Income tax started as a soak the rich tax

A 1913 U.S. Income Tax form - Max of 7% income tax

The US Federal income started out as soak the rich tax in 1913. Back then only rich people who earned $3,000, which is about $60,000 in 2009 dollars had to pay income tax.

And remember back then a large number of Americans lived on farms and lived off the land instead of working at a job where they were paid an income.

Back then the tax was from 1 percent to a maximun of 7 percent tax. Check out this 1913 IRS tax form from the IRS. Congress even debated about limiting the tax to a maximun rate of 10 percent. They thought that a tax of 10 percent on you income would be outrageous!

I got the 1913 tax form from a good source, the IRS. Here is the link to it!
I suspect people allowed the 16th Amendment to pass because they thought that rich people could be forced to pay everybodys bills with income tax. Here is a copy of the Sixteenth Amendment:
The 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.
Now income tax has evolved into a shake down every body tax, but the rich get screwed even more. Obama wants to shake down rich people with a tax of almost 40%


Proposals tax top earners to pay for benefit programs

By Richard Wolf, USA TODAY

WASHINGTON Three tax increases proposed by President Obama and House Democrats on the richest Americans could produce the highest tax rates in a quarter-century. The latest is this week's proposal by House Ways and Means Committee Chairman Charles Rangel, D-N.Y., and others to impose a surtax of up to 5.4% on annual incomes of $350,000 or more to help pay for overhauling the health care system. About 500,000 taxpayers earning $1 million or more would pay the full surtax.

Obama's budget, released in February, calls for letting tax cuts for top earners enacted at the beginning of the decade expire in 2011. That would raise the top rate from 35% to 39.6% on incomes above $373,000.

During the presidential campaign, Obama favored bolstering Social Security by subjecting family income above $250,000 to the 12.4% payroll tax, paid equally by employees and employers. The tax currently is levied on income up to $102,000.

All told, shifting the cost of health care, Social Security and other budget priorities toward high-income Americans would mean an actual tax rate above 45% for the wealthiest "levels never seen," says Clint Stretch, a tax expert at Deloitte Tax LLP. When top rates were higher, tax shelters helped reduce the percentage of income paid.

White House press secretary Robert Gibbs said this week that Obama "believes that the richest 1% of this country has had a pretty good run of it for many, many, many years." The top 1% had income of $557,000 or more, according to the non-partisan Tax Policy Center.

Relying on top earners to pay for benefit programs risks reversal if Republicans return to power, says William Gale of the Brookings Institution, a think tank. "We cannot do this on the backs of the rich," he says.

Robert McIntyre of the liberal Citizens for Tax Justice says Obama eventually must look beyond the 6.4 million taxpayers earning $200,000 or more. "At some point, you just can't squeeze them anymore," he says.


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