My local paper did me the favor of informing me this morning that this week is the 100th anniversary of the passage of the permanent income tax in the 16th Amendment by Congress. (It would not be ratified and implemented until 1913.) Gee, don’t you feel like celebrating?
But what would you do for a cake? One with a chunk missing? Or the top skimmed off? Would you have to cut everyone’s piece, then take back a progressively bigger chunk off for the older people?
A state homeschooling e-newsletter I get had a cartoon once of the signing of the Declaration of Independence. One Founding Father was saying to another, “We have to do this now; if we don’t stand up to England, what’s next? An income tax?” (Actually, Great Britain levied its first income tax in 1789 to pay for the Napoleonic Wars.)
The first income tax in the U.S. was levied to pay for the Civil War. Instituted in 1861, it was a 3% tax on incomes over $800 annually. After the war, the income tax ended, but resurfaced in the 1890’s. At least the first one had the advantages of being both temporary and flat.
Neither characteristic would last.
(May I point out here, that, although generosity is obviously encouraged, the Bible only demands 10%… from everyone. Although the rich are slammed for being stingy at times (and even as a habit), tithing does not work on a mandatory progressive scale, where the rich would be expected to give 30% or more, while the poor were totally unobligated to contribute.)
In 1913, when the 16th Amendment went into effect, less than 1% of the U.S. population owed income taxes. Apparently, it was considered something of a bragging right to be able to say you owed income taxes.
By 1919, the top tax bracket was 77%, allegedly to pay for U.S. involvement in WWI. However, it remained primarily a tax on the upper classes. Having discovered this lovely source of income, of course it was not going to remain a tax for only the rich for long. Whenever a politician promises, “Oh, we’ll tax those nasty rich people, not you!” remember the history of the income tax.
Don’t get me wrong: I think there are benefits to a larger percentage of the population paying taxes.
- We have too many people who pay no taxes and expect handouts from the government, because they’ve been told the rich “deserve” to get stripped of their money. We have degraded work by encouraging this attitude.
- The Biblical tithe system expected everyone to contribute; even the poor can help someone worse off than themselves. Some charities, like Heifer Project, incorporate a requirement to pass on the gift to another person (in their case, they give away pregnant animals and farming information, then the recipient has to give away at least some of the animals and pass on the information to help another family). Contributing to your society is a dignifying thing.
- Finally, we value things more that we pay for. A friend of ours offered free trumpet lessons. The kids hardly ever practiced, didn’t bother to show up on time, if at all, etc. So, he started charging a measely $5 per week. All of a sudden, parents were on their kids to practice, they were on time, they started caring. Just because they’d paid something for it.
WWII made the income tax fun for everyone. In 1944, the income tax started at 23% and topped out at 94%. At least we still had patriotism to keep all those rich people from either quitting work or fleeing to an offshore tax haven. And the instruction book was only two pages long for the 1040.
In 1986, the maximum income tax rate was set to 28%. (And people wonder why conservatives love Reagan: we tend to think if you earned the money, then it’s yours, not the government’s. We’re happy to share it with charities of our choice… but the government is not one of those.)
In 2009, the top bracket was 35%. The booklet that tells you how to fill out the 1040 is considerably longer than two pages. I wouldn’t know; we finally gave up and got the computer program to do it. Apparently, even people *smart* enough to be appointed to the Presidential Cabinet can’t figure out the blasted tax code. (Some wise guy commentator said we could fix our budget deficit by just appointing more people to the Cabinet, thus getting millions in back taxes finally settled.)
We still have four years until 2013, the 100th anniversary of the income tax’s actual implementation.
Can we dump the insanity and figure out something better by then? Maybe something involving spending tax revenues as if they belonged to the people, not the government?
Two prominent suggestions include the Flat Tax and the Fair Tax, each coupled with the repeal of the 16th Amendment and the end of the income tax. Either way, most of the $100 billion spent annually on tax preparation would be freed up to go to useful purposes instead of loophole nitpicking and taxcode deciphering. Special interests and considerations would be excised from the discussion. And there would be a lot fewer dead trees from printing gargantuan tax forms.
Glenn Beck keeps pointing out that our taxes aren’t just money, but our time. The article in my paper this morning said that in 1989, the National Tax Foundation estimated that the average American worked 1 hour, 47 minutes each day to pay their taxes. In 2009, they gave a Tax Freedom Day, but I calculated that would translate to 2 hours, 16 minutes each day to pay taxes (28.2% tax rate * 8 hours= 2.256 hours).
If we started thinking about it not just as money, but time, would it bother us more what Congress does with our tax dollars?