What We Can Learn From the 100th Anniversary of the Federal Income Tax

Just a few days ago marked the 100th anniversary of the ratification of the 16th Amendment, which enabled the establishment of the U.S. federal income tax.

The 16th Amendment has a fascinating political history and the fact that there was popular support for the self-imposition of additional taxes was somewhat unique.  However, the 16th Amendment was never intentioned to be the federal government's main source of revenues.  Indeed, when it was being promoted, it was marketed as "just 1% on the top 1%"--meaning that only the top 1% of earners would be subject to the tax, which rates began at just 1%.  After all, who could be against such a tax? As the House of Representatives Committee Report indicated "all good citizens, it is therefore believed, will willingly and cheerfully support and sustain this, the fairest and cheapest of all taxes".

Over the years, the rates went up and up and the percentage of those actually subject to the income tax increased as well.  What was envisioned as a "soak the rich" tax, ultimately "soaked" the middle class as well.