Last Friday, the income tax celebrated its 100th birthday.
John Fund “celebrates” the birthday:
Critics warned a century ago that the new tax would ultimately be ruinous. The income tax “will tax the honest and allow the dishonest to escape,” the New York Times wrote.
That’s right; a century ago, the New York Times stood against big, rapacious government.
“Even those who approve the tax despite its faults cannot contend that the same sums could not have been raised more certainly, more equitably, and with less trouble to both payers and collectors by a stamp tax.” The Times warned that in any emergency the tax rates would be sure to rise and that “its unpopularity will grow with its life.”
Since then, with rare exceptions, the income tax has grown like Topsy, fueled in large part by the kinds of emergencies the Times worried about. As journalist David Van Edema put it: “The government, using Americans’ sense of patriotism and duty, [has] found new excuses to not only raise taxes, but widen the range of who would pay for them, and how.”
While critics will note that America was not a perfectly libertarian country before October 4, 1913 – slavery was certainly a blot on that particular escutcheon – it’s hard to explain to modern Americans that up until the early 1900s, Civil War aside, the federal government paid for itself with import duties and taxes on alcohol, tobacco and the like.
And along with the skinny government went skinny federal ambitions, and skinnier government control over the lives of Joe and Jane Citizen.
To someone whose entire frame of reference involves looking at pay stubs and seeing money siphoned off to pay for other peoples’ mortgage insurance and farm subsidies and pensions and goodness knows whatever other crap that generations of politicians felt was more important than my own plans for the money, it seems incredible. Almost incomprehensible. Few of us can imagine anything else.
Which is what makes it so diabolical.
And let us not forget 1943 and the advent of withholding.
I’ve often said the best way to foment revolution this country is to repeal withholding and force everyone to actually have to write a check for their income taxes every April 15th. If people actually had to sit down and write that check there’d be a lot less government around.
Most people pay much more in social security and medicare tax than they do income tax. I think that a big part of the reason why the GOP obsesses about the federal income tax is because it has influential contributors who pay a high marginal income tax rate.
The government is screwing over poor people every minute of every day, conservatives would do better in national elections if they payed attention to the problems of low wage workers.
PM, was your account hijacked by EmeryTheUSAHater?
Funny – for a country that bent over backwards to mark a speech (MLK Jr’s ‘I Have A Dream’) from fifty years ago earlier this year (a speech which by the way, most Lefty’s completely ignore the meaning and purpose of) there wasn’t much indication from the Democrat Dominated Media Culture that the 100th Anniversary of the income tax came and went.
You say you want a revolution? – Make people pay their taxes (income, SS, Medicare, funemployment, etc) like they do their gas and electric bill. If people can get incensed about a $2 charge to use an ATM, wait til they find out what Uncle Sam is charging to be their investment manager.
To what Nerdbert and Seflores said, hear, hear!
I was in private practice 10 years. My standing orders were: first checks go to the feds to keep me out of jail, then to employees to keep me in business, creditors next and me, last. There were plenty of times I had to grind my teeth to sign checks to the government knowing I wasn’t getting one until more clients paid up. I knew my tax bracket to the penny. If more people did, resistence would be much higher.
JPA, do you find some flaw in my reasoning?
I actually drafted, and then deleted, a second paragraph paragraph complaining that the worst thing about the income wasn’t its levels or even that it exists, but that it has perverse incentives.
I’ve heard people who consider themselves conservatives praise the idea of swapping the income tax for a VAT. A little thought should reveal that a VAT can be just as bad, in every way, as an income tax, and it probably will be.
I tend to agree with PM: the elites that constitute the Republican “establishment” are disconnected with economic reality for the country. Even a little populism could destroy Democratic messaging and make the GOP more competitive. The point being that both party’s establishment has done a great job structuring the system to benefit those in the elites.
Let’s say it costs $500k to train a doctor. In practice, a doctor can provide 30hrs/wk of labor or 40 hrs/wk of labor. We’d really like him to work 40 hrs/wk, because the return is better — it still only cost $500k to train him, no matter how much he works.
But with progressive taxation of income, the more he works, the less value each additional hour of labor returns to him.
Take a low skilled worker.making minimum wage. He only pays SS + medicare tax. his tax rate remains the same whether he works 30 or 40 hours each week. He is in a flat tax regime, not a progressive income tax regime.
This inequity is baked into the cake of a progressive income tax. By definition the people whose labor is of the highest value will be payed less the more they more they work.
Every proposal I’ve seen for a VAT includes a generous carve-out for people with a low income, so I don’t see how a VAT does anything more than rearrange the deck chairs on the Titanic.
… widen the range of who would pay for them, and how.”
Edema (and by proxy, Fund) got this one wrong. The government is narrowing the range of who pays for them.
Nerdbert:
I’ve often said the best way to foment revolution this country is to repeal withholding and force everyone to actually have to write a check for their income taxes every April 15th. If people actually had to sit down and write that check there’d be a lot less government around.
While I wholeheartedly agree with you in theory, in practice this would have a short term huge boost to the economy as those who weren’t thinking past next paycheck hit it big and started buying new cars, TVs and other toys. Then when the time came for them to drop a tax payment of several thousand dollars, they wouldn’t have nearly enough to pay it. We’d have multiple dozens of millions of people with outstanding tax liabilities, and no way to pay them. Sure, they could sell their toys, but..not likely. I’d conservatively put the ratio at greater than 50% of this country, that would spend themselves into the tax payment black hole.
Of course, that might also work to have a sea change at the next election that would make the 2010 congressional Tea Party take over look like a fart in a hurricane
Of course, that might also work to have a sea change at the next election that would make the 2010 congressional Tea Party take over look like a fart in a hurricane.
Hence my point about presenting the bill all at once in annual format, just like your property tax bill. Most folks don’t own their homes and don’t see it as it’s buried in their “mortgage payment” escrow payment — until they retire, own their own home, and get hit with the bill directly at which point they vote against the tax. Yes, most folks would spend the money, but when the time came to pay up they’d not have the money and seeing the chunk of change they had to come up with they’d freak.
Even just having to mail in quarterly returns is enough to turn most folks against the government. But forcing everyone to mail in Social Security, Medicare, and income taxes quarterly would be enough to force a major overhaul in government.
PM, the fact that you are implying that DemoncRats are more in tune and want to help the little guy than RepubliThugs are. All things beign equal, DemoncRats want to turn the little guy into a slave to the Goobernment, whereas RepubliThugs want little guys to fend for themselves. Thank you very much, but I prefer latter.
And, VAT instead of a Tax, not on top, unlike in Canadaeh. What’s wrong with that? Everybody pays.