Calculate Your Tax Burden in 2012 and 1913

Political  Calculations
Posted: Apr 18, 2012 12:01 AM

Just in case you might have thought that we were the only ones going tax-related tool crazy these days, Nick Kasprak of the non-profit Tax Foundation has done a major update to the organization's MyTaxBurden tool!

Today the Tax Foundation releases its latest interactive tool, an update and overhaul of its successful MyTaxBurden tax calculator. I've rewritten the calculator from the ground up and added a variety of new options and features.

The original MyTaxBurden calculator was released in July 2010, and calculated tax bills for tax year 2011 under three scenarios - full expiration of the Bush and Obama stimulus bill tax cuts, full extension of those cuts, and partial expiration for high income earners in the form proposed by President Obama. Later we added a similar proposal to reflect the proposals of Congressional Democrats, and finally the compromise plan that became law in December.

However, one limitation of the calculator was that it wasn't possible to customize policy scenarios in any real way. Suppose, for example, I wanted to compare the effects of failing to patch the AMT under full extension or full expiration of other tax cuts? What if I wanted to look at how my tax burden changes from year to year, and compare my 2010 bill to my 2011 bill? What if I want to look at the President's proposal, with and without the Buffett rule? What if I wanted to look at all of these scenarios but also see what would happen if health care reform is overturned by the Supreme Court?

The new calculator lets the user make these decisions. Each scenario in the calculator represents a particular combination of pieces of legislation, any of which can be turned on and off individually, on top of current law.

Here's a screen shot we snapped of the tool's basic interface:

The basic interface is a quick and easy for casual users, but the real strength of the tool is it's ability to go into great detail.

For example, once you click to "Calculate My Income Tax", the MyTaxBurden tool will currently show how you will fare on your taxes under current law, in 2013 after the "Bush tax cuts" of 2003 expire, and under the various proposals that President Obama has advanced.

And then, you can go even deeper into detail! And if you find anything worth commenting upon, the MyTaxBurden tool makes it easy to share what you find with whomever you might choose! (For those who would not like to circulate their income data around the Internet, we recommend entering non-specific data....)

By way of example of what the tool is capable of doing, Nick has put President Obama's own tax return data for 2011 into the MyTaxBurden tool to see how he might fare under four possible scenarios!

To show a quick example of this, let's take a look at President Obama's 2011 tax return under four scenarios:

  1. actual 2011 tax law,
  2. full expiration of Bush-era and stimulus tax cuts in 2013 (the default "Tax Cuts Expire" scenario),
  3. same as (3) except that the AMT is also not patched ("Taxmageddon"), and
  4. the President's own budget, plus the enactment of the "Buffett Rule" (the default "Obama proposals scenario.)

(2) and (3) are the same in this case, since the expiration of the Bush tax cuts pushes the President out of AMT.

As for how President Obama fares under his own proposals, Nick observes:

Ironically, the President owes the most under his own proposal, because his budget includes a provision to cap the benefits of itemized deductions to at most 28% of their value.

And so we find that the President is unwilling to allow any deduction to go unclaimed on his own tax return....

On a final note, we reviewed the previous generation of the calculator back in July 2010, awarding it our "Silver Standard" for overall online tool quality.

We're upgrading the MyTaxBurden calculator to our "Gold Standard", as the new generation of the tool appears well adapted to go far beyond the time-specific limitations that held us back from giving it that award in its previous incarnation. We find that it produces highly informative results, allowing users to enter as much or as little data as they might wish in a very clean user interface, producing highly detailed, yet easy to follow results. Very highly recommended.

Tax day 2012 has arrived! And what better way to mark the day where your income taxes have finally come due than by providing another form for you to fill out just so you can see how much you would have been taxed when income tax forms were first issued by the IRS in 1913!

Our tool below is based upon the first page of the original Form 1040, which originally consisted of just four pages: the summary sheet modeled below (Page 1), the Gross Income calculation sheet (Page 2), the General Deductions sheet (Page 3) and finally, one page of Instructions (Page 4). Yes, you read that right. Just one page of instructions!

We'll make it just a bit easier still. All you need to do is click on the tool below and enter the data [form-1040-circa-1913.jpg]

Excerpts from the Instructions

3. The normal tax of 1 per cent shall be assessed on the total net income less the specific excemption of $3,000 or $4,000 as the case may be. (For the year 1913, the specific exemption allowable is $2,500, or $3,333.33, as the case may be.) If, however, the normal tax has been deducted and withheld on any part of the income at the source, or if any part of the income is received as dividends upon the stock or from the net earnings of any corporation, etc., which is taxable upon its net income, such income shall be deducted from the individual's total net income for the purpose of calculating the amount of income on which the individual is liable for the normal tax of 1 per cent by virtue of this return.

19. An unmarried individual or a married individual not living with wife or husband shall be allowed an exemption of $3,000. When husband and wife live together they shall be allowed jointly a total exemption of only $4,000 on their aggregate income. They may make a joint return, both subscribing thereto, or if they have separate incomes, they may make separate returns; but in no case shall they jointly claim more than $4,000 exemption on their aggregate income.

Well, wasn't that a fun exercise! Are you ready for the "improved" modern version of the same thing now?

As a final note, we first published our "Original Form 1040" tool back on 10 April 2007 - we hope you enjoyed this trip to yesteryear!