Carpe Diem

Tax deadline is approaching next Tuesday: Bring us back to 1913 (or better yet, bring us back to pre-income tax 1912)

irsThere will probably be millions of Americans, including me, who will be working on their taxes this weekend before next Tuesday’s deadline on April 15. So it’s time for my annual post at tax time to help put things in perspective.

In a recent report to Congress, the National Taxpayer Advocate estimated that American taxpayers will spend 6.1 billion hours this year complying with the income tax code, based on IRS estimates of how much time taxpayers (both individual and businesses) spend collecting data for, and filling out tax forms. That amount of time spent for income tax compliance – 6.1 billion hours – would be the equivalent of more than 3 million Americans working full-time, year-round (or 2.2% of total US payrolls of 138 million). By way of comparison, the federal government currently employs 2.7 million full-time workers, and Wal-Mart, the world’s largest private employer, currently employs 2.2 million workers worldwide and 1.4 million workers in the US (both full-time and part-time).

“In the beginning” when the US federal income tax was first introduced in 1913, it used to be a lot, lot simpler and a lot easier to file taxes; so easy in fact that it was basically like filling out your federal tax return on a postcard.

For example, page 1 of the original IRS 1040 income tax form from 1913 appears above. There were only four pages in the original 1040 form, including: two pages of worksheets, the actual one-page 1040 form above, and only one page of instructions, view all four pages here. In contrast, just the current 1040 instructions for 2013, without any forms, runs 207 pages.

Individual income tax rates started at 1% in 1913, and the maximum marginal income tax rate was only 7% on incomes above $500,000 ($11.85 million in today’s dollars). The personal exemption in 1913 was $3,000 for individuals ($71,145 in today’s dollars) and $4,000 for married couples (almost $95,000 in today’s dollars), meaning that very few Americans had to pay federal income tax since the average income in 1913 was only about $750. The Tax Foundation has historical federal income tax rates for every year between 1913 and 2013 here for tax brackets expressed in both nominal dollars and inflation-adjusted dollars.

23 thoughts on “Tax deadline is approaching next Tuesday: Bring us back to 1913 (or better yet, bring us back to pre-income tax 1912)

  1. The sixteenth amendment should be repealed and the income tax abolished. There is no reason for the government to have intimate knowledge of your personal finances. Ever.

    For the majority of its lifetime, the republic got on very well without an income tax. Not until the leftists decided it was the government’s business to know what everyone’s financial situation was did this tax come into being.

  2. The income tax is nefarious.

    Current tax law makes it even more so, as withholding is geared to overestimate the amount people owe.

    I am for complete repeal of the 16th amendment, but failing that, we should reduce withholding to zero, but require people to file quarterly taxes so they can see how much government is stealing from them.

    Currently, people are conditioned to feel lucky if they get a refund, which was their money in the first place, since they pay little to no attention to how much is coming out of their checks and going to bloated leviathan government.

        • mesa

          Taxation is illegal.

          Oh, if only that were true. Could you imagine the prison overcrowding problem we would have then?

          • The taxing power as currently enacted is illegal, and far beyond the scope of any founders intent.

            But you are right; the current socioeconomic and political structure of the country is beyond repair, and taxation is one of a long list of government abuses.

          • mesa-

            well, not all of it. not even most of it. the 16th amendment is actually pretty broad.

            “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.”

            it seems to me that it is their spending far more than their taxing that is out of line with constitutional principles.

            once the 10th amendment was basically totally negated by some deeply revisionist and questionable interpretation of the preamble, the feds basically gave themselves the power to do anyhting they describe as being in the “general welfare”, a term so broad and all encompassing, that it’s impossible to even see why the 10th amendment was written if the intent of that phrase in the preamble was as courts have construed it.

          • Exactly right, and as I mentioned above, taxation is only one of many government abuses, having basically granted themselves unlimited powers.

            The history of taxation is quite interesting (yes, I just said that). But that’s for another time.

          • mesa

            The taxing power as currently enacted is illegal, and far beyond the scope of any founders intent.

            True, but the dichotomy legal / illegal only applies to us individuals, not to government actors and agencies that are above the law.

            We might have a valuable energy source if we could harness the heat generated by the Founders spinning in their graves.

          • “We might have a valuable energy source if we could harness the heat generated by the Founders spinning in their graves.”


            that would be inefficient. instead, we should just wrap them in wire and surround them with magnets.

          • morganovich

            that would be inefficient. instead, we should just wrap them in wire and surround them with magnets.

            Heh! Of course. Thanks for the reminder that we should always favor clean energy alternatives. Sometimes I forget how serious global warming is.

    • mesa-

      too true.

      somehow, the irs has managed to get most folks to think about april 15th as the day they get a prize, not the day that the balance of their involuntary interest free loan is returned.

      the feds should, at the very least, pay interest.

      when you underpay your estimated taxes, you get penalized and pay interest.

      why not apply that to the treasury when they over withhold?

      but i like you system better. let’s get everyone paying quarterly so they can write a check with money that was actually in their account at some point and make the system more visible in its totality.

      as someone who pays quarterly, i sure do not look forward to tax day…

  3. Remember, of your income and capital gains taxes (read carefully, not FICA) the DoD, VA, DHS, intelligence and USDA eat up 70 percent.
    We can replace income and capial gains with a smaller federal government and consumption and pollution taxes.
    We would be a richer stronger and cleaner country.

      • Mesa-

        1. Try Sanka brand!

        2. The USA will spend $10 trillion in the next 10 years on national defense. There is no nation on Earth eve with a plan, let alone the desire, to invade the USA.

        That is federalism, US govermentism, ran wild!

        Keep paying your income and capital gains taxes…..the feds will take more next year and more after that….

        • Benji, try minimizing your retarded ramblings.

          Defense is nowhere to be seen, if you combine top outlays 1, 2, and 4. Those are your drivers. Math is hard.

          You re an exceptionally stupid person.

        • And they are going to take much, much more, irrespective of ANY defense spending.

          Defense spending could go to zero tomorrow, and rates would still rise – all of them.

          The setup is having a dysfunctional political process where things like tax adjustments occur automatically (like the sequester), because no one wants to be responsible for removing benefits, which will have to happen. Until we deal with entitlements, the question isn’t if the country collapses, it’s when.

          The country is broken, and the tax system along with it.

  4. The Income Tax has been in existence in the U.S. since 1862, 51 years prior to the Congressional enactment of the Sixteenth Amendment in 1913.

    The Sixteenth Amendment was passed to close a loophole created by Pollock v. Farmers Loan & Trust 158 U.S. 601, U.S. Supreme Court (1895). Mr. Pollock argued that FEDERAL stock he had purchased was his personal property and that the FEDERAL dividends from that stock was equivalent to taxing personal property, which was an unapportioned direct tax prohibited under Article I. The Supreme Court agreed, and struck the relevant sections from the Code. The purpose of the Sixteenth Amendment was indeed to close this loophole and restore to Congress the power to tax FEDERAL dividends, even if those FEDERAL dividends were derived from personal property – hence, the “source derived” language.

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