Income Tax. The Federal government had an income tax from 1861 to 1894. The very first income tax was laid on in the Civil War. It was a flat
or single rate of 3% on all income over $600 which Wikipedia says is equal to $10,000 today.
The Constitutional basis for this tax is found on Article 1, Section 8, Powers of Congress, Clause 1. “The Congress shall have Power To lay and
collect Taxes . . . “ This clause however must be read in conjunction with Clause 18: “To make all Laws which shall be necessary and proper for
carrying into Execution the foregoing Powers, and all other Powers vested by this Constitution in the Government of the United States, or in any
Department or Officer thereof.”
The real Constitutional problem begins when you must determine whether and how to apply Article 1. Section 9, [originally] Clause 4 [Overruled by the
16th Amendment]: “No capitation, or other direct, Tax shall be laid, unless in Proportion to the Census or Enumeration herein before directed to be
taken.” Historically a “capitation” was a head tax. In other words, you counted the people and assessed a tax on each one. A head tax.
www.usconstitution.net... For an earlier but probably familiar example of a HEAD tax, see Note 1.
The Constitution’s “capitation” clause (Sec. 9, Cl. 4) when read in conjunction with the [included] decennial “census” provision seems to
have meant that when raising Federal revenue by use of a capitation tax, it had to be an evenly allotted amount payable by each person based on the
total number of persons eligible to pay such a tax as was disclosed by the census.
However, an income tax is not a “capitation” tax. Nevertheless the 1894 Tax Code was found NOT constitutional in the 1895 Court case cited above.
Congress did not collet income taxes until after the adoption of the 16th Amendment in 1913. Personal income takes are the easiest to lay on and the
most productive and if properly progressive, the fairest.
See Note 2.
Read it and Weep! From 1942 until 1961, the top bracket rate was 91%! You guys who hate to fund the government would have screamed like stuck pigs
if you had lived in the era of the Greatest Generation of which you are not! JFK lowered the top bracket rate to 70%! And this was in an unparalleled
ear of overall prosperity from the TOP down to the BOTTOM!
President Carter lowered the top bracket rate to 50%, and then President Reagan lowered it to 28%. Revenues feel precipitously, so Reagan raised it
back to 32%. Bush 1 raised it to 34% and Clinton raised it to 36% with a 10% “Millionaires” surtax, making a top bracket of 39.6%. And another
era of widely shared prosperity ensued. Balanced federal budget. $1.8 trillion projected surplus. Taxes make sense.
There is NO proof low tax rates encourage overall economic prosperity OR conversely, that HIGH tax rates discourage overall economic prosperity. In
fact, it may well be just the contrary is true.
Note 1. Luke 2:1-5 [1] In those days Caesar Augustus issued a decree that a census should be taken of the entire Roman world. [2] (This was the
first census that took place while Quirinius was governor of Syria.) [3] And everyone went to his own town to register.
[4] So Joseph also went up from the town of Nazareth in Galilee to Judea, to Bethlehem the town of David, because he belonged to the house and line of
David. [5] He went there to register with Mary, who was pledged to be married to him and was expecting a child. (NSV)
Commentary: Joseph and Mary were residents of Nazareth in the Galilee. They traveled approximately 90 miles south from Nazareth to Bethlehem in
Judea in order to take part in the Roman census and [head] taxation.
Note 2. Current US Income tax rate on “taxable” income.
Up to $7,825, No tax. Over $7,825, up to $31,850, s10% rate. Then over $31,850 to $77,100 the rate is 25%. Income over $77100, up to $160,850, is
taxed at 28%. Income over $160,850 up to $349,700, a 33% rate. All taxable income over $349,700 is taxed at 35% rate.
Appendix 1. Consider the Federal tax burden on a taxable income of $40,000; a taxable income of $400,000; and a taxable income of $1,000,000. In
the first instance the tax owed is $6,423.75. This amounts to 16% of the earner’s taxable income. In the second instance, the tax owed is
$119,074.25. This amounts to 29.7% of taxable income. In the last instance, the tax owed is $329,074.25 which amounts to 32.9% of the taxable income.
AFTER tax income to Ex. 1, above, is $33,576.00. In Ex. 2 above, after tax income is $280,925.75. And in Ex. 3, the after tax income is $675,925.75.
[edit on 4/10/2008 by donwhite]