History of U.S. Income Tax

Although the United States was largely founded on the displeasures the colony had with the English king, specifically “taxation without representation” and mistreatment of our citizens, our country has evolved to institute a number of taxes to fund the social policies, wars, and other roles of government.   

It was President Abraham Lincoln that initiated income taxes to pay for the civil war through the Revenue Act of 1861. Without it, America may have become two separate countries, with slavery lasting many more generations. In 1913 the 16th Amendment to the Constitution was ratified by 42 states, more than the required number, giving Congress the power to collect income tax. 

New taxes were imposed to fund Americas involvement in WWI. After which the Great Depression hit, and the United States found itself in the most severe economic turmoil in our history. Unemployment raged and reached almost 25% of the workforce. New income taxes greatly helped the measures which pulled America out of ruin, by funding President Roosevelt’s New Deal programs like the Tennessee Valley Authority and the Works Progress Administration that created over 8 million jobs. Social Security was also instituted, as the United States was one of the only industrialized countries to not have some form of unemployment insurance.    

The next big jump in income taxes went to fund WWII and the defeat of Axis powers. America’s military forces were weak, small, and untrained. The money and sacrifices were required to win the war. The world pulled together to overcome tyranny at great cost. The global community took a stand to not allow a repeat of WWI and WWII. Since then, our military has been strong and one of the best funded forces in the world.   

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Nobody Likes Paying Taxes. 

Then again, nobody like paying for groceries, gas, airline tickets, medical services, etc. The reality is that good and services cost money. We all like to have law enforcement and fire trucks arrive when we call for emergency services. We all like the benefits of roads, bridges, and trains. Americans expect forest fires to be put out and aid given during natural disasters. We want justice to be served when we become the victim of a crime and the perpetrator locked up in a jail or prison. Without government funding, we would not have lasers, phones, the Internet, or be exploring space. We like our food and medicines tested for authenticity and safety. Then there are the soldiers that protect our borders, freedoms, and interests by fighting overseas so we don’t suffer with war on our soil. There are costs to being a country. America, although fervent in independence, is more than just a collection of individuals. We are a nation. We invest in the future in a collective way, which results in far greater accomplishments.

Relativity of Taxes 

So overall, how much taxes do we pay? Compared to the past 100 years, Americans are paying low relative income taxes nowadays.   

Additionally, the U.S. tax burden is low relative to other countries.

Overall, taxes are not fun. When we spend money at the store, we get an immediate and tangible benefit. When we pay taxes, they go towards the many thing we expect to be in place, but aren’t directly and immediately apparent in our lives. There is a disconnect, but that does not devalue the purpose. When we look at the history and numbers, Americans have kept pressure on taxes pretty well. There have been spikes, but the very document that allows for Income tax also grants freedoms to the people to scrutinize and elect representatives that control tax rates and how they are spent.    

Image source: 

• https://en.wikipedia.org/wiki/Sixteenth_Amendment_to_the_United_States_Constitution 
• http://stats.oecd.org/Index.aspx?DataSetCode=REV 
• https://www.interestingshit.com/history/a-history-of-income-taxe-in-the-united-states/