The Flat Tax Is Not Flat and the FairTax Is Not Fair

Ludwig von Mises Institute ^ | April 3, 2009 | Laurence M. Vance

[all the best]

Our current income tax system, inaugurated in 1913 with the adoption of the 16th Amendment, began with a 1 percent tax on taxable income above $3,000 ($4,000 for married couples). A series of surcharges of up to 6 percent were applied to higher incomes, with the maximum rate being 7 percent on taxable income over $500,000. Less than 0.5 percent of the population ended up paying income tax.

From these humble beginnings, the income tax soon blossomed, thanks to World War I, into a tax with a minimum rate that doubled and a maximum rate that reached 77 percent on income of over $1 million. The rates did not fall significantly until 1925. In the middle of the Great Depression, the top rate rose to 79 percent. During World War II, the tax rate for those in the highest income bracket reached an astounding 94 percent. The Internal Revenue Code of 1954 resulted in 24 brackets with rates ranging from 20 to 91 percent. The top rate remained at 91 percent until 1964. Under the Economic Recovery Tax Act of 1981 and the Tax Reform Act of 1986, the top marginal tax rates were lowered to 50 and 28 percent respectively. The Economic Growth and Tax Relief Reconciliation Act of 2001 established the current tax brackets of 10, 15, 25, 28, 33, and 35 percent.

There is no question that the federal tax code is too long, too complex, too intrusive, too confusing, and too inequitable. The members of Congress responsible for the tax code would not even disagree. As a consequence, cries for tax reform can always be heard from every quarter — and especially around election time. There are even organizations dedicated solely to tax reform, such as Americans for Tax Reform, Reform AMT, Citizens for Tax Justice,

[SuziQ]

Bump for later reading.

[Smokin' Joe]

It doesn't matter so much how the government collects the money, what matters is how they piss it away.

You can't fill a bucket with no bottom, no matter how much you pour in.

[gkarlin]

To help gain on the momentum of the Tea Party spirit and the Fair Tax, or just to check it out if you are curious, please check out my friend Marilyn Rickert’s website - http://www.fairtaxnation.com.