Posted on 04/15/2024 8:54:52 AM PDT by zeugma
In 1913 the 16th Amendment to the U.S. Constitution was ratified. It was a fairly short amendment, as such things go, weighing in at a whopping 30 words. It reads 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 of enumeration.
It was a simple little thing, with rather large consequences for the republic. Prior to the income tax being instituted, the United States government managed to fund itself with various excise taxes, and duties on imports. Afterwards, such taxes pale into insignificance to the revenue generated by the income tax.
Those of us who actually pay taxes are familiar with the 1040 form. It was way back in 1913 that the IRS (Infernal Revenue Service) unvelied this form. The modern form (PDF) is a two page document that requires an instruction manual that is 104 pages long. This does not include all the ancillary schedule forms and their associated instructions.
The 1913 form (PDF) was actually longer, being three pages in length, however the instructions were printed on a single page of paper.
Back in 1913, there were 6 tax brackets.Those making under $20,000 per year paid no tax. According to this inflation calculator, $20,000 in 1913 was equivalent to $580,816.16 in 2022. This first $20k was subtracted from your income so even if you made $30,000, you were only taxed on the last $10,000 of it. The rate was a whopping 1%. So, let's take that hypothetical person who made $30,000 in 1913. He would have paid $100 in taxes on it. If you run that through the above inflation calculator, you'll see that it would be equivalent to $2,515.06 today. Well, that sounds like a lot of money until you consider that what that really means is that in today's dollars, someone would have to make $754,518.18 per year to pay that $2,515.06 in income tax.
How do you like them apples folks?
I'd love if someone could put together a PHP or Python script that I could host on my website that would let people input their own numbers, and compare to what they actually pay today. I know that I would MUCH prefer being able to pay the rates specified in this form, even with the inflation that has masively eroded the value of the dollar.
“Well, that sounds like a lot of money until you consider that what that really means is that in today’s dollars, someone would have to make $754,518.18 per year to pay that $2,515.06 in income tax.”
I don’t understand that statement; doesn’t sound right.
A person I know pays a lot more than $2,515.06 in income taxes on a lot less income than $754,000.
Excellent post. FReepers here take note— 1913 is also the year that the Federal Reserve Bank (a Private Bank then and now, for bankers to bank with each other and “guide” the economy. Something they know very little about and have dutifully screwed up many time. Jekyll Island 1913 Senator Aldrich (Rockefeller’s man),, and they got this “chartered” to them by Congress (giving up Congress’s Constitutional responsibility to manage US Currency!).
Income Tax, and Federal Reserve Bank- the same year and then hand in hand ever since bringing our American Republic down every single time through 2 World Wars and the Cold War and several “recessions” following the Great Depression which they caused right after forming JP Morgan’s club. This is the reality. And don’t forget Bretton Woods, after WWII. The very last people one would ask for business solutions to maintain the great wealth of the USA, created by our Citizens.
I concur.
The power of the Federal government to borrow money in concert with the power of the Federal Reserve to Create money out of whole cloth exceeds the taxing power of the Internal Revenue Service by far.
As long as foreign entities hold US Dollars in reserve the US government's deficit spending allows the US Government to in essence tax the entire world.
I can not imagine that any country in the world is not paying tribute to the Empire of the United States.
The difference in the value of the money from then to now— that is what is being stated. That is to say- inflation since 1913 has changed the valuation of money earned (net income) as well as the value of the tax that must be paid on it.
Of course there has never again been a 1% tax on any net income since 1913. 100$ paid against the net income allowed vs 30K a year income in 1913.... is increased to 2515.06 on what would be income of $754,518.18 if it was the income of today, assuredly NOT taxed at 1%, that is for certain. It is an illustration of the absurd inflation (deflation in what money can buy) which has developed- involving the actual income tax system put in place and all the changes to it since that time.
For example, do any here know that Income Withholding was supposed to STOP after the end of WWII (which instituted it)? Congress NEVER did rescind the withholding— they continue to get the money up front from employers and businesses. No one directly feels this- except employers- and the stupid public thinks it’s great to get a “refund”.
Good questions jeffersondem. Jefferson would have certainly raised hell about this- much as he tried against Hamilton’s National Bank run by stockjobbers holding farmers for ransom in the money marketplace. The middlemen rule... they think.
Until they stop paying it. Consider that possibility, and it is not impossible for it to happen. Chi-Coms seeking to take over reserve currency and succeeding at least in some countries.
The whole thing has gotten crazy.
Last year (before I retired), my personal and business tax forms totaled almost 120 pages!
This year (after retirement), I’m down to slightly over 50 pages. Zero income tax this year, only a little self-employment tax (SS and MCare).
yeah. i’d say they’ve been stealing us blind for more than a century: in both our time and money.
that thing turned the gov’t into the mob, and us into slaves. the worse thing is that thing has no limits whatsoever. the Founder’s would have puked on hearing that language.
It was always a fact, given the nature of the Progressives who pushed for the national income tax, that higher rates and more complex rules, along with more deductions, exclusions, exemptions and credits would come along in time. The original was just an introduction intended to get folks used to and accepting of the income tax. Everything the Progressive do is always stealth, intended to broaden and deepen over time.
The Federal Reserve only acquired control of the currency and the economy after Nixon took the US off the Bretton Woods gold exchange mechanism in 1971. With no exchange rate to control inflation and set the value of the currency, inflation took off and the only way to restore value of the currency was raising interest rates, which reduced the ratio of currency to goods.
That's how Greenspan and the Fed acquired control of the US economy and have run it mainly for the profit of the banks and investment houses ever since.
In 1913, making $30,000 of income would require you to pay $100 in taxes. Adjusting over 25 times for the currency devaluation we call inflation, that is the 2024 equivalent of someone making $754,518.18 paying $2,515.06 in tax. Someone making that much today will pay a lot more in taxes.
Zero income tax this year
Don’t think those 40K new tax suckers won’t notice that!
Back in the 90s, a group started legal proceedings challenging the idea that the 16th amendment was legally passed. Then everything about it went dark. Anybody ever hear what happened?
Back when Dollar was worth a Dollar, and 4 Cents.
Friedman had the right idea: Go to a proportional tax. Everyone pays 17% (Friedman’s number) of gross income. No deductions. The complete tax form could be on a post card. Indeed, for domestic income, you wouldn’t even have to file a return as you could have anyone paying someone an income pay the tax directly to the IRS. Removing all deductions means the reallocation impact of income taxes would be removed.
The current tax code is so complex, even the IRS doesn’t give the same answers to the tax owed for certain types of income. I called the IRS helpline twice for an answer to a question and got two different answers. As a result, I always ask for the person’s name if asking a question.
He’s saying that IF the 1913 rates AND brackets, applied, but adjusting for inflation, that someone making 750 K would pay 2.5K in taxes. Not complicated.
There are dozens of arguments that the amendment was not legally passed. One being that Ohio is not really a State.
You may as well argue with the Supreme Court’s decision that a tomato is vegetable, even though it’s a fruit. Nix v. Heden (1893) 149 U.S. 304.
“Friedman had the right idea: Go to a proportional tax. Everyone pays 17%”
Flat tax
Our government is awash in tax dollars. They can spend a trillion for covid handouts in a blink of an eye and not think anything of it. We can send Ukraine 80 billon and it's not even worth accounting for how it's spent. We should go to a 10% flat tax.
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