Not to drag everybody down on Super Sunday, but today also marks another occasion: The 100th anniversary of the implementation of the U.S. federal income tax:
On February 3rd, 1913, one of the two most historic events in US history took place: the ratification of the 16th amendment, which established Congress’ right to impose a Federal income tax on Americans, and overturned Article I, Section 9 of the US Constitution which explicitly prohibited a general income tax. The amendment was brief and to the point, and read as follows: “The Congress shall have power to lay and collect taxes on incomes, from whatever source derived, without apportionment among the several States, and without regard to any census or enumeration.” And with that, the US Federal Income Tax was born and has been with us for precisely 100 years.
Much more at Zero Hedge.
It’s hard to imagine that, for many years, this country was run on very limited funds. Up until the early 1800s, the government was run purely on internal sales taxes and revenue from a gigantic powdered wig closeout sale. Then, in 1817, the government got rid of internal taxes and functioned completely on tariffs on imported goods.
Can you imagine running the bloated monster of a federal government we have today solely on the four percent we’d get from taxes imposed on imports of running shoes and plastic novelty poop?
During the Civil War the “Revenue Act” was passed to raise money for the war, but that was repealed within a decade. But I imagine by then the sharks had already had a taste of that blood, so the income tax was reinstated in 1913:
The incomes of couples exceeding $4,000, as well as those of single persons earning $3,000 or more, were subject to a one percent federal tax. Further, the measure provided a progressive tax structure, meaning that high income earners were required to pay at higher rates.
It would require only a few years for the federal income tax to become the chief source of income for the government, far outdistancing tariff revenues.
By the way, here’s the alternate headline for this post: “U.S. Federal Income Tax Celebrates 100th Anniversary; Willie Nelson and Wesley Snipes Refuse to Buy it a Gift”
A little more info below. Click the picture to enlarge. Note in particular that in 1913 the tax code was 170 pages long as opposed to about 20,000 pages today: