A Hundred Years of Income Taxes in the USA

The modern income tax was signed into law by President Woodrow Wilson 100 years ago on October 3, 1913.

At the turn of the 20th century, the rise of Progressivism and the Democratic opposition to high tariffs generated support for an income tax. President William Howard Taft proposed a Constitutional amendment for an income tax in 1909. It was passed by the House and Senate, and then ratified by the states in early 1913. Congress got to work on legislation, and the modern income tax was signed into law by President Woodrow Wilson 100 years ago on October 3, 1913.

Unfortunately, it turns out defining “income” is a tricky matter, and liberal and conservative economists and policymakers have never agreed on how to do it. The many economic interest groups affected by the tax have different views as well. The result of all the disagreement is that we’ve had a constantly changing and increasingly complex tax code.

The number of pages of federal tax rules soared from 400 in 1913 to 73,954 today, according to CCH Inc. Unlike a product in the marketplace that improves over time, like the century-old automobile, the government’s income tax has become ever more inefficient and damaging. After 100 years, it is a bigger challenge than ever to create a simple, pro-growth structure for federal taxation.

“After a century, it’s time to scrap the income tax and replace it with a consumption-based flat tax,” says Chris Edwards, director of tax policy at the Cato Institute.

Learn More: http://www.cato.org/publications/commentary/income-tax-century-enough

Learn More: http://www.downsizinggovernment.org/

SOURCE: Cato Institute