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An Ignominious Anniversary

Yesterday was the 100th anniversary of the passage of the 16th Amendment, which authorized the income tax.  I frequently show students the following chart, generated by the Federal Reserve Bank of St. Louis, and ask the simple question: “See if you can spot when the personal income tax started?”

Meanwhile, John Steele Gordon has a nice retrospective on the history of the income tax over at American.com, including this most relevant bit:

Once the Sixteenth Amendment was ratified, of course, Congress (with strong Democratic majorities in both houses) quickly passed a personal income tax, aimed at the upper middle class and above, with a top rate of 7 percent on incomes over $500,000.

Unfortunately, the personal income tax did not replace the corporate income tax that had originally been intended only as a stopgap. Nor did Congress integrate the two taxes so that income, whether corporate or personal, was only taxed once. The two taxes simply ignore each other as if corporations are owned by Martians, not people.

Recommend this Power Line article to your Facebook friends.

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