How the Income Tax Created the American Welfare State
Ending the Federal Income Tax: A Return to American Prosperity
Chris’ newly released coin, Abolish the Income Tax, is an idea that’s long overdue. The gravy train has gone off the rails. The federal government has gone from levying reasonable taxes in the 18th century to pay for necessities to becoming a drunken sailor on an obscene and pointless spending binge with no end in sight.
Unfortunately, there isn’t a person alive today who remembers a time when there wasn’t an income tax. And yet, unknowingly, it has become an albatross around every working man’s neck and the dead bird has been there for so long that people just accept it as normal. Most people can’t even fathom what it would be like to have their income taxes back in their own pockets. It has literally become an alien concept. Even Benjamin Franklin agrees when he wrote, “In this world, nothing is certain, except death and taxes.”
Of course Mr. Franklin wasn't referring to the modern federal income tax, as this was not established until 1913 with the ratification of the 16th Amendment to the US Constitution. What he was referring to was the ability of governments, primarily England, to levy taxes on popular products, such as stamps and tea. And, as Americans, we all know how that ended. The premise literally started the American Revolutionary War.
2025 "Abolish the Income Tax" Silver Proof Coin, by Chris Duane
From Revolution to Revenue
Despite the fact that colonial America went to war primarily due to the egregious taxes England imposed on their colonies, once the war for independence was won, the newly established United States of America started doing the exact same thing to its citizenry.
The US Congress began to impose taxes on Americans almost immediately. The new US federal government needed cash in order to perform the three functions they were charged with - defend the country, print the money and set foreign policy. The government didn’t have it and taxation was the only way to get it.
In Franklin's time, although tariffs were a source of revenue for the United States government, most revenue was acquired from taxes levied on property, products and in some colonies, on individuals.Taxes inflicted on the population varied from colony to colony and later from state to state and they were not all accepted graciously either. Arguments, disagreements and fist fights often happened while being discussed.
Property taxes were the easiest to impose on men because most property owners wanted to vote and unless they paid their property taxes they were not given that privilege. This also meant that the voter had a vested interest in limiting the size of government and restricting its interference with their lives. It was one of the first checks and balances.
Today, you can vote even if you live under a bridge and your primary voting motivation is to keep the gravy train flowing into your pockets at the hard-working taxpayer’s expense.
The Seeds of Class Warfare
Another source of revenue was poll taxes. They were invented in order to broaden the voter base. If a person could pay the tax, whether they owned property or not, they were permitted to vote. This was the beginning of legalization of larceny by legislatures.
Then the institution of excise taxes began. These taxes were primarily levied on goods deemed immoral, such as alcohol and tobacco, but also included “luxury” products including glass windows. The start of class warfare? Sounds like it.
Initially, most of these taxes were used to build up our newly established federal government’s military. We needed ships, armament and men and that all cost money. The individual state representatives argued incessantly about how to acquire the money, with the rich states objecting to their having to fund the poor states defense. But, an agreement was ultimately attained.
Finally, in 1788, Article 1, Section 8, Clause 12 of the US Constitution was ratified in order to grant Congress the power to raise and support armies. As mentioned, printing our money and setting foreign policy were the only other responsibilities, and expenses, allocated to the federal government. The first appropriations act was passed in 1789 and amounted to $639,000.
The Tax Man Cometh: A Century of Punishment
When the income tax was established in 1913 the top tax bracket was 7 percent on income over $500,000 ($16 million today). During WWI money was again needed for the military. And so, the top tax rates jumped from 15% in 1916 to an unprecedented 77 percent in 1918. And to add salt to the wounds, the estate, or death tax, was created in 1918 too. These all robbed the most productive members of our society who were also building museums, universities and hospitals for the general public too. These men were NOT the bad guys. They were not hoarding piles of gold bars like greedy King Midas. They were generous men who spent a large portion of their incomes on philanthropic endeavours..
It’s no wonder the Great Depression started just 10 years later. The government had brutally and savagely punished our biggest employers and our best entrepreneurs, the very same men who raised America out of the mire and made it one of the greatest economic powerhouses on earth. The spectacular Industrial Revolution would never have happened if it weren’t for these, pre-income tax, men
WWII caused more expenditures on the military. And it was even worse than WWI with the income tax rates now rising to 94 percent on taxable income over $200,000 ( $6.5 million today). When Mr. DuPont testified before Congress during WWII about the excessive income tax rates he was being forced to pay, he said regretfully that this was the thanks his family got for providing the gunpowder that allowed America to win all of its previous wars.
“Abolish the Income Tax” Silver Coin from Silver Shield
The government literally robbed the DuPonts blind, as it did to most of our brilliantly successful entrepreneurs. By the 1960s, many of these families were forced to abandon their gracious homes, or donate them to non-profits to cover their tax bills.
More importantly, these talented men were forced to curtail or limit the activities of their successful businesses for lack of funds, while almost all of their profits went to pay the taxes inflicted on them, both during their lives and upon their deaths.
Top income tax rates remained at 91% from 1945 through 1963. It wasn’t until the passage of the Revenue Act of 1964 that the top and bottom rates were lowered from 20% and 91% to 14% and 70%.
Up until 1970, while continuing to squeeze America’s greatest producers and employers, the federal government managed to maintain a balanced budget, or in many cases, a small surplus. But, the rush to social justice demolished their historically balanced budgets starting with the implementation of the low-income allowance, which reduced, or eliminated, the income taxes for lower-income people. This loss of revenue had to be made up by someone, and the top earners took the hit again reducing their ability to expand their philanthropy. Is it any wonder Japan and China eclipsed our economy? The government was literally committing economic suicide.
The deficit spending explosion that occurred in 1970, which continues to this very day, is a direct result of Pres. Johnson’s implementation of his social program in 1964, called the Great Society. In just 2 years he established the Food Stamp Act of 1964; The Civil Rights Act of 1964; the Economic Opportunity Act of 1964, the Voting Rights Act of 1965; the Elementary and Secondary Act of 1965 and the Social Security Act of 1965, which established Medicare and Medicaid programs.
This unprecedented and expansive federal program was aimed at eliminating poverty, instituting racial justice and creating more social welfare programs. As a result, the federal government’s expenses exploded. Deficit spending became the norm and raising the income taxes became its primary source of revenue. In 1913, when the income tax was created, the form and directions fit on four pages. Today it requires 106 pages! As Will Rogers once said, “The difference between death and taxes is death doesn’t get worse every time Congress meets.”
The Great Society was an expensive pipedream. And worse yet, it’s become an abysmal failure. Unlike pre-1964, our major cities are much worse. They are now riddled with crime, poverty, homelessness, broken families and filth despite the untold trillions of dollars being dumped into them through the social programs Johnson created. The cities are unrecognizable cesspools when compared to the era before the “beneficial” social programs were begun.
Paying people to do nothing, especially when using other people’s money, breeds contempt, crime and the total destruction of self-worth. Work is good, no matter what the job. It gives people pride, purpose and perseverance. That’s what we should be paying for and, unlike the nameless, faceless, do-nothing paper-pushers in DC, the businessmen are truly experts in that field. Rather than steal their money, let them spend their own money as they see fit and the results will be astounding.
It’s time! Cut the income tax IV out of the addict’s arm. Kill its blood supply and stop the flow from the healthy to the unhealthy. Then, stand back and watch the American star start to rise over this nation once again.
Other 2025 Silver Shield Proof Round releases
