Monthly Archives: April 2011

40 Years of Tax Changes

Calculating taxes

Few laws are as important as the federal tax law. It affects most of the 215 million adults who live in the United States, as well as millions of for-profit businesses and nonprofit entities.

How has tax law changed since 1971? Let’s count just a few ways.

  • In 1971 the top individual income tax rate was 70%. In 2011 it is 35%.
  • In 1971, the average income tax rate for a typical family of four was 9.27%. In 2011, it was 4.5%.
  • In 1971, a person with $50,000 in income paid about $18,000 in income tax. In 2011, a person with the same income pays less than $8,000.
  • In 1971, corporations accounted for over 14% of all federal tax revenue. In 2011, they accounted for about 9% of revenue.
  • In 1971, the top tax rate on long-term capital gains was 34.25%. In 2011, it was 15%.
  • In the entire decade of the 1970s, the federal tax law was seriously amended five times. From 2000 to 2010, it was amended 22 times.
  • In 1971 the Federal Tax Code was approximately 16,500 pages long. In 2011 it was over 71,000 pages.

Thus, we can see that due to the “tax revolt” that began in the late 1970s and continues to this day, taxes have fallen, particularly for the rich. The result is that the federal government takes in far less than it spends, and must borrow heavily to meet its obligations.

In 1971, the annual federal deficit was less than 1% of the nation’s Gross Domestic Product. In 2011, the deficit was almost 10% of GDP, the highest since World War II. In 1971, the total national debt was $371 billion, which was about 37% of GDP. In 2011, the total national debt exceeds $14 billion, which is over 93% of GDP.

At the same time, the tax law has grown increasingly complex. Now it seems that the tax laws are changed every year, often more than once a year. Congress amends the law over and over again as a way to reward friends and punish enemies. There is a well-known adage: “The power to tax is the power to destroy.” But the power to tax is also the power to obtain campaign contributions. This is why few areas of law have changed as much as tax law over the last 40 years.

The result is a complete mess.

Immigration: A brief history

Nolo’s founding happens to have coincided with a quantum leap in the numbers of immigrants coming to live permanently in the United States (with a green card). Back in the white-picket-fence 1950s, typical annual immigration to the U.S. was about 250,000 people. That number doubled in the 1970s, largely reflecting new laws that scrapped quotas favoring immigrants from Europe. The numbers of immigrants doubled again by the 1990s, and now over a million people receive U.S. green cards every year.

Not surprisingly, the immigration laws have been reworked numerous times over the same time period, reflecting contradictory U.S. impulses. On one hand, legislators have sought to gain the advantages of immigrants’ expertise, investment dollars, and willingness to work; and to protect victims of war, political injustice, and humanitarian crises. On the other hand, as the number of newcomers has risen (and perhaps not coincidentally, the number coming from European countries has dropped to a tiny minority), the trend has been to limit the numbers of immigrants, or the benefits available to them, in efforts to protect U.S. jobs, resources, and security.
The result is a tangle of legislation that’s widely considered more complex than the Tax Code, implemented by a massive and often dysfunctional bureaucracy.

Nolo’s first book on immigration law came out in 1995. We now offer four books on the topic, all of which have been rewritten numerous times, to help people navigate through the shifts in course and the bureaucratic whirlpools. With many prospective immigrants unable to afford legal help, or confused about whether they’ve got a chance at a U.S. green card or other immigration benefit in the first place, these books continue to serve a valuable function.

Immigration Books from Nolo

Immigration Books from Nolo

The Brief Story of Texas vs. Nolo

Headlines feature Nolo-Texas BattleWhen 19th century pioneers rode west, many carried a bible in one saddlebag and the bestselling Everyman His Own Lawyer, by John Wells in the other. But by 1998, when a Committee of the Supreme Court of Texas sought to ban Nolo’s books and software from the state, this frontier tradition of legal self-help had obviously been forgotten.

Claiming that only lawyers could provide legal information and that Nolo’s publications were guilty of practicing law without a license, the Supreme Court of Texas’ Unauthorized Practice of Law sub-committee ordered Nolo to appear before a closed hearing at Austin on August 20, 1998 to explain why sale of its books and software should not be prohibited.

Nolo fought back by challenging the Unauthorized Practice of Law Committee’s kangaroo court-like proceeding before the very same Texas Supreme Court that authorized the sub-committee. And after the Court ordered the UPL sub-committee to adopt new, more open procedures, Nolo pressed its case. Represented by Austin civil liberties attorney Peter Kennedy, Nolo sued the U.P.L. sub-committee in state court in Austin claiming that the sub-committee’s activities violated the U.S. Constitution’s First Amendment and the Texas Constitution. Joining the suit were a group of Texans who had used Nolo’s books, the Texas Library Association and the American Association of Law Libraries.

Nolo’s argument that Texans had a fundamental right to basic legal information and that the Texas legal profession had no right to ban low cost competition struck a chord with both the press and the public. The New York Times, The Wall Street Journal, Time Magazine and even the International Herald Tribune were just a few of the publications that covered the story, almost always treating Nolo’s pro-democracy arguments sympathetically. The headline on Jim Barlow’s column in the Houston Chronicle of May 31, 1998 “Lawyers Want Law Kept to Themselves” was typical.

After a two-year battle, and on the eve of Nolo’s case being heard by an Austin jury, the Texas legislature provided a respectable exit strategy for its beleaguered legal establishment. In the 1999 session it passed legislation that exempted self-help law products from the Texas Unauthorized Practice of Law statute as long as they carried a disclaimer making it clear that they didn’t provide legal advice. Since all of Nolo’s books and software had already done this for many years, the fight was over.

In looking back at Nolo’s struggle, Ralph Warner, Nolo’s Co-founder and Publisher said, “Lots of Texans cared about keeping our books and software available in the state but none more so than librarians. With tens of thousands of Nolo books in Texas public libraries, the Texas Library Association and its individual librarian members were absolutely committed to the fight to keep them accessible to the public. The idea that Texas lawyers could simply ban and remove Nolo books from library shelves was absolutely anathema to them.”

Consumer Scams: 1971 & 2011 Comparison

Consumer fraud has come a long way in the last 40 years. Although scams thrived in the 1970s, the Internet brought the scamming trade to new heights in the 21st century. Let’s take a look at what the scam scene looked like in 1971 and what it looks like today – and how you can protect yourself.

  • 1971: Spam was canned meat that looked (and some say, tasted) like cat food, phishing was something you did with your grandfather, a virus was something to be celebrated because it meant you got to stay home from school, and cramming was what you did before a test.
  • 2011: Savvy consumers must be on the lookout for Internet spam, phishing (when fraudsters try to obtain sensitive information via email by posing as a legitimate company), computer viruses, and phone cramming (when a company bills you for a service you didn’t agree to, order, or use).
  • 1971: The average consumer scam involved a relatively small number of victims and most fraud victims had personal, face-to-face contact with the scammer. Think used car sales, door-to-door sales, and small-time investor schemes.
  • 2011: The Internet enables scammers to perpetrate fraud quickly and easily on a very large scale and allows the scammer to remain faceless and nameless. This makes getting your money back difficult, and poses challenges for government prosecutors.
  • 1971: Because scammers in the 1970s knew that many Americans were sitting on a treasure trove in the form of their house, fraudsters came up with all sorts of home improvement and contractor scams to suck money out of homeowners.
  • 2011: While home improvement and contractor fraud are still biggies, today resourceful scammers have invented thousands of new home scams in every variety and flavor. Tricking elderly homeowners into signing their home away, stealing equity from homeowners through elaborate refinancing schemes, and taking money from folks to buy land that does not exist are just a few.
  • 1971: If you were the victim of a Nigerian scam, it meant you had traveled to Nigeria and got pick-pocketed in an open-air market.
  • 2011: Today, the Nigerian scam is just one of many “advance fee” scams that rip off businesses and individuals alike – causing folks to lose cash and risk identity theft to impersonators over the Internet. (You can learn about the Nigerian scam and other advance fee scams from the FBI.)
  • 1971: Although the term “identity theft” was first coined in 1964, the vast majority of Americans in 1971 remained untouched by (and often unaware of) this crime.
  • 2011: Identity theft is the most common consumer fraud reported to the Federal Trade Commission, with 1.3 million reported cases in 2010. Some estimate the number of actual victims per year to be 10 million.
  • 1971: Smart consumers could reduce the chance of being scammed by arming themselves with information. Luckily Nolo entered the scene in 1971, providing plain English legal information to everyday folks.
  • 2011: The advice on how to reduce your chance of becoming a scam victim hasn’t changed much over the years — know what scams are lurking about and learn how to protect yourself. Fortunately, Nolo can help you do just that. Today, Nolo’s Solve Your Money Troubles, Credit Repair, and Stopping Identity Theft provide consumers with sound advice on how to avoid scams, protect your money, and protect your good credit. Or, with the click of a mouse (not the 1971 kind that eats cheese), you can download and fill out one of Nolo’s many eForms (drafted by our top-notch in-house lawyer-editors) in the consumer protection and money management area. And thanks to the Internet, Nolo now has hundreds of free articles and FAQs on consumer protection – so you can learn about lemon laws, avoid eBay fraud, spot the most common travel scams, protect your good credit from identity thieves, check out the newest home equity scams, and more.