Income Tax: Intended For The Rich

For nearly 100 years, the progressive income tax has been the federal government’s major source of revenue, and it must now be strengthened, so more is collected from corporations and the rich.

The first federal income tax, used to finance the American Civil War, was imposed from 1861 through 1873.

When Congress implemented another income tax (1894), the issue went to the Supreme Court. Although the Constitution stated: “Congress shall have power to lay and collect taxes” (Art I, Sec. 8), the opponents of the tax argued the framers did not intend for them to be imposed on “income;” they only permitted “uniform” taxes “in proportion to the census.” Since income taxes could never be based on the census or be “uniform,”  the court declared the law unconstitutional (1895).

During the Progressive Era, after Wisconsin enacted the first state income tax (1911), the nation ratified the 16th Amendment (1913), which overruled the 1895 case, and allowed a federal income tax. The Constitutional Amendment provided: “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.”

The Revenue Act of 1913 imposed an income tax on individuals earning $3,000 or more, or couples making at least $4,000. The tax applied only the rich, since it reached just the top 1% of all households. The wealthy paid anywhere from 1% to 7% of their incomes in taxes, at rates that increased as their earnings went up. The income tax was never intended for the lower or middle classes.

Today, it is the middle class that pays the income tax, as wealthy corporations escape its grasp. Although the law treats corporations as persons and gives them constitutional rights, they evade the financial duties of citizenship. While they benefit from services for transportation, energy, education, commerce, justice, state, and defense, they fail to pay much, if any, income tax.

Corporate tax evasion must be prosecuted and avoidance through exemption and deductions must end. Corporations on the Fortune 500, doing business in the U.S., should pay taxes on a certain percent of their gross “revenues,” no matter what their source, and without exception, deduction, exclusion, adjustment, credit, prior loss, loophole, shelter, or excuse.

It’s time to get tough with big corporations and the rich. They are far better off now than they were when the income tax started a century ago. It’s time to return to the good old days of the Progressive Era, when the rich were disproportionately taxed.


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