To impose an income tax without apportioning it among the states, Congress proposed the 16th Amendment, which states:"The Congress shall have 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."This amendment was ratified by the required number of states on February 3, 1913, and effectively gave Congress the clear constitutional authority to impose a federal income tax.
The first federal income tax in the United States, after the ratification of the 16th Amendment in 1913, primarily affected wealthier individuals. Here are the details:
### Who Was Affected:
- The tax applied only to individuals with higher incomes. Specifically, it was aimed at those earning more than $3,000 per year (equivalent to about $90,000 today when adjusted for inflation).
- For married couples, the threshold was $4,000 (approximately $120,000 today).
- Because the average income at that time was much lower, this tax affected a relatively small percentage of the population, estimated at less than 1% of Americans.
### Tax Rates:
- The income tax rates were initially very low:
- The basic rate was 1% on income above the threshold ($3,000 for individuals and $4,000 for couples).
- Additionally, there was a "surtax" for higher incomes. This surtax started at 1% for incomes over $20,000 and rose to 6% for incomes over $500,000.
### Revenue and Impact:
- The goal of the tax was to generate revenue for the federal government from the wealthiest citizens.
- It was designed to be progressive, meaning that the tax rate increased as income increased, placing a larger burden on the wealthy.
This income tax structure marked a significant shift in the way the federal government raised revenue, moving away from tariffs and excise taxes and towards income taxation, which would become the primary source of federal revenue in the years to come.
The first significant increase in the federal income tax rates occurred during World War I. The U.S. government needed additional revenue to finance the war effort, leading to several changes in the tax system.
### Key Increases:
- **Revenue Act of 1916**: This act increased the basic tax rate from 1% to 2% on incomes over $3,000 for single filers and $4,000 for married couples. It also expanded the surtax brackets, with the highest rate reaching 15% on incomes over $2 million.
- **Revenue Act of 1917**: As the U.S. entered World War I, the need for revenue grew more urgent. This act further increased the basic rate to 2% and expanded the surtax rates. The surtax ranged from 1% on incomes over $5,000 to a maximum of 50% on incomes over $1 million.
- **Revenue Act of 1918**: This act was enacted towards the end of World War I and represented the most substantial increase during this period. The basic tax rate was raised to 6%, and the surtax rates were further expanded, with the highest rate reaching 77% on incomes over $1 million.
### Impact:
These increases reflected the government's need to fund the war and marked the beginning of a trend toward higher and more progressive income tax rates in the U.S., particularly during times of national crisis. The top marginal rates during this period were among the highest in U.S. history, and the income tax became a significant source of federal revenue.
Just let them pass unrealized gains tax on the rich. It won't affect you!
FUCK U SCUMBAGS
JOE & THE HO GOTTA GO
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