The first Federal income tax was adopted in 1861 to finance the Civil War, but it was allowed to lapse after the war. In 1913, the Sixteenth Amendment to the Constitution was ratified, permitting the Federal government to levy an income tax without giving all of it to the states. The Federal income tax enacted in 1913 included corporate and individual income taxes.
Federal taxes were expanded greatly during World War I. In 1921, wealthy industrialist and then Treasury Secretary Andrew Mellon engineered a series of significant income tax cuts under three presidents. Mellon argued that tax cuts would spur growth. The last such cut in 1928 was followed by the Great Depression in 1929. Taxes were raised again in the latter part of the Depression, and during World War II. Income tax rates were reduced significantly during the Johnson, Nixon, and Reagan Presidencies. President Clinton raised marginal tax rates on the wealthy in 1993 and eliminated the deficit. George W. Bush scaled back tax rates across the board, resulting in large and sustained budget deficits.
Cry Wolf Quotes
Every school child knows you don't raise taxes in a recession unless you want to make it worse.
The true purpose of the tax bill is to finance a further expansion of government. For all of the yelling and kicking, Congress still has done nothing serious to curb government spending. Therefore we have a swelling deficit. And because of the deficit, we’re told, taxes must go up.
[There is] no doubt that it [TEFRA] will curb the economic recovery everyone wants.
Related Laws and Rules
Millionaire Migration and State Taxation of Top Incomes: Evidence From A Natural Experiment
The rich did not flee New Jersey wen the state raised tax rates on top earners by 2.6 percentage points.
Estate Tax Basics
The Center on Budget and Policy Priorities explains the reality of the much-mythologized estate tax.
Maryland Millionaires Vanish in the Face of Recession, Not Higher Taxes
Maryland's tax increases on the rich did not induce millionaire flight.
Conservative Commentator Examines the History of Right-Wing Tax Cut Hypocrisy
Hard right-wingers fear-monger in the face of tax increases of both Republican and Democratic administations.
Tax Cuts on the Rich Don't Spur Economic Growth
The Center for American Progress takes apart supply side myths.
Backgrounders & Briefs
By Joseph J. Thorndike
Since at least the 1920s, estate tax opponents had been trotting out the same litany of warnings and complaints about the Estate Tax.
Almost everyone agrees that raising taxes on the rich does not induce mass upper-class migration.
Media Matters holds conservative media and political figures accountable for their rhetoric.
The Center on Budget and Policy Priorities (CBPP) is a think tank focused on tax and fiscal policy. They provide in-depth analysis of state issues.
Citizens for Tax Justice is an organization that represents low and middle income citizens in the tax debates on Capitol Hill.