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Thread: Happy 16th Amendment Centennial, RPFs!

  1. #1

    Happy 16th Amendment Centennial, RPFs!

    Thread title says it all, I reckon. (beware: many logical and economic fallacies lie ahead)

    IRS at 100: How income taxation built the middle class

    http://blogs.reuters.com/great-debat...-middle-class/
    Exactly a century ago, on October 3, 1913, President Woodrow Wilson signed the first modern federal income tax into law. The sky did not fall.
    That may have surprised the eminences of the American plutocracy. For years they had predicted the most dire of consequences should the federal government begin taxing the incomes of America’s most comfortable.
    Those warnings took a shriller turn in 1909. A flurry of cynical congressional maneuvers sent the states a constitutional amendment, ostensibly designed to allow a federal income tax. Conservatives in Congress felt confident that the amendment had no chance of gaining enough state support to be ratified. To clinch the amendment’s defeat, they unleashed a fierce rhetorical fusillade.

    Friends of grand fortune would reserve a special venom for the notion of “progressive” taxation — the idea that high incomes should face the highest tax rates. They characterized a “graduated” tax on the incomes of America’s affluent as “extortion,” a “penalty upon ability and intelligence” and an imposition on a “small class of people powerless to defend itself.” Taxing the wealthy, they contended, would be “killing the goose that laid the golden egg.”
    In the Virginia House of Delegates, Speaker Richard Byrd predicted that an income tax would put freedom itself in jeopardy. Any new income tax law, Byrd charged, “will of necessity have inquisitorial features.”
    He forecast: “Under it men will be hailed into courts distant from their homes. Heavy fines imposed by distant and unfamiliar tribunals will constantly menace the taxpayer. An army of federal inspectors, spies and detectives will descend upon the state.”
    An income tax, Andrew Carnegie summed up, would simply destroy initiative and create a “nation of liars.”
    Americans ignored these admonitions. In 1910 and 1912, new progressive state legislative majorities across the nation endorsed the income tax amendment. Early in 1913, final ratification gave Congress a green light to add an income tax to the tax code. Months of congressional debate culminated eight months later with a new revenue act that featured a modest income tax.
    How modest? The top tax rate would sit no higher than 7 percent on income higher than $4,000 — the equivalent of slightly more than $94,000 today.
    That top rate would soar higher in the decades to come — much higher. In the 1940s, during World War Two, income above $200,000 faced a 94 percent tax rate. America’s top marginal federal income tax rate would hover around 90 percent into the early 1960s.
    These high-tax years — for the rich — should have been a time of economic calamity. At least according to the critics of progressive income taxation. But real life proved these critics wrong. Commerce did not cease when the tax code levied steeply graduated rates on U.S. incomes. The wealthy did not flee. The entrepreneurial spirit did not evaporate.

    Quite the contrary. The United States thrived throughout the mid-20th century heyday of high taxes on the rich. We became the first mass middle-class nation in the history of the world, the first industrial nation ever where the majority did not live in poverty.
    The progressive income tax was a key pillar of this middle class “golden age.” Fiscally, the nation’s steeply graduated tax rates raised the revenue that bankrolled new programs and services that opened doors into middle-class life. Culturally, these same steeply graduated rates sent the message that American society frowned on incomes that towered too high over the nation’s economic and political landscape.
    Looking back on those years now, the historical record is clear: America works best when we tax progressively — and significantly so.
    History hasn’t been kind to all those who sought to prevent progressive income taxation a century ago. None of their dire predictions have come true.
    This is the great irony of federal income taxation’s first 100 years. Our contemporary political movers and shakers go about their business as if history had vindicated those shrill critics of income taxation in the early 20th century. Pols and pundits today have swept off our political center stage any serious consideration of the stiff progressive rates that even moderate Republicans, like President Dwight D. Eisenhower, once accepted as political and economic common sense.
    Economists like Emmanuel Saez, the University of California, Berkeley scholar who rates as the leading authority on high incomes, points out that this refusal to revisit stiff top marginal rates makes no sense. Top tax rates today could double, Saez and his colleagues say, without jeopardizing our economic health.
    Saez has more than economic theory on his side. He has history. On this anniversary of the first income tax, let’s be sure to remember that history — and the Americans who made it.
    In 1909, former Attorney General Wayne MacVeagh asked “Why should the colossal incomes and the colossal accumulations of the possessors of what Mr. Carnegie himself calls surplus wealth continue to be exempted from proper taxation?”
    “Gigantic fortunes,” MacVeagh said, serve as “serious obstacles to the contentment, the peace and the healthy growth of the community as to call for their abatement.”
    Let’s stop treating our egalitarian-minded forebears like MacVeagh as crazy old uncles we hide away in the attic. Let’s invite them into our public policy parlors.
    They have much to share. We have much to learn.
    PHOTO (Top): A general view of the Internal Revenue Service (IRS) Building in Washington, May 14, 2013. REUTERS/Jonathan Ernst
    PHOTO (Insert 1): Woodrow Wilson. REUTERS/Woodrow Wilson Presidential Library
    PHOTO (Insert 2): President Dwight Eisenhower during a ribbon-cutting ceremony for a new extension to the George Washington Memorial Parkway, November 1959. REUTERS/Eisenhower Library
    Quote Originally Posted by Torchbearer
    what works can never be discussed online. there is only one language the government understands, and until the people start speaking it by the magazine full... things will remain the same.
    Hear/buy my music here "government is the enemy of liberty"-RP Support me on Patreon here Ephesians 6:12



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  3. #2
    I feel dumber having read that article and regret reading this thread.

  4. #3
    Quote Originally Posted by Cutlerzzz View Post
    I feel dumber having read that article and regret reading this thread.
    haha, yes people misunderstand the 16A. It did not give us the income tax, it merely overturned the Pollock decision.

    We had, and still have the income tax from 1862. It is what we have today, it has never been repealed.
    Pfizer Macht Frei!

    Openly Straight Man, Danke, Awarded Top Rated Influencer. Community Standards Enforcer.


    Quiz: Test Your "Income" Tax IQ!

    Short Income Tax Video

    The Income Tax Is An Excise, And Excise Taxes Are Privilege Taxes

    The Federalist Papers, No. 15:

    Except as to the rule of appointment, the United States have an indefinite discretion to make requisitions for men and money; but they have no authority to raise either by regulations extending to the individual citizens of America.

  5. #4
    Quote Originally Posted by Cutlerzzz View Post
    I feel dumber having read that article and regret reading this thread.
    LOL You kids crack me up sometimes.
    Quote Originally Posted by Torchbearer
    what works can never be discussed online. there is only one language the government understands, and until the people start speaking it by the magazine full... things will remain the same.
    Hear/buy my music here "government is the enemy of liberty"-RP Support me on Patreon here Ephesians 6:12

  6. #5
    Ironic that the most popular Agorist business using a competing currency was taken down precisely 100 years later.

    The fight has begun.

    100 years from now, will we still be stuck with needing our masters unlimited garbage of credit, or will a finite crypto-currency in some form that is truly owned by the people reign supreme?

  7. #6
    FLIP THOSE FLAGS, THE NATION IS IN DISTRESS!


    why I should worship the state (who apparently is the only party that can possess guns without question).
    The state's only purpose is to kill and control. Why do you worship it? - Sola_Fide

    Baptiste said.
    At which point will Americans realize that creating an unaccountable institution that is able to pass its liability on to tax-payers is immoral and attracts sociopaths?

  8. #7
    In the Virginia House of Delegates, Speaker Richard Byrd predicted that an income tax would put freedom itself in jeopardy. Any new income tax law, Byrd charged, “will of necessity have inquisitorial features.”
    He forecast: “Under it men will be hailed into courts distant from their homes. Heavy fines imposed by distant and unfamiliar tribunals will constantly menace the taxpayer. An army of federal inspectors, spies and detectives will descend upon the state.”
    It's like he could see into the future.
    Spooky.
    Inspired by US Rep. Ron Paul of Texas, this site is dedicated to facilitating grassroots initiatives that aim to restore a sovereign limited constitutional Republic based on the rule of law, states' rights and individual rights. We seek to enshrine the original intent of our Founders to foster respect for private property, seek justice, provide opportunity, and to secure individual liberty for ourselves and our posterity.


    A police state is a small price to pay for living in the freest country on earth.

  9. #8
    Quote Originally Posted by mad cow View Post
    It's like he could see into the future.
    Spooky.
    Is that the same guy who flew over Antarctica? I'm having a hard time getting biographical info



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  11. #9
    Quote Originally Posted by GunnyFreedom View Post
    Is that the same guy who flew over Antarctica? I'm having a hard time getting biographical info
    The politician was the explorers Dad.
    Famous old family in Virginia.
    Inspired by US Rep. Ron Paul of Texas, this site is dedicated to facilitating grassroots initiatives that aim to restore a sovereign limited constitutional Republic based on the rule of law, states' rights and individual rights. We seek to enshrine the original intent of our Founders to foster respect for private property, seek justice, provide opportunity, and to secure individual liberty for ourselves and our posterity.


    A police state is a small price to pay for living in the freest country on earth.

  12. #10
    Thanks!

    Holy cow posting about this exploded my Facebook

  13. #11
    Yeah, the middle class was built on taxes. Well, okay professor.

    Maybe that person should look into how a big chunk of America was built enslaving one group of people and committing genocide on another group.

  14. #12
    (beware: many logical and economic fallacies lie ahead)
    You weren't kidding.

    One of the Worst Anniversaries in History
    http://www.lewrockwell.com/lrc-blog/...es-in-history/
    Today is the anniversary of Woodrow Wilson signing into law the Revenue Act of 1913, which imposed the income tax. I am glad to see that Dan Mitchell termed Wilson “one of America’s worst Presidents” in his great post about this unfortunate anniversary.
    But just as tiny acorns become large oak trees, small taxes become big taxes and simple tax codes become complex monstrosities. And that’s exactly what happened in the United States.

    We now have a top tax rate of 39.6 percent, and it’s actually much higher than that when you include the impact of other taxes, as well as the pervasive double taxation of saving and investment.

    And the relatively simply tax law of 1913 has metastasized into 74,000 pages of Byzantine complexity.

    Not to mention that the tax code has become one of the main sources of political corruption in Washington, impoverishing us while enriching the politicians, lobbyists, bureaucrats, and interest groups. Or the oppressive and dishonest IRS.

    However, even though I take second place to nobody in my disdain for the income tax, the worst thing about that law is not the tax rates, the double taxation, or the complexity. The worst thing is that the income tax enabled the modern welfare state.

    Before the income tax, politicians had no way to finance big government. Their only significant pre-1913 sources of revenue were tariffs and excise taxes, and they couldn’t raise those tax rates too high because of Laffer Curve effects (something that modern-day politicians sometimes still discover).
    Based on the idea of natural rights, government secures those rights to the individual by strictly negative intervention, making justice costless and easy of access; and beyond that it does not go. The State, on the other hand, both in its genesis and by its primary intention, is purely anti-social. It is not based on the idea of natural rights, but on the idea that the individual has no rights except those that the State may provisionally grant him. It has always made justice costly and difficult of access, and has invariably held itself above justice and common morality whenever it could advantage itself by so doing.
    --Albert J. Nock

  15. #13
    Winston Churchill when on a speaking tour had spent a week as a house guest of the Byrds of Virginia.

  16. #14
    On The 100th Anniversary Of The Income Tax
    http://www.zerohedge.com/news/2013-1...ary-income-tax

    by Mises Updates via The Circle Bastiat blog,

    Woodrow Wilson signed the Income Tax into law one hundred years ago today. As direct taxation of Americans was prohibited by the Constitution, a constitutional amendment was necessary before what would become the Revenue Act of 1913 could be legally imposed. The income tax, and the enabling amendment, were sold to the voters as necessary for a tax on rich people that would mean lower taxes and cheaper goods (due to lowered tariffs) for everyone else.

    Only one percent of the population was subject to the tax then, and the tax rate was one percent.

    The voters need not worry, they were told, because regular people would never ever pay the income tax.

    And while we are all feeling so good about taxes - here is brief history... (click image for immense legible version)

    Based on the idea of natural rights, government secures those rights to the individual by strictly negative intervention, making justice costless and easy of access; and beyond that it does not go. The State, on the other hand, both in its genesis and by its primary intention, is purely anti-social. It is not based on the idea of natural rights, but on the idea that the individual has no rights except those that the State may provisionally grant him. It has always made justice costly and difficult of access, and has invariably held itself above justice and common morality whenever it could advantage itself by so doing.
    --Albert J. Nock

  17. #15
    The Daily Bell also got in on the Reuters bashing fun.

    This Sh-t Is Bananas!
    http://www.thedailybell.com/news-ana...-t-Is-Bananas/

    IRS at 100: How income taxation built the middle class … Exactly a century ago, on October 3, 1913, President Woodrow Wilson signed the first modern federal income tax into law. The sky did not fall. That may have surprised the eminences of the American plutocracy. For years they had predicted the most dire of consequences should the federal government begin taxing the incomes of America’s most comfortable. – Reuters

    Dominant Social Theme: Thank goodness for taxes. They are a fundamental building block of civil society.

    Free-Market Analysis: Ordinarily our second lead article would focus on a dominant social theme somewhere other than Reuters, as we have already analyzed a Reuters story.

    But, as mentioned, the crop of articles offered up in the Reuters editorial section this past week is so extraordinary that we find ourselves transfixed by both the wrongheadedness of many of the assertions and the bluntness with which they are stated.

    It’s notable because it seems as if Reuters has raised its rhetoric and heightened the stridency of its argumentation. We could advance a couple of theories as to why this is going on, but for now we’ll just offer an analysis of the article excerpted above.

    Ironically – perhaps because we are in a melodic mood given the return of The Daily Bell and the launch of the High Alert Trends & Sector Report – we found yet another popular song running through our tiny noggins as we perused it. Pardon us for the profanity, but these lyrics surely occurred to us because of the outrageousness of the idea that forcibly confiscating wealth and redistributing it is an essential element of prosperity.

    It strikes us as, well … bananas – with an obscenity for emphasis. Here’s more:
    [...]
    Conclusion

    A weird and misguided article, indeed, in our humble opinion. And so we leave you with this, dear reader, from the immortal Gwen Stefani in her one-time monster hit single, “Hollaback Girl.” She wasn’t singing about this Reuters editorial to be sure, but she might as well have been; and thus this chorus, so popular with the younger generation, expresses our sentiments.

    Let me hear you say this sh-t is bananas
    B-A-N-A-N-A-S
    (This sh-t is bananas)
    (B-A-N-A-N-A-S)
    Based on the idea of natural rights, government secures those rights to the individual by strictly negative intervention, making justice costless and easy of access; and beyond that it does not go. The State, on the other hand, both in its genesis and by its primary intention, is purely anti-social. It is not based on the idea of natural rights, but on the idea that the individual has no rights except those that the State may provisionally grant him. It has always made justice costly and difficult of access, and has invariably held itself above justice and common morality whenever it could advantage itself by so doing.
    --Albert J. Nock

  18. #16
    Quote Originally Posted by Danke View Post
    We had, and still have the income tax from 1862. It is what we have today, it has never been repealed.
    Not quite. The 1862 tax was repealed and replaced by the Revenue Act of 1864. The 1864 tax was replaced by the Revenue Act of 1870, and the income tax provided by that act expired at the end of 1871.



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  20. #17
    Quote Originally Posted by Sonny Tufts View Post
    Not quite. The 1862 tax was repealed and replaced by the Revenue Act of 1864. The 1864 tax was replaced by the Revenue Act of 1870, and the income tax provided by that act expired at the end of 1871.
    Revisions, not repealed.
    Pfizer Macht Frei!

    Openly Straight Man, Danke, Awarded Top Rated Influencer. Community Standards Enforcer.


    Quiz: Test Your "Income" Tax IQ!

    Short Income Tax Video

    The Income Tax Is An Excise, And Excise Taxes Are Privilege Taxes

    The Federalist Papers, No. 15:

    Except as to the rule of appointment, the United States have an indefinite discretion to make requisitions for men and money; but they have no authority to raise either by regulations extending to the individual citizens of America.

  21. #18
    Quote Originally Posted by Danke View Post
    Revisions, not repealed.
    Section 173 of the 1864 Act explicitly repealed the income tax provisions of the 1862 Act:

    http://memory.loc.gov/cgi-bin/ampage....db&recNum=332

  22. #19
    Quote Originally Posted by Sonny Tufts View Post
    Section 173 of the 1864 Act explicitly repealed the income tax provisions of the 1862 Act:

    http://memory.loc.gov/cgi-bin/ampage....db&recNum=332
    "Except..."
    Pfizer Macht Frei!

    Openly Straight Man, Danke, Awarded Top Rated Influencer. Community Standards Enforcer.


    Quiz: Test Your "Income" Tax IQ!

    Short Income Tax Video

    The Income Tax Is An Excise, And Excise Taxes Are Privilege Taxes

    The Federalist Papers, No. 15:

    Except as to the rule of appointment, the United States have an indefinite discretion to make requisitions for men and money; but they have no authority to raise either by regulations extending to the individual citizens of America.

  23. #20
    Quote Originally Posted by Danke View Post
    "Except..."
    For the layman, that means revised.
    Pfizer Macht Frei!

    Openly Straight Man, Danke, Awarded Top Rated Influencer. Community Standards Enforcer.


    Quiz: Test Your "Income" Tax IQ!

    Short Income Tax Video

    The Income Tax Is An Excise, And Excise Taxes Are Privilege Taxes

    The Federalist Papers, No. 15:

    Except as to the rule of appointment, the United States have an indefinite discretion to make requisitions for men and money; but they have no authority to raise either by regulations extending to the individual citizens of America.



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