| Income taxes are one of many ways to collect | | | | that a direct tax on income was unconstitutional, |
| taxes, but they're among the most controversial. | | | | so Congress amended the constitution to make it |
| Income taxes were first instituted in 1862, to help | | | | viable. During the 1930's, increases in government |
| pay for the Civil War. At the time, the minimum | | | | spending and decreases in other revenue forced |
| income to pay income tax was $600 per year. | | | | income tax rates higher, to the point that taxes |
| That miminum income to pay income tax is | | | | reached a high of 91%. |
| equivalent to around $13,000 in today's dollars, but | | | | This number was deceptive, however. Extensive |
| represents a much higher standard of living. | | | | tax loopholes and credits allowed the rich to avoid |
| In other words, the original income taxes were | | | | paying taxes in much of their income. For |
| meant mostly for the well-off or the super-rich, | | | | example, wealthy cattle owners and oil barrons |
| and had a minimal effect on their lifestyles. With | | | | could get hefty deductions for their assets, even |
| such a high minimum income to pay tax on | | | | if they were making a profit from them. The |
| income, the issue of income taxes was a minor | | | | minimum income to pay income tax dropped with |
| political issue. Few people paid it, and those who | | | | the introduction of FICA in the 1930's. Now, |
| paid it paid very little. Instead, most money was | | | | workers owed some taxes on almost all the |
| raised through tariffs and excise - people paid for | | | | money they earned, regardless of how little it |
| the govenrment by paying extra for the goods | | | | was. |
| they consumed, while rich people (the ones who | | | | Now, we've reached a compromise between |
| paid taxes) earned extra money from these | | | | sky-high taxes combined with easy loopholes. Top |
| protective rules. | | | | income tax rates are under 40%, and more than |
| Interestingly engouh, the same argument is being | | | | half of the country doesn't pay taxes, even |
| replayed now that carbon taxes are becoming | | | | though they technically earn more than the |
| significant. The minimum income to pay income | | | | minimum income to pay income tax. What |
| taxes may keep creeping up thanks to | | | | happens now is that, as anyone who uses tax |
| middle-class tax deductions, but an increase in | | | | preparation software knows, you can find |
| energy costs hits nearly everyone. Superficially, | | | | deductions and credits that cause you to pay |
| the minimum income to pay income tax hasn't | | | | zero, or get money back, even if you have more |
| changed, but below the surface, it's clear that the | | | | than the minimum income. Income tax is |
| minimum just keeps dropping. | | | | something you have to calculate, but for more |
| The last time this debate was resolved, it | | | | and more Americans, it's not something you have |
| happened through the Supreme Court. They ruled | | | | to pay. |