Progressive Income Tax. Tool of the Welfare State?
At the Investor's Business Daily website this evening, Terry Jones provides a short history of the progressive income tax, reminding us the nation thrived during the nation's first 124 years of the nation's history when there was no income tax. The progressive income tax will be 102 years old on October 3, 2015.
Jackson next pointed to this January 2015 Gallup poll, which showed:
"According to the Jan. 5-8 poll, 63% of Americans this year are dissatisfied with the amount Americans pay in taxes. In a follow-up question, most of this group -- equivalent to 46% of all Americans -- say they would like to see Americans pay less in taxes. Hardly any -- 4% -- would prefer they pay more. An additional 13% are dissatisfied with what Americans pay in taxes, but aren't specific about how it should change.
"The 46% who currently want taxes decreased is notably higher than what Gallup has found since 2012. It is only exceeded by the 51% recorded in mid-January 2003, a week after President George W. Bush proposed extending certain 2001 tax cuts and implementing new ones, measures that ultimately became known as the 2003 Bush tax cuts. Gallup did not ask this satisfaction question about taxes from 2009-2011."
Gallup also points out that "Democrats' views (are) at odds with Independents and Republicans," saying:
"While only 5% of Democrats believe Americans' taxes should be increased, the largest segment, 47%, is satisfied with what Americans pay, while about a third, 31%, think they should pay less. In contrast, the largest segment of independents (46%) and a robust majority of Republicans (61%) are dissatisfied and believe taxes should be decreased."
Jackson provides a brief history of the progressive or graduated income tax. He points out that "Article I, Section 2 of the Constitution later forbade an income tax per se and required only a uniform tax to be applied "among the several states" based on their populations." He also includes Chief Justice's 1819 admonition, "'The power to tax, . . . involves the power to destroy."
He also reminds us of the role that Karl Marx, writing:
"Several decades later, an obscure German political philosopher named Karl Marx showed he understood what Marshall meant. In 1848, he made a progressive tax on income one of his 10 essentials for fomenting communist revolution. It would later became a key part of the socialist and progressive movements in the U.S."
Jackson then touches all the historical data points until President Wilson's signing of the Revenue Act on October 3, 1913 before writing:
"When the tax was first enacted, proponents promised that it would remain low and that only a few wealthy people would have to deal with it. And at first, that was true, with the wealthy paying a top rate of just 7%. The tax form itself was a mere two pages, and the entire tax code was 400 pages. Some of the new revenue, moreover, provided relief in the form of lower tariffs.
"In retrospect, however, 1913 can be seen as the year the camel first poked its nose under the tent. In just four years, the top income-tax rate soared above 70%, and rules, exceptions, exemptions and loopholes began to multiply.
"'The worst thing,' economist Dan Mitchell said on the occasion of the income tax's 100th birthday in 2013, 'is that the income tax enabled the modern welfare state.' And indeed, the tax became a gusher of revenue, taking money from the private sector and directing it at a relentlessly growing federal government."