How did it become “fair” for an American family to give to government a third of its income? How did it become “fair” for an American family to give to government half of its income?
When Parliament passed the Stamp Act in 1765, Americans had never before experienced direct taxation. They rebelled. In 1767, Parliament passed the Townshend Acts, which levied taxes on an array of British goods. The colonists responded by boycotting British imports. Parliament repealed most of the Townshend Acts in 1770 (except the tax on tea), and in 1773 passed the Tea Act, which essentially told Americans they had to buy their tea from the East India Company through government-approved merchants. Though the act actually lowered the cost of British tea, Americans were so outraged at Britain’s assertion of authority that they forbade tea-bearing ships from docking. And, of course, in Boston they threw 342 chests of tea into the harbor.
All of these taxes, by the way, were passed to finance the British Army. The newly independent United States taxed its people directly to pay off the war and ongoing conflicts with France, but in 1802, under President Jefferson, all direct taxation upon the American people was ended. That lasted for a decade, until we had to finance the War of 1812. That war was paid off by 1817, and Americans experienced no direct taxation from their federal government until 1861.
That means that “Manifest Destiny,” including James K. Polk’s war with Mexico, and the expansion of the country from coast to coast, was financed without a single direct federal tax being levied upon the American people.
The federal income tax imposed to finance the Civil War had two tax brackets — 3 percent and 5 percent — and was repealed in 1872. It remained off the books until 1913, when the 16th Amendment was ratified. The federal income tax rates in 1913 ranged from 1 percent to 7 percent. That highest rate applied to people earning $500,000 a year or more. Today, a married couple earning that much would pay a federal income tax rate of 35 percent, and with all taxes combined could pay more than half their income in taxes.
The greatest tax outrage in American history is Washington’s gradual convincing of the American people that giving so much of their income to the government is just and fair.
By Andrew Cline