Income taxes are not new—they were discussed on numerous occasions in the Bible, and that’s from a couple of thousand years ago. The current version of the U.S. income tax turned 100 years old today.
Are you having a birthday party with a cake and a bunch of candles? I kind of doubt it.
BloombergBusinessweeks’s writer Eric Chemi has an article on the 100th birthday and the tax rates at that time, and what they would be today, after adjusting for inflation.
Back in 1903, everyone with earnings paid Federal income taxes, even an income of just $1, unlike today when 47 percent of all filers paid zero Federal income taxes. If you earned from $1 to $20,000 in 1903, you paid a whopping 1 percent income tax rate. The maximum rate was 7 percent. You did not hit that level until earning $500,000 – in 1903.
Adjusting for inflation and assuming the same relative tax rates people earning from $1 to $463,826 annual income would pay just 1 percent of their income as Federal income taxes today. At the 7 percent tax rate, a person would have to earn almost $11.6 million – just to hit the 7 percent tax bracket. You probably never thought about tax rate envy, at least until now.
See the tables below published by BloombergBusinessweek for comparative taxes.
So why the massive increase in taxes? Expanded defense spending, Section 8 housing, free cell phones, medical insurance, food stamps, increasing interest on the debt, public transportation, subsidies for ethanol, wind, solar, education, the EPA, CFPB…. Yep, government has grown.
To read the entire article click http://www.businessweek.com/articles/2013-10-03/the-federal-income-tax-turns-100-dot-many-happy-returns?campaign_id=DN100313
I bet you would be having a party right now if we merely adopted the original rules and income tax schedules—even without adjusting for inflation.