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Today is Centennial of Federal Income Tax

At the Tax Foundation's Tax Policy Blog on Friday, Richard Morrison reminds us that today "marks the 100th anniversary of the ratification of the 16th Amendment." And as a press release from Americans for Tax Reform (ATR) points out, passage of the 16th Amendment "enabled the establishment of the U.S. federal income tax."

Morrison's post includes links to s USA op-ed that mentions how "tax burdens and distributions have changed dramatically" and to a Tax Foundation history of individual income tax rates from 1913 to 2013.

The ATR press release has a side-by-side comparison of the 1913 and 2013 income tax, including for example:

  • Top Tax Bracket -- 1913, 7%; 2013, 39.6%.
  • Total Tax Revenues (today's dollars) -- 1913, $16.6 billion; 2013, $2.7 trillion.
  • Total Pages in Tax Code -- 1913, 400 pages; 2013, 73,954 pages.

In a March 18, 2005 prepared statement for the President's Advisory Panel on Tax Reform, the National Taxpayers Union's Pete Sepp said:

"Since adoption of the 16th Amendment to the U.S. Constitution over 90 years ago, federal tax revenues of all kinds have increased by roughly 175,000 percent. Given this trend, it is understandable that many taxpayers believe they are still giving over far too much of their hard-earned money to the federal government. By most measurements, they will continue to do so – according to the Bush Administration’s FY 2006 budget, federal revenues are projected to consume a progressively larger share of the nation’s economic output (GDP), from 16.3 percent in 2004 to 17.7 percent in 2010."

Finally, researchers at the Library of Congress compiled both Internet and print resources and include this short overview:

"If, in the midst of sorting receipts and studying the latest changes in the US income tax laws, you suddenly wonder "What is the origin of this annual ritual in the weeks leading up to April 15th?" here are some places you can go for answers.

"The origin of the income tax on individuals is generally cited as the passage of the 16th Amendment, passed by Congress on July 2, 1909, and ratified February 3, 1913; however, its history actually goes back even further. During the Civil War Congress passed the Revenue Act of 1861 which included a tax on personal incomes to help pay war expenses. The tax was repealed ten years later. However, in 1894 Congress enacted a flat rate Federal income tax, which was ruled unconstitutional the following year by the U.S. Supreme Court because it was a direct tax not apportioned according to the population of each state. The 16th amendment, ratified in 1913, removed this objection by allowing the Federal government to tax the income of individuals without regard to the population of each State. For additional information on taxation in the United States, see the section on taxes on the web site of the U.S. Department of the Treasury."

At Townhall.com, blogger Heather Ginsberg quips about the tax brackets in the ATR press release, "Is it just me, or does this show something is a little off? Oh yeah, remember that part where liberals think the rich need to pay their fair share! Look at our top tax bracket, who on earth would have thought one hundred years ago we would be asking almost half of Americans to pay even more in taxes?"

Now, won't knowing this little of the history of the federal income tax make it easier to complete your tax return in April?


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