Since April 15th came on a Sunday this year, today is the filing deadline for federal income taxes. This has become so much a part of life that most Americans probably don’t realize it wasn’t always this way. The federal income tax didn’t exist for the first 137 years of the republic [except for a short time during the Civil War]. Then in 1913, the Sixteenth Amendment was added to the Constitution [the ratification of which is still suspect historically] allowing taxes to be collected for all incomes derived from whatever source.
The amendment itself didn’t establish an income tax; it merely permitted it. Congress, later that year, in a bill that reduced tariffs—which was a good move—decided, in its wisdom, to make up for “lost revenue”—a line used repeatedly over the succeeding decades—by adding to that bill a provision for the first national income tax.
It wasn’t an intrusive tax at the time. The rates ranged from 1% to 7%, the latter being only for what today would be called multi-millionaires. So it didn’t bother too many people. Yet only four years later, in 1917 in the midst of World War I, the highest rate jumped from 7% to 77%, as a means to help pay the costs of the war. That truly is astounding.
Once the camel has its nose in the tent, it wants to come the rest of the way in.
After the war ended, and a Republican administration replaced Woodrow Wilson, the top rate was cut back to 25%. That certainly was better, but we never again got close to the 7% where we started. The value of having this progressive tax became evident to politicians of all stripes: anytime the government needs more money, just open the spigot and take more. At one point, after World War II, the highest marginal rate was over 90%. Can you imagine what that does to incentive to earn money and be productive?
Where did this wonderful idea of taxing citizens progressively—the more you make, the higher percentage of your income you have to pay—come from? Well, one of the originators of this policy in the modern era was Karl Marx. He set forth his plan for the progressive income tax in his Communist Manifesto in 1848. So Marxist ideology is behind the bright idea, and we continue to “honor” Marx today by propagating his class-envy program. Why should the government have first say on what we earn? Why should it demand so much? God requires a tithe; the government requires more than God.
Proposals to alter our taxation always fall short of support. An entire industry has arisen to bolster the current system, and an even higher percentage of citizens no longer pay any income tax at all, thereby putting the onus for financing the government on the middle and upper classes. And what do we receive for all our sacrifice? Obamacare??? Trips to Las Vegas for federal employees??? The list of abuses is virtually endless.
It’s time to rethink the entire tax code, not merely tinker with the edges. The income you earn is your money, not the government’s. That is the first perception that needs to change. Then perhaps we can find a way to appreciate that basic truth while still supporting the essential services of the government.