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The 16th Amendment was ratified in 1913, due to the American federal government wanting a source of revenue while in fact reversing the 1896 Supreme Court decision that did not allow for a nationwide income tax build-up. The income tax is a modern invention because the United States had its eye on making more money to fund itself with.
On October 3, 1917, the United States declared war with Germany if only because of the War Revenue Act. The tax system was imposed on ordinary citizens as well as those with more income than others. The intent had not been to exempt rich people from paying taxes although they still try to avoid taxes to this day.
Back in October of 1913 though the taxpayers had been introduced to a graduate tax system starting at one percent and expanding to seven percent for taxpayers who had an income above $500,000. The law that you should be taxed according to your income was started to reach the wealthy that made money from investments. In the Pollock case, however, the Supreme Court had concluded in a 5-4 decision that income tax was a direct tax which would have to be parceled out based on how much income an individual or family made.
The original income tax resolution was passed in 1909 and four years later in 1913, an un-apportioned individual income tax was the result. The power to tax individuals was given to Congress. Then Congress decided more money to fund wars was needed, so they gave themselves the executive powers to pass the War Revenue Act in 1917, that increased tax rates on individuals. There are major discrepancies in the way we are taxed now, compared to the way we were taxed then. Taxpayers with more money had to pay more taxes, such as a person with $40,000 of income had been subject to a 16 percent tax rate.
A person earning $1.5 million faced a rate of 67 percent back then. Rich people often try to get away with tax evasion even if they get a tax refund. So despite the refund, they try to wiggle their way out of paying taxes. But in the days before the 20th century tax laws, government income came from tariffs, or taxes on specific types of goods.
Even so at the end of WWI, the war had been funded in part from tax revenues. It had been $809 million in 2017, to a $3.6 billion the following year. The new concept of income tax revenue had funded the war, and it still funds modern wars such as the Iraq and Afghanistan wars. Congressman did express concern during the Pollock case that the wealthy had consolidated too much power, and this is true of the current economic disparities that we face in modern times. Rich people have too much money, poor people can barely get by economically, and the middle class struggle with two jobs just to be able to afford their lifestyles.
The income inequality in the United States will not get better. Class is determined by how much money you make. Some lawyers would not date a guy because he’s a janitor or a plumber. There is much in the way of elitist nonsense being bandied about in the modern age as money plays a huge role in how healthy you stay or are able to be because health care is not free? How much money you have determines how much insurance you would have to pay anyway. Income inequality is a huge issue to be addressed in 2020s election. Those candidates that have the ready solution will win.