Thursday, January 10, 2013

US Income Tax - 100 Year Anniversary

The income tax as we know it today is the result of enactment of the 16th Amendment to the United States Constitution in 1913, giving the federal government the right to confiscate our money as taxes on all sorts of personal and corporate income.  It should be no surprise that this occurred when Socialist President Woodrow Wilson was in office.  Before 1913, there were short periods of time when a small income tax was imposed; but eventually this kind of taxation was ruled unconstitutional by the Supreme Court, which ultimately resulted in the Constitutional Amendment to allow for a permanent income tax. 

Originally, the income tax was made law, as a replacement because at the same time certain tariffs, or sales taxes, were eliminated on various goods.    This was done to stimulate a degree of free trade, since prior to the income tax, the federal government's primary source of income until 1913 were tariffs (sales taxes) on foreign goods to protect US industries.   Once the US became an industrial power house in the late 1800's and 1900's, these tariffs were deemed harmful because they were always reciprocal and retarded free trade.  Of course, we have gone back and forth on this issue for years. 

In any case, when the income tax was imposed in 1913, it was primarily a millionaire's tax as rates began at 1% and were capped at 7% on income above $11 million in today's dollars.  That did not last long and by 1917 during World War I, rates went from 2% to 67% on incomes of $35 million in today's dollars.   Rates came down a bit during Republican Presidencies in the 1920's; but then when Socialist President Roosevelt was elected in 1932, by 1944 the lowest rate was 23% and the highest rate was 94% levied on income of about $2.5 million in today's dollars.   Rates have always been high during Socialist Presidencies as Socialist always argue that the "rich" can and should pay more even though it retards economic growth and job creation.  Roosevelt's New Deal and high taxes actually prolonged the Great Depression as unemployment was between 12% and 20% from 1932 until 1939, when war production began. 

The latest story is Obama's Fiscal Cliff Deal, which gives us federal rates of 10% - 39.6% and even more at the higher levels as a result of ObamaCare taxes.   What started out as a millionaires tax at 1% now impacts 50% of all Americans that on average are paying about 25% of their income in federal taxes, plus state income taxes, plus an assortment of property taxes and other fees, fines etc.   So much so, that the typical Middle Class family is probably paying about 35% of income in taxes of various sorts.   Those families and small businesses that are "rich", earning $250,000 or more, could be paying well over 55% of their income depending on the state they live in.   

Think about it.    For the 50% of us that are Makers, Middle Class families are working about about 4 months a year to feed the beast at all levels of government.   On average, The "rich" are working 6 months a year to provide for Obama's PEEP's, those on the dole, the 50% of Americans that pay no income taxes at all, public employee union members, illegal aliens, radical feminists and environmentalists, trial lawyers and crony Capitalists that support Socialists because they are all feeding at the trough.  

The real question is when is enough enough.   Obama just got his tax increases in the Fiscal Cliff deal and ObamaCare and then immediately started talking about even higher taxes on the Makers in our Society.  Some Socialists are now talking about imposing a Value Added Sales Tax like the 20% - 25% taxes that exist in Europe.    That tax causes Europeans to come to the United States on business, or vacations, with empty suit cases to buy clothing and other household items in the US at a third the price in Europe. 

The reality is that for Socialists, what ever hard working people are paying in taxes, is never enough.  How is this different than Communism, where everything belongs to the state.   The truth is, there is no difference because today in addition to the taxes we pay, government intrudes into all aspect of daily life.   And, it all started with the income tax in 1913.  Happy Anniversary America. 

No comments:

Post a Comment