A Brief History
On February 3, 1913, a dark day indeed for Americans, the 16th Amendment to the Constitution of the United States was adopted, making it legal to institute an income tax!
Digging Deeper
Digging deeper, we find that income taxes did not meet constitutional requirements for the federal government to levy such taxes and an amendment was required to allow congress to pass laws levying such taxes.
Prior to implementation of the income tax, the main sources of revenue for the United States government were tariffs and excise taxes. Since those taxes raised prices for everyone, they proportionately hurt poorer people more than wealthier people.
The United States did implement a short-term income tax to pay for the Civil War, and it was effective at raising the required revenue. It did, however, have a disproportionate high impact on highly industrialized states and low impact on more rural states.
A graduated income tax is one where the more money you make, the higher the rate of taxes you pay, which would put more of the tax burden on the wealthy. This concept was popular among the masses at the time. Of course, many wealthy people disagreed!
The income tax started out pretty simple but has been getting more complicated and convoluted ever since! All sorts of special interest tax deductions and tax shelters enabled wealthy people, who could afford the best accountants, to work their money to minimize their tax burden to the point where some wealthy people paid either no tax at all or at least an effective rate as low as people of more modest means, which became a major issue during the 2012 presidential race when it was revealed candidate Mitt Romney only paid at the tax rate that a common secretary would pay! His refusal to release more tax records led to speculation that for some years he paid no tax at all on millions of dollars of income.
Corporations also became liable to pay income taxes on the profit portion of their income, and again, over the years convoluted loopholes and laws have enabled companies to do a variety of fiscal gymnastics to minimize their tax liability, even to the point of moving out of the country! Recently, some corporations with profits in the billions of dollars have managed to pay no tax at all in some years, sparking outrage and cries for reform. Not surprisingly, reform seems far away at this time!
Income tax law has been used as a weapon by federal prosecutors to target people believed to be criminals who law enforcement just cannot catch in the act. Charging drug dealers and other criminals with income tax violations has been a backdoor way of convicting these alleged criminals, although many people think such tax enforcement is arbitrary and used unevenly for political purposes. A famous such use of the law was the conviction of notorious gangster Al Capone, whose thefts, murders and selling of illegal liquor could never be proven, but went to Alcatraz for tax evasion!
The bizarre part of this history is that politicians in the Republican party, including President W.H. Taft, were strong advocates of the income tax, something today’s Republicans can hardly be accused of!
Question for students (and subscribers): Do you support the existence of an income tax? Please let us know in the comments section below this article.
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Historical Evidence
For more information, see…
Ketcham, Earle Hoyt. The Sixteenth Amendment. Gale, Making of Modern Law, 2010.
Marchi, Daniel H. This Book Places An Indictment On The Federal Government and 16th Amendment! AuthorHouse, 2012.
<span class="dsq-postid" data-dsqidentifier="1158 http://www.crackedhistory.com/?p=1158">53 Comments
I find the current income tax system in serious need of reform. The uneven burden placed on different groups of society is unfair and acts as a disincentive to work hard for some groups of individuals.
I think the income tax system we have today needs changed.
We should do away with all taxes and the government shouldn’t have as much control as they do now.
It is crazy that Romney could get away with avoiding taxes! I agree with other comments that the tax system needs to be changed. In Tennessee, I think, they do not pay income tax or property tax; they just have higher sales tax. I think that is an interesting idea.
I’m not a fan of the current tax system. There are too many loopholes and too many things that people don’t know about that can be written off on your taxes. The tax system needs to be reevaluated by someone who isn’t in the higher tax brackets so that way everyone is getting their fair share of tax payments. We also need to make it the same across the United States because in many states the taxes differ and what is taxed also differs and this can be seen as unfair and cause people to find ways to cheat the system, which is being done by many of the rich people in the nation.
It’s amazing to me that such a seemingly good system of taxation could go so incredibly wrong. We need some sort of tax reform if the extremely wealthy are finding loopholes to avoid taxes.
The income tax could be a good idea, but there are aspects of it that need to be fixed. I think wealthier people should be taxed at a higher rate, because taxes put more of a burden on the poor. If the wealthier were taxed a little more, they would still be wealthy, but if poor people are taxed more, it could make them less able to survive. It’s also crazy that so many people have been able to avoid paying taxes.
I don’t like the “graduated” tax idea at all as described above because one if it wasn’t for the rich people there would be no jobs.
I believe that the income tax could be a good idea for our country if the bugs were fixed. The idea of the more you make the more you pay. It gives the poor a break and makes the people who can actually afford taxes pay more. Taxes can frustrate a lot of people and I see why this outraged many, mainly the wealthy, but taxes keep our country from going bankrupt and necessary for our country to function.
I like the income tax idea but I also don’t like it. I like it because it would give the poor a little bit more money to live off off. However, I don’t like the idea of it because there are too many things wrong with it that needs to be fixed.
I believe that the more wealthy a person is, the more that person should be taxed. Giving the same amount of taxes to the wealthy and the poor could result in the poor becoming even more broke than they already are. Making the poor even less wealthier means that they will continue to struggle and now they may struggle even more. Charging the wealthier a little higher tax fees will result in making them less wealthy, but they will still be considered wealthy and they would still have way more money than the poor.
I agree with income taxes. The wealthier a person, the more they should pay. It would not be fair for someone poor to have to pay as much as someone rich, although I can understand why that would frustrate the wealthier people.
I think that the income tax system is a good thing. I think it is obvious that the more a person makes, the more they should be taxed. It would not make sense for a poor person to pay the same as a wealthy person or vice versa. It is understandable however that the wealthier population would be opposed to paying drastically higher amounts than the general public.
I think if people have a lot of money they should have higher taxes than those who are barely getting by. I am sure the wealthy get upset about having to pay more but if it is by income percentage then it should balance out.
The income tax system should be fixed. Fixed meaning it should be common rate across all social classes. The wealthy are still going to be paying a whole hell of a lot more then the lower class just based on the amount of money they make. But that wont happen because we depend on the wealthy level income tax so much in the world we live in.
I thought it was really interesting how opinions and the effects of income tax have changed over the years. And, how the debate still continues today.
The graduated tax income is a good thing. I believe the wealthier a person is the higher taxes they should pay.
I understand that wealthier people would get upset with having to pay more income taxes, but I think it’s only fair. A dollar means more to a poor person who is struggling to get by.
I believe that the wealthier people should be taxed more but then again should they be punished for working hard in life and becoming successful?
The income tax system is complicated in my opinion.. it has its pros and cons. It would make sense for wealthier people to pay more, but what if they worked hard to get where they are? Versus a poor person who was too lazy to have a successful life, then that’s not fair.
I think income tax is a good idea, but i do not completely agree that wealthier should pay more. I think it should be more of equal between every person. But it is not a topic i have a firm idea or grasp of. An interesting article though.
I think that the super rich should be taxed more but not so much that it takes away from there hard work this way they can help up the less fortunate
Interesting to see how people always find a way around the system. Also that the Republicans were strong advocates for it at one time
I think its funny how some people get around paying taxes. It is an easy way for our our government to make revenue. Therefore it serves its purpose.
I think the income tax is a good idea, and one that serves an important role. But the implementation and the rates at which people are taxed is something that I disagree with.
Some people should just keep quiet. Here is a what someone wrote in the comments “It would not be fair for someone poor to have to pay as much as someone rich”. What utter nonsense. It’s a percentage of what you make. For example, let’s say that the tax rate was the same for all…10%. If it’s good enough for God then it’s good enough for the federal government. So, a poor person makes $10,000/year compared to a rich person making $1,000,000/year. The poor person’s tax would be $1000 and the rich person’s tax would be $100,000. How is that not fair? The poor person is paying the same percentage as the rich person. People keep whining and crying that it’s not fair and that the tax system needs to be graduated. The same tax rate is the “fairest” tax system because we are all paying the same rate. Actually, the real problem is that we’ve allowed the government to become so large that they need more and more money to run itself. At what point does the American people declare that the government has taken enough money? At some point, the government may decide that it needs ALL of your income to stay afloat. Then what’ll you do? That’s why the 16th Amendment needs to be repealed, the government has no right to your income.
OMG!!!!! I so agree with this post..The graduated tax is for the birds; I think people need to wake up before it’s too late. Love this POST!!!!! I agree everyone should pay the same percentage as you described. I really hope you read this.
i think that this is very wrong that they are making this addition. i don’t feel that they should tax us on our income because we work hard to earn our money.
I think that income taxes serves its purpose. But I do feel that all people should be taxed the same amount therefore “making it fair.” Just because you are poor should not mean your getting the easy way out in paying less taxes.
Income tax needs to be proportionately paid by all classes, whether rich or poor. Rich people can find many loopholes to get out of paying so much, but poorer Americans must pay their share. This is not fair to all people. Taxation without representation is starting to become a problem again and this was part of the Revolutionary War.
I think taxes should be tailored to how much money you make with a limit as to how much or little people can be taxed in general. The poor should not have to skip a meal to pay taxes and the rich can afford to give a little more that would be the equivalent of what the poor is giving.
I don’t think that wealthy people should get paid higher taxes because they actually work hard for that money and I think everyone should be treated equally and have to paid the same amount of taxes. I don’t agree with income tax.
Agreed!
Everyone should pay the same amount of taxes, it’s not fair to those who have to pay more.
I believe that it only makers sense everyone should pay the same amount of taxes. People cannot help that they make more money due to their job.
With the large amount of debt that the U.S. is currently in, taxes are a must. I do however believe that tax amounts should be based on income.
I’m just going to be brutally honest when I say that I cannot understand the mindset of Mitt Romney, thinking that “it’s okay” to hoard all of the money in the world, and ran for a presidential election in the attempt to give a tax cut to the rich and then claimed in a speech that it was a rumor. How could anyone fail to consider that 47% of America is nearly half the country, and that the vast majority of people make up the middle class, which with the economy is nearing the lower class? I’m glad the devil incarnate wasn’t elected, and what a whiny baby he was when he lost. It’s ridiculous to permit an income tax to Americans who are struggling with making money in a job, especially for those with children, and let’s not forget most people with jobs HAVE children. Children are expensive, as parents have to worry about being able to afford their basic needs, college education, heath care, and anything else that may be regarded as important, not to mention many parents want to the satisfy the recreational desires of their children. I say that there should be NO income tax for the lower and middle classes, but rather for the upper class!
Devil incarnate? Are you for real?
Taxes are a must because of the financial situation that the U.S. is in, but the taxes should be based on income. The taxes now are only hurting the poor and not even putting a dent in the wealthy people’s pockets.
The idea of our country is the best get the rewards. I believe our system is broken which is why Mitt was able to find loopholes for taxes. He is not a money hoarder. He works extremely hard for it and is an intelligent guy (you have to be to run for any election). Our system is broken and rich people should pay fair taxes, but the rich are usually rich for a reason and also employ other people and give them the opportunity to learn and become rich. Greed is an issue obviously, but it’s part of the economic system we have chosen since day 1.
Taxes should really only affect the extremely wealthy because they have the money to pay for it. Giving ridiculous taxes to the poor is like blowing up thier house and having them live on the streets.
While the idea of taxing the wealthy makes more sense simply on the basis that they have more money to give, we should reconsider how much and who we tax. Perhaps reverting back to the older ways of taxing such as tariff and excise taxes. Though it would hurt the poor in some regard, it is more fair than simply taxing one group.
I feel that taxes are a good thing to do because it helps the US. financially, however I don’t agree with how much we are taxing because it is hurting many Americans who are not in the wealthy class more than it is helping.
Taxes are a necessary evil in America, the problem is HOW we tax people. If the rich can afford to pay more, they should pay more rather than having poor people pay a huge amount of tax that leaves them with only enough money to survive.
Taxing the poor with equal, or more, amounts than you are taxing the rich is like kicking a friend while they are down. Many people struggle with poverty, and debt, taxing them for more than half their income is just digging them a deeper hole.
Taxes should be equal in America, whether you are rich or poor.. There are hard working people in the world and just because they make a flowing income for their family doesn’t mean they should have to pay more taxes.. Everyone should be treated equal. Maybe some Americans need to get a better education and make some money for themselves and not just sit around..
Thanks corporate America. The wealth in America is so unequal and I really think the rich should get taxed more because they can live with it, while poor Americans live paycheck to paycheck so they should get some tax relief.
The rich should be taxed more. Even though our country denies it we were founded on christian principles. Jesus would of taken more money from the rich to give to the poor.
This is why I did not vote for Romney. The rich look out for the rich. They could care less about the middle and lower classes. America needs to get its tax laws in order so that we can fix our deficit and even out the playing field.
I don’t think it is fair to take more from the rich even though they have because it should be EQUAL. It is not the rich peoples fault that they worked hard for their money or that their family before them worked hard for their money. Yes, I think some people should give more to other things such as charities but only on their terms.
Tax are needed to pay for the commons. Without them we would have no infrastructure. So I do not believe that taxes are necessarily a bad thing. I do believe that the tax code is too convoluted and should be fixed. I also think that the wealthy should pay for their share. The middle class seems to bear the burden of paying for things in America.
Al Capone. One of the most notorious thugs ever to run the streets of our great nation. It is amazing to me that other crimes of his were not proven yet he was convicted for tax evasion. The government is very effective at enforcing the position that taxes play in our country with each passing year. I like to think income tax is a subject that many different people clash on but nothing will ever change to drastically.
I agree that taxes are a good thing and I think it was good for taxes to help pay for the civil war but I do not like that rich people have these ways to avoid paying taxes and paying less of taxes for what they make. I believe the more money you make the more you should pay in taxes.