History of Taxation in the United States


It all started when the Civil War erupted and Congress passed the Revenue Act of 1861, which imposed a tax on personal incomes.

This tax on personal income was a new direction for a Federal tax system which was based mainly on excise taxes and customs duties. …

• In 1861, The income tax was levied at 3 percent on all incomes higher than $800 a year.
• In 1913, Congress passed a new income tax law with rates beginning at 1 percent and rising to 7 percent.
• In 1916 lowest tax rate was from 1 percent to 2 percent and raised the top rate to 15 percent. This act also imposed taxes on estates and “excess” business profits. In 1916, a taxpayer needed $1.5 million in taxable income to face a 15 percent rate.
• By 1917 a taxpayer with only $40,000 faced a 16 percent rate and the individual with $1.5 million faced a tax rate of 67 percent.
• In 1918, takes rates went up once again, this time raising the bottom rate to 6 percent and the top rate to 77 percent.
Something to note here is by 1918 only 5 percent of the population actually paid income these taxes and yet the income tax funded one-third of the cost of World War 1.
• In 1920 alone, the Federal government collected $6.6 billion in taxes
• By 1936 the lowest tax rate had reached 4 percent and the top rate was up to 79 percent.
Wait! Your still not paying enough taxes america!

• In 1935, the “social security act” was passed
• Now in addition to the income tax, you had to pay 2% more (1% paid by the employer and 1% paid by you)
• By 1941 bottom tax rate was 23 percent, and the top rate was 94 percent.
• In 1945, the government collected $45.2 billion in taxes
• In 1945, the government returned to the income tax withholding that had been used briefly during the civil war.
• This greatly reduced the taxpayer’s awareness of the amount of tax being collected, i.e. it reduced the transparency of the tax, which made it easier to raise taxes in the future. (this is word for word from the U.S. Treasury’s website!)
• By 1954 the maximum tax rate was 87 percent

1913 – 1% – 7%
1918 – 6% – 77%
1941 – 23% – 94%

Wait! Your STILL not paying enough taxes america!

• In 1956, the government began “disability benefits” and in 1965 Medicare began
• Who paid for all of these “benefits”? YOU.
• Between 1949 and 1962 the payroll tax rate climbed steadily from its initial rate of 2 percent to 6 percent.
• The expansions in 1965 led to further rate increases, with the combined payroll tax rate climbing to 12.3 percent in 1980
• By 1990, the payroll tax increases to 15.3 percent!
• In 31 years the maximum Social Security tax burden rose from a mere $60 in 1949 to $3,175 in 1980.
• Between 1980 and 1990, the maximum Social Security payroll tax burden more than doubled to $7,849.
• Today (2009), you pay 12.4% of your paycheck to social security (6.2% paid by you and 6.2% paid by your employer) – you will probably never see this money as this system is going bankrupt
• Today you pay 1.45% of your paycheck to medicare

All of the info above was all taken directly from the U.S. Treasury’s website and now this page has been REMOVED:http://www.treas.gov/education/fact-sheets/taxes/ustax.shtml BUT thanks to the waybackmachine.com here it is: http://web.archive.org/web/20040925082551/http://www.treas.gov/education/fact-sheets/taxes/ustax.shtml

Taxes eat up 38.2% of the average family’s income; that’s more than for food, clothing and shelter combined.
• The IRS sends out 8 billion pages of forms and instructions each year.
• Laid end to end, they would stretch 28 times around the earth.
• American taxpayers spend $200 billion and 5.4 billion hours working to comply with federal taxes each year, more than it takes to produce every car, truck, and van in the United States.
• Nearly 300,000 trees annually are cut down to produce the amount of required paper for all the IRS forms and instructions.
Accounts Receivable Tax
Building Permit Tax
Capital Gains Tax
CDL license Tax
Cigarette Tax
Corporate Income Tax
Court Fines – (indirect taxes)
Dog License Tax
Federal Income Tax
Federal Unemployment Tax – (FUTA)
Fishing License Tax
Food License Tax
Fuel permit tax
Gasoline Tax – (42 cents per gallon)
Hunting License Tax
Inheritance Tax Interest expense – (tax on the money)
Inventory tax IRS Interest Charges – (tax on top of tax)
IRS Penalties – (tax on top of tax)
Liquor Tax
Local Income Tax
Luxury Taxes
Marriage License Tax
Medicare Tax
Property Tax
Real Estate Tax
Septic Permit Tax
Service Charge Taxes
Social Security Tax
Road Usage Taxes – (Truckers)
Sales Taxes
Recreational Vehicle Tax
Road Toll Booth Taxes
School Tax
State Income Tax
State Unemployment Tax – (SUTA)
Telephone federal excise tax
Telephone federal universal service fee tax
Telephone federal, state and local surcharge taxes
Telephone minimum usage surcharge tax
Telephone recurring and non-recurring charges tax
Telephone State and local tax
Telephone usage charge tax
Toll Bridge Taxes
Toll Tunnel Taxes
Traffic Fines – (indirect taxation)
Trailer registration tax
Utility Taxes
Vehicle License Registration Tax
Vehicle Sales Tax
Watercraft registration Tax
Well Permit Tax
Workers Compensation Tax


Not one of these taxes existed 100 years ago and our
nation was the most prosperous in the world,
had absolutely no national debt, had the largest middle
class in the world and Mom stayed home to raise the kids.

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