Yesterday I got an email for the President's birthday inviting me to sign an e-card (and no doubt asking for contributions, too.) The subject line, "Big Birthday," could have been about another landmark: Today, August 5, the Federal income tax turned 151 years old.
Now that's a big birthday. Bring out the balloons and party hats.
I can hear people saying, "Is this guy crazy? Doesn't he pay taxes? Who likes giving up a big chunk of money?"
Yes, I pay my taxes, and there are lots of other bills on the family table. Among other things I'm a small business owner, and our ongoing "invisible recession" has taken a toll on my income. Under the circumstances I can't say I like paying taxes. Or, more precisely, I don't enjoy the process. But then I think about what it would cost us, financially and otherwise, not to have the Federal income tax.
It could cost seniors $30,000, $40,000 or more to buy health insurance, for example -- that is, if they could afford it at all. And what would it cost to use the public highways if they'd been built for profit -- $500 per year? $5,000? Then there are those things the private sector wouldn't bother with at all, like disease prevention. I'd guess we'd just get sick more often.
When I think about that I become downright grateful. So Happy 151st Birthday, Federal income tax! May you have many more to come.
Our Little Bundle of Joy
It's a tax! President Abraham Lincoln and the Congress of the United States are pleased to announce the arrival of the Federal income tax. Name: The Revenue Act of 1861. Date of birth: August 5, 1861. Place of birth: Washington DC.
1861: The Civil War was straining the Federal government's budget. There were fears that the Confederacy would capture major Atlantic seaports, depriving it of a major income source from import tariffs. Lincoln conferred with members of his famed "Team of Rivals" Cabinet about Constitutional approaches to taxation, and they agreed on a tax for high earners.
In those days that meant anyone earning more than $600, a figure which excluded most Americans of the time. The new tax was progressive even above the $600 mark: Earnings up to $10,000 were taxed at 3 percent, while those above that figure were tax at five percent.
The Lincoln tax had the virtue of simplicity, too. It applied to all income or profit "derived from any kind of property, or from any professional trade, employment, or vocation carried on in the United States or elsewhere or from any source whatever."
That's it: No loopholes, even for financial speculators like today's Bain Capitalists.
The 1861 tax wasn't the first Federal tax of any kind, of course. As the Policy Almanac notes, "Congress levied excise taxes on distilled spirits, tobacco and snuff, refined sugar, carriages, property sold at auctions, and various legal documents" to pay the debts it had run up fighting the Revolutionary War.
The Almanac also notes that taxes were used from the very beginning as a tool for social policy. It cites a Pennsylvania excise tax on liquor that was partially intended to "restrain persons in low circumstances from an immoderate use thereof."
The Wonder Years
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