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People don't realize that when the Income Tax was first proposed it was predicated on the idea that most Americans would not end up paying it. As you can imagin

People don't realize that when the Income Tax was first proposed it was predicated on the idea that most Americans would not end up paying it. As you can imagine, it was only for 'the rich' to pay. The first tax bracket was a measly 1% on income over $3,000 at the time, which WolframAlpha says is about $80,500 today. https://www.wolframalpha.com/input/?i=%243%2C001+in+1913+USD https://www.wolframalpha.com/input/?i=%243%2C001+in+1913+USD https://en.wikipedia.org/wiki/Income_tax_in_the_United_States#Federal_income_tax_rates https://en.wikipedia.org/wiki/Income_tax_in_the_United_State... EDIT: I needed to correct myself, according to the IRS "Congress adopted a 1 percent tax on net personal income of more than $3,000 with a surtax of 6 percent on incomes of more than $500,000." Thank you to alecst for correcting me.

bwb 5y ago
Sure, and back then people didn't fathom flying, tanks, or space exploration either. Good thing we learned better :)
- simonsarris 5y ago
  If you break down what the US gov spends money on it is absolutely not those things. The US is mostly in the business of insurance (welfare, healthcare) and "education". Defense and infrastructure come some time after those. Of the things they could fathom, they might have even been better at them. Certainly better per dollar spent.
  - bwb 5y ago
    Yes and those things are fantastic, as they provide the platform we all run on.
    - zionic 5y ago
      Hardly, those things are parasitic load that prevents the platform from growing and prospering. They also breed dependence and servitude to the centralized authority, many of which are even designed such that working and earning income puts you in a worse spot than not. The people in charge aren’t stupid, it works this way by design.
      - bwb 5y ago
        I don't agree, taxes provide the platform that runs everything. Taxes are group spend to improve the entire platform that is the country. The people in charge are just like you and me, they are trying to improve things and work really hard.
  - frockington1 5y ago
    All of those increase in cost much faster than inflation
    - lostcolony 5y ago
      Not sure that's all that meaningful though? I mean, the inflation rate is effectively an average of the increase in costs across a variety of goods. Either that average is non-representative of the actual increase in costs (so meaningless), or that average is representative, but still an average, in which case you would still expect outliers, both above and below the average inflation rate. You would need the second derivative to be meaningful (and maybe that's what you mean), the percentage increase compared to the percentage increase in inflation (i.e., if in one year inflation is 2% and healthcare costs increase 4%, and the next year inflation is 2%, and healthcare costs are > 4%, and this trend continues, that would be concerning)
      - pedrosorio 5y ago
        I think this is what they are referring to: https://www.aei.org/wp-content/uploads/2019/01/cpichart2019.png?x91208 https://www.aei.org/wp-content/uploads/2019/01/cpichart2019....
  - thecage411 5y ago
    This isn't accurate if you are talking about the federal level. A better model in terms of spending is that the federal government is an insurance company with an army. The federal government spends something like 10 times as much on defense as direct educational expenditures and it's still significantly more than education if you include things like loan financing in education.
    - rsj_hn 5y ago
      Given that education funding is done by the states, that's like saying the Federal government spends 10 times as much on welfare as on police and firefighting. I mean, OK, but that's only because the second part of your comparison isn't a federal government responsibility and there are only certain targeted initiatives (mostly pork-barrel) that fall into that category. Same for federal spending on education. But when you look at all government spending on education, it's very clear that we spend more on education (5% of GDP, not counting loan guarantees) than on defense (3.7% of GDP). Except education is funded by local government whereas defense is funded by the federal government.
      - mapgrep 5y ago
        OP was correctly refuting the prior post which claimed "US govt" (that means federal) is "mostly in the business of insurance (welfare, healthcare) and 'education'. Defense and infrastructure come some time after those." It's just not true that the federal government spends more on education than defense, in fact it's very lopsided in the other direction. The context is a thread on the federal income tax specifically, and someone said the federal govt used to be not very technologically ambitious, and someone else says, essentially, it still isn't technologically ambitious, it spends most of its money on education and social welfare. OP corrected that. The social welfare part has some validity but federal education spending is quite minor. Yes the total spending by all govts in the US including state + local has a lot more education spending but the thread and the whole article are focused on federal taxes.
        rsj_hn 5y ago
  - alecst 5y ago
    For you guys getting in the weeds about how the govt spends money, here's the data: https://www.usaspending.gov/explorer/budget_function https://www.usaspending.gov/explorer/budget_function
- BitwiseFool 5y ago
  It serves as a cautionary tale. Just keep in mind that whenever some politician proposes a tax only on the richest Americans, and that tax is very very small, it won't stay that way. The highest rate in 1913 was 7%. Today the lowest rate is 10%.
  - danans 5y ago
    > The highest rate in 1913 was 7%. Today the lowest rate is 10%. Those rates seem selected to support your point. For example, you left out that highest rate in 1944 was 94%. There is also quite a bit of historical context that you are omitting. In 1913, without social security, common people in the US were impoverished in old age. The country had little infrastructure. It's not as simple as "taxes only go up".
    - BitwiseFool 5y ago
      I didn't include the 1944 rates because I only wanted to mention the top rate at the time of the adoption/passage of the 16th amendment and the income tax. My point was, at the time, the public was told the rates would be low and only on top earners. Then overtime, the rates rose while the brackets kept expanding downwards to include more and more of the middle and lower class. My point was not 'taxes never go down' but rather, taxes expand to include more and more people, despite originally being told they would not.
      - danans 5y ago
        > taxes expand to include more and more people, despite originally being told they would not. And with them, the country's population, infrastructure, and economy expanded and transformed. Some may argue for the better, others for the worse, but taxes and societal development are intrinsically linked.
    - refurb 5y ago
      If their point was taxes start low and go up, you rather proved it didn’t you?
alecst 5y ago
Your numbers don't seem right to me. For people who want more context than this comment provides, please start here: https://www.irs.gov/newsroom/historical-highlights-of-the-irs https://www.irs.gov/newsroom/historical-highlights-of-the-ir... Some highlights: > 1862 - President Lincoln signed into law a revenue-raising measure to help pay for Civil War expenses. The measure created a Commissioner of Internal Revenue and the nation's first income tax. It levied a 3 percent tax on incomes between $600 and $10,000 and a 5 percent tax on incomes of more than $10,000. > 1909 - President Taft recommended Congress propose a constitutional amendment that would give the government the power to tax incomes without apportioning the burden among the states in line with population. Congress also levied a 1 percent tax on net corporate incomes of more than $5,000. > 1913 - As the threat of war loomed, Wyoming became the 36th and last state needed to ratify the 16th Amendment. The amendment stated, "Congress shall have the power to lay and collect taxes on incomes, from whatever source derived, without apportionment among the several states, and without regard to any census or enumeration." Later, Congress adopted a 1 percent tax on net personal income of more than $3,000 with a surtax of 6 percent on incomes of more than $500,000. It also repealed the 1909 corporate income tax. The first Form 1040 was introduced. > 1918 - The Revenue Act of 1918 raised even greater sums for the World War I effort. It codified all existing tax laws and imposed a progressive income-tax rate structure of up to 77 percent. Also something many people don't realize is that in the '50s the highest marginal tax rate was 91%, for $4M or more. (The lowest was 20% for $40K or less.) So I don't totally see how your comment relates to the article. You can draw diverse conclusions looking backwards.
- BitwiseFool 5y ago
  This is a good catch. I will edit my parent comment accordingly.
  - deleted 5y ago
    [deleted]
  - alecst 5y ago
    While I appreciate your perspective, you seem to have cherry-picked a particular instantiation of the income tax to make a point, which I think dovetails with the last sentence in my original post. You can draw lots of conclusions by looking backwards.

bwb 5y ago

Sure, and back then people didn't fathom flying, tanks, or space exploration either. Good thing we learned better :)

simonsarris 5y ago
If you break down what the US gov spends money on it is absolutely not those things. The US is mostly in the business of insurance (welfare, healthcare) and "education". Defense and infrastructure come some time after those. Of the things they could fathom, they might have even been better at them. Certainly better per dollar spent.
- bwb 5y ago
  Yes and those things are fantastic, as they provide the platform we all run on.
  - zionic 5y ago
    Hardly, those things are parasitic load that prevents the platform from growing and prospering. They also breed dependence and servitude to the centralized authority, many of which are even designed such that working and earning income puts you in a worse spot than not. The people in charge aren’t stupid, it works this way by design.
    - bwb 5y ago
      I don't agree, taxes provide the platform that runs everything. Taxes are group spend to improve the entire platform that is the country. The people in charge are just like you and me, they are trying to improve things and work really hard.
- frockington1 5y ago
  All of those increase in cost much faster than inflation
  - lostcolony 5y ago
    Not sure that's all that meaningful though? I mean, the inflation rate is effectively an average of the increase in costs across a variety of goods. Either that average is non-representative of the actual increase in costs (so meaningless), or that average is representative, but still an average, in which case you would still expect outliers, both above and below the average inflation rate. You would need the second derivative to be meaningful (and maybe that's what you mean), the percentage increase compared to the percentage increase in inflation (i.e., if in one year inflation is 2% and healthcare costs increase 4%, and the next year inflation is 2%, and healthcare costs are > 4%, and this trend continues, that would be concerning)
    - pedrosorio 5y ago
      I think this is what they are referring to: https://www.aei.org/wp-content/uploads/2019/01/cpichart2019.png?x91208 https://www.aei.org/wp-content/uploads/2019/01/cpichart2019....
- thecage411 5y ago
  This isn't accurate if you are talking about the federal level. A better model in terms of spending is that the federal government is an insurance company with an army. The federal government spends something like 10 times as much on defense as direct educational expenditures and it's still significantly more than education if you include things like loan financing in education.
  - rsj_hn 5y ago
    Given that education funding is done by the states, that's like saying the Federal government spends 10 times as much on welfare as on police and firefighting. I mean, OK, but that's only because the second part of your comparison isn't a federal government responsibility and there are only certain targeted initiatives (mostly pork-barrel) that fall into that category. Same for federal spending on education. But when you look at all government spending on education, it's very clear that we spend more on education (5% of GDP, not counting loan guarantees) than on defense (3.7% of GDP). Except education is funded by local government whereas defense is funded by the federal government.
    - mapgrep 5y ago
      OP was correctly refuting the prior post which claimed "US govt" (that means federal) is "mostly in the business of insurance (welfare, healthcare) and 'education'. Defense and infrastructure come some time after those." It's just not true that the federal government spends more on education than defense, in fact it's very lopsided in the other direction. The context is a thread on the federal income tax specifically, and someone said the federal govt used to be not very technologically ambitious, and someone else says, essentially, it still isn't technologically ambitious, it spends most of its money on education and social welfare. OP corrected that. The social welfare part has some validity but federal education spending is quite minor. Yes the total spending by all govts in the US including state + local has a lot more education spending but the thread and the whole article are focused on federal taxes.
      - rsj_hn 5y ago
- alecst 5y ago
  For you guys getting in the weeds about how the govt spends money, here's the data: https://www.usaspending.gov/explorer/budget_function https://www.usaspending.gov/explorer/budget_function
BitwiseFool 5y ago
It serves as a cautionary tale. Just keep in mind that whenever some politician proposes a tax only on the richest Americans, and that tax is very very small, it won't stay that way. The highest rate in 1913 was 7%. Today the lowest rate is 10%.
- danans 5y ago
  > The highest rate in 1913 was 7%. Today the lowest rate is 10%. Those rates seem selected to support your point. For example, you left out that highest rate in 1944 was 94%. There is also quite a bit of historical context that you are omitting. In 1913, without social security, common people in the US were impoverished in old age. The country had little infrastructure. It's not as simple as "taxes only go up".
  - BitwiseFool 5y ago
    I didn't include the 1944 rates because I only wanted to mention the top rate at the time of the adoption/passage of the 16th amendment and the income tax. My point was, at the time, the public was told the rates would be low and only on top earners. Then overtime, the rates rose while the brackets kept expanding downwards to include more and more of the middle and lower class. My point was not 'taxes never go down' but rather, taxes expand to include more and more people, despite originally being told they would not.
    - danans 5y ago
      > taxes expand to include more and more people, despite originally being told they would not. And with them, the country's population, infrastructure, and economy expanded and transformed. Some may argue for the better, others for the worse, but taxes and societal development are intrinsically linked.
  - refurb 5y ago
    If their point was taxes start low and go up, you rather proved it didn’t you?

alecst 5y ago

Your numbers don't seem right to me. For people who want more context than this comment provides, please start here: https://www.irs.gov/newsroom/historical-highlights-of-the-irs https://www.irs.gov/newsroom/historical-highlights-of-the-ir... Some highlights: > 1862 - President Lincoln signed into law a revenue-raising measure to help pay for Civil War expenses. The measure created a Commissioner of Internal Revenue and the nation's first income tax. It levied a 3 percent tax on incomes between $600 and $10,000 and a 5 percent tax on incomes of more than $10,000. > 1909 - President Taft recommended Congress propose a constitutional amendment that would give the government the power to tax incomes without apportioning the burden among the states in line with population. Congress also levied a 1 percent tax on net corporate incomes of more than $5,000. > 1913 - As the threat of war loomed, Wyoming became the 36th and last state needed to ratify the 16th Amendment. The amendment stated, "Congress shall have the power to lay and collect taxes on incomes, from whatever source derived, without apportionment among the several states, and without regard to any census or enumeration." Later, Congress adopted a 1 percent tax on net personal income of more than $3,000 with a surtax of 6 percent on incomes of more than $500,000. It also repealed the 1909 corporate income tax. The first Form 1040 was introduced. > 1918 - The Revenue Act of 1918 raised even greater sums for the World War I effort. It codified all existing tax laws and imposed a progressive income-tax rate structure of up to 77 percent. Also something many people don't realize is that in the '50s the highest marginal tax rate was 91%, for $4M or more. (The lowest was 20% for $40K or less.) So I don't totally see how your comment relates to the article. You can draw diverse conclusions looking backwards.

BitwiseFool 5y ago
This is a good catch. I will edit my parent comment accordingly.
- deleted 5y ago
  [deleted]
- alecst 5y ago
  While I appreciate your perspective, you seem to have cherry-picked a particular instantiation of the income tax to make a point, which I think dovetails with the last sentence in my original post. You can draw lots of conclusions by looking backwards.