Get PJ Media on your Apple

Taxed Enough Already: A Brief History of U.S. Taxation

The power to tax is the power to destroy.

by
Larry Greenfield

Bio

April 15, 2013 - 10:12 am

As the American colonial economy grew, the British Crown imposed duties on molasses, rum, sugar, wine, newspapers, legal documents, licenses, and playing cards.

Even more taxes were then imposed on glass, lead, paper, paint, and tea, leading to the Boston Tea Party, resulting in the closing of the Eastern port and imposed British military command.

The American Revolutionary War cry went out: Taxation without representation is slavery!

The founders of the new United States limited federal taxing power. Early 19th century revenue was based on import tariffs and some internal taxes on distilled spirits, tobacco, refined sugar, auctioned property, corporate bonds, carriages, and slaves.

The War of 1812 brought the first sales taxes on gold, watches, jewelry, and silverware.

In 1817, Congress revoked most taxes, with tariffs on imported goods sufficient to run the government.

In 1862, the Civil War effort led to sales and excise taxes, and the nation’s first income tax — with a progressive rate of 3% for most earners. The “inheritance” tax also made its debut, and the commissioner of Internal Revenue was given the power to assess, levy, and collect taxes through seizure of property and income, and prosecution.

Congress eliminated the income tax in 1872. Revived in 1894, the U.S. Supreme Court decided the next year that the income tax was unconstitutional because it was not apportioned among the states in conformity with the Constitution.

In 1913, the 16th Amendment to the Constitution gave Congress legal authority to tax income of both individuals and corporations. The top marginal tax rate was 7% and the entire tax collected was $28 million.

By fiscal year 1918, collections hit the billion-dollar mark, rising to $5.4 billion by 1920.

The withholding tax on wages was introduced in 1943, and the war-time economy increased the number of taxpayers to 60 million and tax revenue to $43 billion by 1945.

President John F. Kennedy cut tax rates, and in 1962 delivered his famous speech promoting low taxes.

In 1981, President Ronald Reagan signed the largest tax cut in U.S. history, and in 1986 he brought the top tax rate on individual income down from 50% to 28%, the lowest it had been since 1916, sparking decades of economic productivity.

President George H. W. Bush, who had famously pledged “read my lips, no new taxes,” came to regret his 1990 budget deal with Democrats that included “tax revenue increases.”

President Bill Clinton cut capital gains taxes for individuals, and provided child tax credits and incentives for education.

In 2001, President George W. Bush saved taxpayers $1.3 trillion over ten years, cutting the top four tax rates (28% to 25%; 31% to 28%; 36% to 33%; and 39.6% to 35%) and creating a new low rate of 10%.

Then came the Affordable Care Act of 2010. Though a tax on individuals based solely on their decision not to buy health insurance is a direct tax on individuals disallowed by the U.S. Constitution, Chief Justice John Roberts controversially ruled that the new healthcare tax is indirect because not everyone will have to pay it.

Obamacare imposes taxes on investment income, medicare payroll taxes, individuals, employers, health insurers, medical device makers, drug companies, medical bills, special needs parents, health savings accounts withdrawals, indoor tanning services, charitable hospitals, and more.

The 2013 Congressional fiscal cliff deal resulted in a rise in payroll taxes to 6.2% (from 4.2% in 2012), hurting all working Americans. The top income tax rates also rose back to 39%.

And the 2013 Senate Democrat and Obama budgets propose roughly one trillion dollars in new taxes over ten years.

Bloated federal spending, a massive national debt, and unfunded liabilities for entitlement programs that Mr. Obama resists reforming promise to keep taxes high on current and future workers. Washington continues to resist a flat tax that would simplify the tax code.

We are taxed on accounts receivable, alcohol, art, birth, books, buildings, cars, clothes, computers, death, dining, education, energy, entertainment, food, fuel, health care, hotel stays, active and passive income, luxuries, marriages, Medicare, real property, recreation, social security, sales, transportation, travel, watercraft, wells, and workmen’s compensation.

Add in local, city, county, state, and federal taxes, and a range of assessments, enhancements, fees, fines, licenses, permits, and tolls.

The massive estate tax crushes family farms and small businesses; that’s taxation even without respiration. Compliance costs for all taxpayers result in lost national productivity.

The U.S. corporate tax rate is the highest among Western economies, stunting economic growth and job creation.

Proposals abound for additional new taxes on carbon emissions, internet sales, vehicle miles driven, land, wealth, savings, financial transactions, and for exit taxes for those departing high tax states and the U.S. for lower tax havens.

The UN wants to impose a global poverty tax on citizens.

Cyprus now grabs savings deposits from account holders. France has raised the top income tax rate to 75%, causing an exodus of earners.

Government avarice has no limits. Former U.S. Chief Justice John Marshall once expressed the fundamental axiom that the power to tax involves the power to destroy. Our greatest economist, Milton Friedman, taught that what we tax, we get less of. He noted that we now have a system that increasingly taxes work, and subsidizes not working.

U.S. Senator Marco Rubio (R-FL) repeats a truism: We need not more taxes, but more taxpayers.

The Tea Party will be back.

Larry Greenfield is a fellow in American studies at the Claremont Institute, and senior fellow of the American Freedom Alliance.

Comments are closed.

All Comments   (9)
All Comments   (9)
Sort: Newest Oldest Top Rated
I don't mind the 47% who do not pay taxes. What really chaps my a$$ is that I have to feed the Ba$tards with food stamps and welfare when there is not one word in the Constitution authorizing the Federal Government to perform any Charity or Welfare of any type to people or other nations...
Maybe it is time for the TPP to file a lawsuit against the Federal Government for Involuntary Servitude (Slavery) and push it to the SCOTUS and see what the Stooges have to say about it.... Anybody interested in OUR EQUALITY??
1 year ago
1 year ago Link To Comment
"Congress eliminated the income tax in 1872. Revived in 1894, the U.S. Supreme Court decided the next year that the income tax was unconstitutional because it was not apportioned among the states in conformity with the Constitution."

That is not correct.
A tax on rent and other income from properties and a tax on interest from state and municipal securities and a tax on dividends derived from such was declared a direct tax and so had to be apportioned, but the basic income tax on ordinary wages was not declared unconstitutional.
1 year ago
1 year ago Link To Comment
I think that limiting the size of the federal government is the only way out of this mess. Limit its size to 10% of GDP with a minimum of 5% of GDP to go to the military. Any variation would be by supermajority 2/3 + 2/3 and only last one year. Target year 2150 as the 10% year and we'd get there gradually. The States would reclaim their proper place in the political scheme of things.

That and have a one-year sunshine amendment to the constitution stating that all bills (except emergency supermajority bills) would have to wait one year after introduction before the Congress could vote on them.
1 year ago
1 year ago Link To Comment
Mark,
My mom when she was alive used to tell me,what it was like after the depression hit 1929.Her own dad said;Goverment told people that taxes would never go above a certain small percentage.So basically they've been decieve us for ages now.Why can't anyone be truthful with us?My brother&his wife have 4 girls&they don't know how they are going to pay taxes in 2013.Liz Obama doesn't care that as a nation were crumbling.
1 year ago
1 year ago Link To Comment
so having the social security reduction in rate, going back to the proper rate to fund social security is bad, but raising tax rate back to prior rate of 39% is good.

And we are to believe those that spout this nonsense as serious??????????
1 year ago
1 year ago Link To Comment
Why bother working?

Its a lot easier to sit on your butt and claim disability.
1 year ago
1 year ago Link To Comment
On Drudge, there is a blurb about a new poll wherein a majority think that their taxes are "fair". The fairness of the taxes paid can be viewed in different ways. First, is it "fair" relative to what others pay. Is it fair considering the cost of bloated government spending. Is it fair when hard working peoples' taxes are used to subsidize a large group of people who have no intent to ever work or be responsible for themselves.

The word "fair" is wishy-washy in that it is almost meaningless to describe anything but emotions devoid of facts. But, that is what our Leftist government likes, pure emotion with no analytical thinking, no response based on knowledge of facts. The poll is nothing but meaningless garbage at best.

1 year ago
1 year ago Link To Comment
Considering 47% of the adults of working age pay no income tax, I can see where they would think their taxes (0%) are fair. It wouldn't take much to raise that 47% to 55%.... just ask follywood.
1 year ago
1 year ago Link To Comment
View All

One Trackback to “Taxed Enough Already: A Brief History of U.S. Taxation”