you do more of these. People are so lazy they waste money on tax services when you can download fill-in pdfs from for free! Takes no more than 30 minutes if you’ve been keeping records. If you’re self-employed it’s only 2 forms in addition to the 1040: schedule C and SE.

    Instructions are all there, costs .44 postage. Any deductions those pros tell you about you can figure for yourself- and if they’re shady deductions it’s you that gets audited, not them.

  11. Taxation without representation is unfair.

    Don’t re-elect anyone. Abolish the tax code and put government back to the limited roles that only it can play, those with which it can cause the least damage.

  12. nice diagram, actually 70% of all fortune 500 companies in america have offshore banking, here is a list of all of them who pay very minimal tax

    • lol.. very interesting article, thanks for sharing it.

    • Blake Waddill :

      I’ve heard that the majority of big earners have offshore methods to reduce the amount of tax they pay. Even John Chow wrote some pretty interesting articles about how to do this a couple of years ago.
      The loopholes that people find are what have turned tax law into the giant mess it has become.

      • It’s a pitty that Americans have to figure out off-shore methods… but that’s just what we’ve come to.

      • “The loopholes that people find are what have turned tax law into the giant mess it has become.”

        Isn’t that the same with most anything requiring rules and regs? There is a reason that business directors do PESTEL analyses, after all. When the 60% hire someone to do their taxes, they are not doing so to ensure they pay every penny that they can. I think most would fire their accountant in a heartbeat if s/he did not save them more than s/he cost. Loopholes are a natural consequence of that process…

  13. Hey Neil,

    I’ve been seeing these visual representations of statistics a lot lately and I think they are pretty cool. Can you tell me how you made this?

  14. It is drastically messed up that is for sure. I reported $11000 in income and cause all the tax credits I get $6000 this year.

    Are 16% really evading taxes, or have they just legally evaded through a loop hole? I remember Obama naming a loop hole as tax cheating, but it is 100% legal. That is what a loop hole is.

    Too bad taxes are going to go up. We are taxed 2.5t yet the gov. Spends what 4.1t.

  15. I wish you would have included how much, on average, they spend on the tax services, too…that would have brought it full circle!

  16. There aren’t that many loopholes. A great one was converting a rental unit to residential by living in it for two years and getting the section 121 exclusion on the gain. The IRS has finally plugged that one up. And the Alt Min supposedly takes care of a lot of the others. The people who aren’t paying their fair share are pretty much just lying on their returns. And don’t forget your fees paid for preparation are deductible.

    • It may not seem like it, but there are always some kind of loopholes that people figure out every now and again to help them in their situation. And yes, the fees are deductible… thanks for adding it.

  17. Very impressive statistical data. It so sad that the Tax keep on increasing every year. The Fed Goc is getting richer every year I suppose

  18. Incredible, isn’t it? The government taxes almost every single legitimate exchange of goods between any two entities. Every payroll check gets a chunk taken out of it, every gallon of gas purchased, (if you live in New York) every MP3 downloaded.. Even when you die, the government takes ~40% for your trouble.

    Yet we have a $12 trillion debt. And there are people out there that want to raise taxes. Seriously, I’m not kidding.

    • It’s amazing how things work… really. I can’t agree with you more on our system being completely crazy and complicated.

  19. I’m tired of being punished for not reproducing.

    So I pay MORE tax because I’m not supporting a brewed of brats?

    I think people getting tax cuts for populating the planet is B.S. I don’t get any breaks for not adding one more child to the ‘public’ education system. Nor am I adding strain to the planet!

    • I hear what you’re saying Doc, I don’t disagree with you there. It’s too bad there aren’t programs to help you out in that predicament.

  20. Wow ..just 10-15% in tax…here in Australia we are ripped off..26% tax at that kind of income.

  21. This is really crazy. 82800000 taxpayers are paying someone to prepare their taxes and for each of them it will take a day (24 hours) to do their tax return.
    This is way too much!!

    • There are a lot of people making a ton of money… and then it’s just taxed… again. It’s a vicious cycle.

      • Phew .. When everybody is part of that vicious cycle, then that cycle would remain in the system forever. By everybody I mean everybody except those 16.5% people who are not paying the taxes.

  22. Well… I’d have to say that a majority of tax evasion is done by small businesses or self-employed citizens. How would the government ever know if you earn cash and keep it in a safe? No bank… nothing… I’d say most business only claim what they can’t get away with such as: credit card payments, checks, and bank transfers :/

  23. Believe me, the U.S. tax rate is still a hell of a lot better than in Canada or the UK. As for cheating and loopholes, have a look at this article, which points out how GWB’s administration hid the low tax rate of the richest 400 Americans:

    • I’ve read that before, it’s quite interesting. There are a lot of people doing a lot of different things to figure out a way.

  24. Thanks for the explanation, I am not from USA and I a few day ago I was wondering how is US Tax System working. Thanks again!
    Best Regards!

  25. Use TurboTax and it will take you less time… and less money. 🙂

  26. 24.2 hours on average (!!!), that’s over 60% of a 40 hour work week–just to prepare taxes. There needs to be an extra deduction added in just for the time spent filing based on your wage or something… If I make $340 a week after taxes, I should get an extra $205 in deductions for filing taxes, just due to the fact the system is so complicated it takes that long for an average individual to file… jesh. Yea, the proposal is ridiculous but so is 24.2 hours for something that shouldn’t be that complicated.

  27. I’m sorry, I don’t really understand how this is a “visual representation” of the federal tax system. It’s just a few random statistics placed over some loosely relevant graphics. It doesn’t seem to me that the data interacts with the “visual” aspect in anyway. Anyone could have pulled these very basic numbers and placed them over some origami dollar butterflies…. very underwhelming and disappointing

    • Sorry you felt that way… most people understood the point. Please feel free to share some statistics you’ve come up with…

  28. I am a home owner with an income over $200,000, children, an investment portfolio (capital gains), give considerably to charity and I was able to get through my taxes in under and hour with the aid of commercial software which costs $40. Without that software it would be unimaginably comlplex, but because that software exists (and my income gives me access to it) I really don’t see the problem with the code. Is is complex? Of course, the world we live in is complex. I guess the only real advantage I would see to a simplified code would be to reduce the number of employees in the government required to administer it and check all the returns. I imagine something like a national sales tax would require almost no overhead.

    • For some it’s as easy as punching in some numbers and that being the end of it… for most others that have many variables, it becomes a lot more complex.

  29. I did my tax return in an hour and a half. It was pretty chill.

    • For some it’s as easy as that, but then there are many others who have too many different variables that make it much more challenging.

  30. Antonio Fisher II :

    Awesome. I just learned a lot. Visual systems rock. After all my over seas travel I really began to appreciate America a lot more. Although not a perfect system I see what our tax system affords us. I do believe you should take every legal tax credit you can get. I work hard for my money so keeping as much of it as I can is no problem for me.

  31. I’m sure the contributing demographic that dominates that 16.3 is the 18-22 year old. Not enough money to be noticed, but enough where they are required to file.

    • Read it again, Sam. That 16.3% accounts for $345B USD or 2.6% GDP. So in the aggregate, yes, this has a significant impact on our social system; the US DoD budget is (not counting our “overseas contingency experiment” is about $550B USD.

    • The earned income tax credit pays some Americans (mostly lower income working families, single head of household) more than they paid that year in taxes.

      I couldn’t believe it the first time I got it. I had been doing my own taxes and never filled out the EITC form because I was already getting back all I paid in to federal taxes. I didn’t think you could get more than that back.

      It’s not tax evasion, and if you don’t know you’re entitled to it – your loss.

      Without my accountant, I would have left thousands on the table.

      • Wow… and what’s so interesting is that most people make that mistake… they cheap out on hiring the right person for the job and leave a lot of money on the table.

    • That’s exactly why the system becomes so difficult and complex to analyze. That’s just how it is though…

  32. I didn’t know you could sum up the tax system, at all.. not just on a website, but at all.. too many holes

    • Well you can’t … obviously it wouldn’t be possible to sum up 700,000+ pages … but this can give you a small view of what some of it is about.

  33. Dont worry Indian tax system is equally complicated but you can call yourself a farmer and run away from paying taxes.

    • I’m not surprised lol…. I would think that there would be a lot more difficulty in accounting the people that work out there.

  34. So i had dinner with my wife and wrote it off as a business expense…. the gov’t can suck it!

  35. A few quick points. This is broad brush data. Neil only accounts for 97m taxpayers. I assume we are excluding corp taxes. We are missing 745b somewhere. You lump every1 in 200k or more and 50k or less categories. This brings the average rates way down or up as case may be.
    I’m no fat cat and I pay a dam lot more in Fed taxes (let alone State property taxes) than 20-25%.
    On the flip side there are many people who struggle on 10-20k who pay little or no tax (as they should). By breaking down teh brackets we can see more clearly the tax ‘burden’ carried by each group/demographic, tax bracket.
    For the folks who think EVASION is the same as minimization your wrong.
    EVASION is illegal Minimization is legal. You work the complex 70k pages to your advantage. COming from Australia I am stunned at how low taxes are here, and yet how complex the system is.
    I still believe that if you let people keep more of what they earn for each hour worked that they will spend/save it better than a bureaucrat will allocate it.
    The man who is avoiding/evading taxes likely does the economy good on one hand: He spends proportionally more per dollar earned, which increases M1(more money for banks to lend), buying goods and services which aids production, which creates jobs.
    …..anyway great Graphic, I’d love to see a more detailed version.
    Also why not have comment tracking? Its a drag to check in to see if my post was commented on, I’d rather get a text or email for it.

    • Yea, I agree some of the stats are off. I should have done more research.

      As for comment tracking that is something that I will add in the future.

  36. Interesting stats. Like some others, I don’t know it cheating is the right word for the 16.3% that avoid paying all or some taxes. I believe it comes down mainly to the complexity of the code. Make it simple and it will be easier to control with less abuse.

    • Most business owners “cheat”… or whatever it is you want to call it. Cash transactions are hardly ever reported …and when they are, they are far from the truth.

  37. Heritage Foundation claims that the bottom 50% of American earners pay no taxes at all, and that an inordinate share of the tax burden is borne by the top 5%.

    Tax evasion encompasses a lot of thing and most of us have engaged in it. For example, holding a garage sale and not reporting the income or paying sales tax would qualify as tax evasion in many cases. Earnings or gambling winnings of under $600 in a one-year period aren’t reported by the payer to the IRS, and so many taxpayers routinely don’t report such income. Cash transactions often don’t generate tax information or payments.

    The brutal fact, though, is that not only do Americans individually pay that much in taxes, they also, indirectly, pay all the taxes paid by every company that pays any sort of tax. As to complexity, consider that in addition to the national tax burden described above, most Americans also have to deal with a sometimes bewildering maze of state and local income, sales, property and other taxes.

    I say scrap the whole system, repeal the Sixteenth Amendment and adopt the FairTax!

    • lol… yeah that would be great. Too many people do it and it’s really impossible to stop them. Minor stuff like garage sales or cash transactions account for so much money too.

  38. With all due respect, don’t quit your day job, Neil. Not an impressive example of data visualization…

  39. Russell 'Bacon' Senior :

    The graphics of your story do not tell a story themselves. this is just the bullets of an article over some unrelated graphics. The graphics of an infographic should also tell a story, such as this one:

    This shows not only textual data, but if you analyze the graphic you can learn things as well. Here is another example
    The point is, and infographic needs to help you visualize the data presented.

    My suggestion is that if you want to show how complex the tax code is, compare how it all relates in say leaves of a tree. Each requirement or each idea would be a different leaf. Then compare this tree to leaves of a tree depicting driving laws, or something. Since this is probably difficult, how about simply showing what 70,000 pages look like compared to a standard law document.

    Bottom line: the graphic should help you understand the data.

    • Sorry to hear that you didn’t find it as informative as you would hope it to be. Thank’s for sharing that info.

  40. Gee, with over 70,000 pages – how could you NOT be breaking some sort of tax code? Hiring someone will just help at the audit so you’ll have someone there who is more knowledgeable than the assessor!
    Great graphic, Neil

  41. I’m an American living in France so I get to see 2 tax systems. US is by far more complex than the US.
    I only file in the US every 5 years or so because I am not taxable in the US, but I still have to file. For me, there are 2 forms I have to file, the 1040 and the foreign earned income (I think form 255). The foreign earned I declare how much I made and how long I was out of the US. On the 1040 I declare how much I earned and deduct the sum on the 255, which is all of my income. US taxes take about an hour, once every 5 years.
    French taxes are even easier – how much I earned, the automatic 10% deduction for expenses, how much I paid in child support and sign the form.

    • Wow, you would think for you it would be a lot harder and more complex. Luckily you found a system to help the process go a lot smoother for you.

  42. Alejandro Reyes :

    Hiring someone will just help at the audit so you’ll have someone there who is more knowledgeable than the assessor!
    Great graphic,

  43. Has anyone wondered why there needs to be 70k+ plus pages of tax laws? seems like a scam to me. If they were honest about it they could fit it on about one page. or even a few lines.
    “Pay X amount based on your income or we kick in your door kill you and your family then take all of it any way”.

  44. The tax system can be boiled down to ignorance. The ignorance is of the “tax payer”. One that fully understands tax law will never pay income tax on private sector monies in the US because it is never stated anywhere that the private sector is obligated to pay income tax. People in general, the blog writer included, believe that the IRS and its “laws” apply them them when in reality the the Internal Revenue Code can only apply to employees of a government within the US, a territory of the US, or a district of the US, including employees of the federal government. Ignorance is easy.

    • Ignorance is easy and it’s exactly why so many people often time get busted trying to avoid and save themselves some money.

  45. That wasn’t complex at all. Pretty simple really.

    What I find confusing is why so many people seem to assume that a lot of pages of tax code (or health care bill for that matter) automatically means something underhanded is going on. Whenever you’re dealing with policies or regulation that will eventually be challenged in court there is going to be a lot of ink spilled on making everything as detailed and loophole free as possible. It’s basically a ton of legalese designed to cover every conceivable issue that can come out of every conceivable situation.

    My point is having 70k+ pages of tax code is not necessarily a bad thing. The economy has grown tremendously since 1913, new industries requiring special regulations have sprung up, as well as new sources of revenue. Having 1 page of tax code would be disastrous since obviously the lack of detail and regulation would leave a lot of room for cheats and crooks as well as hinder the IRS’s ability to prosecute.

    Sounds like a good thing until you realize tax cheats are basically stealing from those of us who do pay.

    • Even though it appears to be simple (point of the info-graph), it’s really complicated and full of loopholes and rabbit holes and whatever else you can think of.

  46. I can’t believe how little tax Americans pay! This makes it even more unbelievable when some of your politicians start railing against heavy taxation!

    • Well most don’t pay that little, but a select few figure out a way to do it that way.

    • Compared to other countries the Americans pay a lot less…What about countries that ask for taxes of around 25-30% while the average salary is 250$?

  47. hitesh punjabi :

    The way you have used the imagery makes the tax system in US so easy to understand..I don’t know why the authorities make them complex!!

    • I can’t really figure it out either, making it complex allows them to make more money in a way as many people do find loop holes, even more aren’t able to.

  48. evden eve nakliyat :

    People can change their identity, what they really are when they’re in a public or for a short period of time, but eventually everyone take their masks off.

  49. Sandy Cormack :

    Those last few items, IMHO, are why we will never go to a comsumption-based tax system – too many people make a living on our tax code complexity!

    • Yeah a lot of people certainly do, but there are a good portion too who still have no clue how much extra they could be making.

  50. Tax is a sensitive subject. When government still wants up to 25% of your nett income, after you’ve already paid out huge chunks of cash on everything from VAT, through to levies on fuel and luxury goods it stings when they still want more….

  51. That’s an interesting way of explaining it. I bet you are getting taxed a lot from the look of the hotel that you call home. 🙂

  52. Great Graphic! Have you guys heard of the FairTax? HR 25 in the House of Representatives. It eliminates the personal income tax, the corporate income tax, all social security and Medicare/Medicade withholding, and other taxes and eliminates the IRS as we know it. The Feds are then funded by a national sales tax on all new goods and services. Business purchases to be incorporated in their finished products are not taxed! Talk about a boost to entrepreneurs! Check it out at

    • Thanks for the link Jack, interesting insight you’ve posted there. I’ll still check out the site and let you know if I find something that intrigues me.

  53. Weight Lifting Training :

    The income tax was never ratiffied. The offshore banks take the money. This is straight fact. In 1984 ron regan found that nothing you pay in income tax goes to roads, schools ect.

    Income tax is a scam.

    That said this last year i dont have to pay income tax. Once i get a job and start making more money online its going to be much different.

    • Well I sure hope so… income tax is just the rent you gotta pay to live in this country. Keep focusing on making more money and less focus on taxes.

  54. Is it true that every household in america has to fill out a tax return?

    Seems a complicated way of doing it if this is tre. Why don’t the employers just handle all the tax like in other countries?

  55. PretendExtend :

    Just buy physical gold coins or bars. Last time I checked people only get taxed on paper money that they hold or acquire.

    With the way the economy is now, its probably a good idea to have only enough paper money in your possession to get from one month to next. The rest should go to physical gold- that should go in a plastic/glass container-that should go in a hole in the ground- that only you and one trusted person know about.

    • That is the word out there, put your money into gold as it’s something that always holds value, no matter where you are.

  56. Zohrab Hadeshian :

    Years ago my auto mechanic/partner couldn’t come up with $26.oo to pay his tax dept; an IRS agent showed up at the garage we worked at to collect the dept from him personally. What I’d like to know is; how does a US Senator make a mistake of one quarter of a million dollars, and get away with it so long?

    • Over $26? Wow, that’s pretty intense… Some people are just really familiar with how things work…too familiar if you know what I mean.

  57. Cheap Hotel Singapore :

    Oh no! tax time again

  58. Email Delivery :

    I agree with you Neil, here in our country tax system is not only complicated but also charges large percentage on most of the items.

    • From what I’ve heard, it’s quite challenging in most countries… the US just has one that’s extremely complicated.

  59. Tom | What's Your Story :

    Thank goodness we only have to do it once a year!

  60. The effect of changing the marginal tax rate has never been shown to directly change macroeconomic trends.

  61. Medication Therapy Management :

    Interesting idea. Makes me wonder that something similar could work out for US healthcare system.


    How are the 16 odd% people able to evade taxes?? Whats the federal govt. doing abt it?

  63. New interesting idea. Keep it up and try some other subjects.

  64. Warner Carter :

    This chart is misleading. After sales tax, and the taxes on utilities, gas, and the variety of fees like car registration, and taxes that are expenses to people passed down to them as expenses to operate businesses the real percentage of taxes paid is much more than what you say.

    • There are many loop holes available to business owners though…. so much that it alters the way the system should be.

  65. Great infographic Neil.. Who did you get it designed with? In-house?

  66. Sell Textbooks :

    That is the exact reason I filed for an extension this year to wait for my accountant to have more time…

  67. sell textbooks :

    Great way to break it down for people! I actually kinda understand now, although I think I will still leave my account to do my taxes for me!

  68. kyra@forex cfd :

    Great diagram! Now I could tell individual differences regarding this stuff. Different ideas came up with such topic. But all I can say is: Very informative and many will be able to understand this complexity of tax system we’ve got.

    • Well, I would say that most won’t completely understand it because it’s just too complex, but hopefully it helps people understand it better than before they saw this.

  69. Yeah, it’s quite complicated, but hopefully this helps clarify it for you more than before.

  70. Printer Ink :

    I’m betting that a significant amount of that 16% who don’t pay taxes are working off a cash based business with little to no reporting or receipts. I saw a story in my local paper about a mobile car washer that was arrested for 4 years worth of tax evasion. His estimated annual income: nearly $70,000. He only claimed around $5500 or so every year in income and bought most everything either through a relative or using cash. But Neil’s right, they all eventually get caught in the end.

  71. Büyü Bozma :

    I’m betting that a significant amount of that 16% who don’t pay taxes are working off a cash based business with little to no reporting or receipts. I saw a story in my local paper about a mobile car washer that was arrested for 4 years worth of tax evasion. His estimated annual income: nearly $70,000. He only claimed around $5500 or so every year in income and bought most everything either through a relative or using cash. But Neil’s right, they all eventually get caught in the end.

    • wow… that’s pretty intense and very true. For every 1 person that’s caught, there are thousands who still get away.

  72. SEO Results :

    16,3 % seems like an optimistic estimate of tax dodgers. If we look at what the Mexican illegal labor force alone absorbs this figure will be thrown way out.

    The graphic illustration is very effective, by the way.

    • Thanks, the illustration definitely does a great job at getting the point across. It may or may not be an optimistic estimate, but I would say it’s as close as we can get based on what’s available.

  73. ProbusinessGuy :

    I belive peter schiff is right that we need a consumption tax and get rid of all other taxes in place of it. You have to cut government spending which is the key.

  74. I really do not see why that have to make things sooo complicated! I say just charge a certain percent tax for everyone PERIOD. In my opinion maybe 20% tax for everyone would make a lot on sense and in the long run probably save the government a lot of money. But sadly I doubt most of the politicians nowdays are smart enough to even comprehend that. Just continue to let businesses move to places like Brazil…

  75. An interesting addition to your graphic would be the number of “taxpayers” like me who don’t pay taxes.

  76. The tax is complex of course so not many people could understand it and the government just demands money 🙂

  77. Web Design LA :

    This a really complex system which people don’t want to understand just pays the tax told to them. People gets frustrated and so they don’t demand anything from system or government. They know very well no one is going to change.

  78. çizgi film İzle :

    Hi Neil, always you are giving something different information, this time also. Your post is really amazing. Few of your points need to remind while build link structure.

  79. I don’t reside in the U.S. Neil. I gotta admit that. But i’ve watched the Penn & Teller episode on U.S. taxing and i gotta say, you guys have some weird taxing system!

  80. iphone 4 case :

    A good Tax person comes in very handy. Especially when they keep up with the current laws on writing off items.

  81. Venetian Mirrors :

    In my country, most business owners pay around 50% in taxes. The average joe pays 39%. We have the worlds highest tax pressure, which also means that many talented entrepreneurs moves out of the country, to grow their businesses. The tax laws here are also very complicated and accountants can always find a job.

  82. How To Increase Sales :


    The bit that bug me is that there is so much waisted, that the solution is to put up taxes.

    I’d like to see a more efficient system that’s solution to its problems is putting up or creating new taxes.

  83. Best Ski Resorts :

    The federal tax system dips too deeply into the pockets of Americans. The U.S. government now costs the average family more than $ 20,000 per year. In 2007, the federal government about U.S. $ 1,000,000,000,000 exact more than a decade.

  84. Godaddy Coupon :

    Interesting stats. Like some others, I don’t know it cheating is the right word for the 16.3% that avoid paying all or some taxes . I believe it comes down mainly to the complexity of the code. Make it simple and it will be easier to control with less abuse.

  85. Hiring someone will just help at the audit so you’ll have someone there who is more knowledgeable than the assessor!..

  86. I would say some businesses only claim what they can not get away with such as- credit card payments, checks, and bank transfers.

  87. Vivek Krishnan :

    What an amazing infographic. I am sure this post viraled the globe. Pretty interesting stats have been put up about the US tax system!

  88. Individual Taxpayers vs Corporate Tax :

    It is a great infographic and insight. What would be really interesting to see is the dollar amount in corporate tax breaks (and tax fraud) that corporations get. This post seems geared towards individual taxpayers if I’m not mistaken with no mention of corporations. When thinking about corporate tax breaks and additional monies given from our tax dollars (TARP, etc.) I think this number would dwarf your numbers. It just seems like you’re casually pointing the finger at individual taxpayers which in my humble opinion isn’t exactly why this country is in trouble. Just my 2 cents and I do respect your good work here.

    • Sorry for the misunderstanding. I am not trying to point any fingers as I am not the most educated person when it comes to our economic problems.

  89. eBook Cover Maker :

    The complexity creates more back doors to be exploited, a simple system does not create as many loop holes.

  90. the notion is that we are not going to go simply be treating the tax system as a big ugly pinata.

  91. College textbooks :

    That is an interesting and great way to illustrate the system, quite spot on too.

  92. gercek seks :

    I just wanted to comment your blog and say that I really enjoyed reading your blog post here.
    It was very informative and I also digg the way you write!All of them make sense and are very helpful. Keep posting.

  93. Glad I am not in the US. Maybe you can prepare an info graphics for the tax system in India maybe?

  94. Well okay it’s complicated, but I’d like to point out that the Americans that always complain about their taxes pay like 150%-200% less than Europeans do.

  95. Yeah a lot of people certainly do, but there are a good portion too who still have no clue how much extra they could be making.

  96. our success is very much an inspiration for me.

  97. Sökmotoroptimering :

    Wonderful picture man!
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  98. mersin bilgisayar :

    thanks it is really complex

  99. Tax is something essential as a main source of income for government. Everybody has to be committed to it. After all the money will eventually flow back to the people, whether directly or indirectly.

  100. Rajnish Anand :

    This is brilliant. You have simplified the whole thing so well. You are a genius.

  101. In light of the upcoming tax season, this puts a lot of things into perspective! Loved the infographic. The stats are fascinating.

    • Great, happy to know you found it helpful. Thanks for letting me know what you specifically liked about it. 🙂

  102. Bilgisayar Servisi :

    Thank you, glad you found it easy to understand.

  103. hey neil,
    Great information over here. great explanation of this complexity.
    i really liked this post.

  104. Yazlık Daire :

    Yeah a lot of people certainly do, but there are a good portion too who still have no clue how much extra they could be making.

  105. Thanks for the explanation, I am not from USA and I a few day ago I was wondering how is US Tax System working. Thanks again!
    Best Regards!

  106. Great visual interpretation of the US tax system.

  107. Coleman Jackson :

    The process and rules of the U.S. tax system makes it very complex, every one wants to avoid the “TAX TIME” and they prefer to prepare their taxes with the help of someone, and i think it is the best way to handover your tax problems to a specialist tax lawyer and get relax.

    • Coleman, I find that to be a really easy fix. Having someone you trust do your taxes can relieve a lot of stress.

  108. Dana Zelasko :

    Spot on with this write-up, I really suppose this website needs rather more consideration. I?ll most likely be again to read rather more, thanks for that info.

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