Monday, February 04, 2013

Yesterday Was The 100th Anniversary Of The Ratification Of The 16th Amendment To The Constitution

It authorized a federal income tax. See Many Unhappy Returns—Millions of Them: It's the 100th anniversary of the 16th Amendment. Don't forget to file your taxes By JAY STARKMAN, from Saturday's WSJ. Excerpt:
"The country's first income tax was implemented to raise money during the Civil War. The tax was repealed in 1872 because the revenues were no longer needed. The idea was resurrected in 1894 as a populist measure to tax the rich when William Jennings Bryan successfully championed passage of a 2% income tax on annual income over $4,000. The rich denounced it as communistic and predicted that many would flee the country rather than pay the tax."

"Over the years, the personal exemption and standard deduction have not kept pace with inflation, so today 70% of the population is subject to income taxes. Almost 60 million returns, mostly under $20,000 in gross income, pay no income tax, largely the result of the earned-income and child tax credits. The individual income tax today raises $950 billion annually through 144 million tax returns. Of this, the top 40 million returns pay about $856 billion and the bottom 104 million returns only about $94 billion."
See also Mickelson and the Sports Star Tax Migration: If Lefty moves to a state with no income tax like Florida, he'll find he has plenty of elite athlete company by ALLYSIA FINLEY, from the WSJ, 1-27-2013. If you can't access either article, email me. I might be able to email them to you.

To see the history of federal income tax rates, go to U.S. Federal Individual Income Tax Rates History, 1913-2013 (Nominal and Inflation-Adjusted Brackets) from the Tax Foundation. In 1913, you paid 1% on all income up to $20,000. Any amount over $500,000 you paid 7%.

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