President Obama recently gave a lengthy speech on inequality, poverty, and what to do about it. He claimed inequality is increasing, which is debatable, and then offered a few populist ways to reduce it, such as raising...
- The Tax Policy Blog
- Happy Centennial, Income Tax!
Happy Centennial, Income Tax!
Though it sounds like the answer to an obscure trivia question, a significant event recently occurred in the United States that doesn’t involve the government shutdown or the looming debt ceiling. On October 3rd, 1913; The United States Revenue Act of 1913, known for supplementing lower tariffs by implementing personal income taxes, was signed into law by President Woodrow Wilson. Over 100 years later, some Americans remain uncertain about the soundness and application of income taxes.
The income tax, as it exists today, has grown far beyond its original confines as a source of revenue for the federal government. The tax code has extended into industrial and social policy and, as a result, it has grown wildly complex.
Income tax reform is an undying topic of discussion. America’s income tax code has been in a constant state of change; whether it is Occupy calling for fair wealth distribution, the Tea Party’s call for a “fair tax” plan, FDR proposing 100 percent top marginal tax rates, Kennedy and Johnson lobbying for lower rates, or the Reagan/Clinton/Bush/Obama administrations’ search for improved tax reformation. This incessant debate has resulted in an enormous 73,954 page, 25 volume, amorphous blob that started out as a seemingly minuscule 400 pages with a relatively simple and transparent 1 percent to 7 percent progressive rate structure.
There is nothing simple about a work that approaches 74,000 pages and currently requires 6 billion hours of work by professionals to prepare return forms and comply with tax laws. Clearly, America’s attempts at egalitarianism have been a constructive process that never seems to satisfy the demands of citizens or their elected officials.
It is human nature that we will look to improve our living conditions through all means possible, so it is safe to assume that we will continue to seek tax code improvement and reform.
On one hand, we can continue to make progressive changes through sophistication that, extrapolated based on past growth data, will lead to a multi-million page skyscraper. On the other, it is possible to attain growth through subtraction by putting forth the effort towards improving tax policy through simplification. At the Tax Foundation, we promote any move towards simpler, more transparent, and more neutral tax policy. Those are the principles tax reformers should keep in mind.
Buy this blogger a cup of coffee!
Join the Tax Foundation's fight for sound tax policy Go
About the Tax Policy Blog
The Tax Policy Blog is the official weblog of the Tax Foundation, a non-partisan, non-profit research organization that has monitored tax policy at the federal, state and local levels since 1937. Our economists welcome your feedback. If you would like to send an e-mail to the author of a blog post, please click on that person's name to locate his or her e-mail address or visit our staff page here.