Personal Career and Financial Security Ch 20

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Questions and Answers

How much time will a person spend on tax paperwork if they keep tax records and fill out forms for two weeks each year over a sixty-year adult life?

One year

Four years

Three years

Two years (correct)

What was the typical family structure in the United States during the 1950s?

Same-sex couple with children

Single parent with children

Husband, wife, and children (correct)

Couple without children

By the year 2000, how did the income distribution of American families typically change?

Both parents worked to support the family.

One parent's income was used entirely for taxes. (correct)

Only one parent worked outside the home.

There was no significant change in family income distribution.

What was the savings rate of the typical American family in 1970?

Nine percent Signup and view all the answers

What does the author suggest is the realistic way to earn a higher income in today's economy?

Owning a good business Signup and view all the answers

What change occurred in the savings rate from the 1970s to the year 2000?

It decreased to near zero. Signup and view all the answers

What concern does Uncle Eric imply about parenting in the context of both parents working outside the home?

There is limited time left to raise the children. Signup and view all the answers

What was a significant factor contributing to the shift in the size of the U.S. government in the 20th century?

The establishment of the income tax in 1913 Signup and view all the answers

By what percentage of income were average American families estimated to pay in federal taxes by 1995?

24% Signup and view all the answers

What does the term 'time tax' refer to in the context provided?

Hours spent managing tax records and forms Signup and view all the answers

What was the thickness of the federal tax code and regulations in 1952?

Three-fourths of an inch Signup and view all the answers

How did the percentage of income paid in taxes change from 1950 to 1995?

It increased dramatically Signup and view all the answers

What major historical events were mentioned as contributing to the rapid growth of the U.S. government?

World War I and World War II Signup and view all the answers

What does the increase in government consumption of family income imply?

The government acts as a larger financial burden Signup and view all the answers

What was a notable statistic about the IRS paperwork mentioned?

It could circle the earth 36 times Signup and view all the answers

Study Notes

The Decline of the Prosperous Employee Model

Government growth, particularly after World War I and the Great Depression, led to a significant increase in taxes.
By the 1980s, taxes consumed a large portion of average family income, often exceeding 40%.
Federal taxes rose from 2% of income in 1950 to 24% in 1995.
State and local taxes also increased considerably.
The time burden of taxes: Tax forms and record-keeping grew dramatically since 1952
The 1952 federal tax code and regulations were 1.25" thick.
By 2000, the code and regulations totalled 14" in thickness.
IRS receives enough paperwork to circle the earth 36 times annually.

Impact on Families

The increase in taxes resulted in a decreased ability for families to save money.
The savings rate among American families diminished significantly, nearing zero by the year 2000.
The "prosperous employee model," where a single wage earner could support a family, became obsolete.
In 2000, both parents often worked outside the home, and one income was frequently directed towards paying taxes.
The time required to manage taxes increasingly impacted family time and the ability to raise children effectively.

Tax Burden Increase

The growth of government is directly linked to the increasing tax burden.
Import taxes, liquor, and tobacco taxes were primary sources of government income in the pre-20th-century US.
Income tax was not in effect until 1913.
Ohio's state and local government in the 20th Century exceeded the size of the entire US federal government.

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Description

This quiz explores the historical shifts in tax structures and their impact on American families from the post-World War I era to the year 2000. It discusses how rising taxes diminished the savings rates and altered the traditional family income model, making it difficult for a single wage earner to support a family. Understand the complexities and consequences of fiscal policy changes over the decades.