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It's doubtful most people will notice, let alone celebrate, Friday's 100th anniversary of the U.S. income tax code. But, yes taxpayers, Oct. 4, 2013, is the centennial.
So, happy birthday income tax?
"Obviously, it depends on your perspective," said Ajay Mehrotra, a history professor at Indiana University.
"But there's one thing we can take from the period of time when the tax law passed," he said. "And that is lawmakers got together and realized some permanent form of taxation was needed instead of having a political stalemate that got nowhere."
One expert sees the 100 years as a system run amok.
TextIt was the 16th Amendment, adopted in February 1913, that gave Congress the legal right to levy an income tax. On the evening of Oct. 3, President Woodrow Wilson signed the Revenue Act of 1913 that allowed the collection of a federal income tax—starting the next day.
Text"By 2012, the tax code was 73,608 pages," he said. "We have gone from a simple tax system to a complex, unfriendly system."
In 1868, Congress again focused its taxation efforts on tobacco and distilled spirits and eliminated the income tax in 1872. It had a short-lived revival in 1894 and 1895. In the latter year, the U.S. Supreme Court decided that the income tax was unconstitutional because it was not apportioned among the states in conformity with the Constitution.
In 1913, the 16th Amendment to the Constitution made the income tax a permanent fixture in the U.S. tax system. The amendment gave Congress legal authority to tax income and resulted in a revenue law that taxed incomes of both individuals and corporations. In fiscal year 1918, annual internal revenue collections for the first time passed the billion-dollar mark, rising to $5.4 billion by 1920. With the advent of World War II, employment increased, as did tax collections—to $7.3 billion. The withholding tax on wages was introduced in 1943 and was instrumental in increasing the number of taxpayers to 60 million and tax collections to $43 billion by 1945.
History of the Income Tax in the United States