I came across this infograph the other day, the one hundredth anniversary of the income tax. I have already expressed how I believe the 16th amendment is outright theft elsewhere, but today I would like to give you all some information (objectively) that this graph fails to take into account, and then make some remarks (subjectively).
Now one thing the above photo does not take into account is inflation caused by the federal reserve. The buying power was 23.62 times what it is today back in 1913. Another way of putting it, for every 4.5 cents of stuff I had back in 1913, I would have a dollar worth of stuff today. So, if you adjust the tax revenue of 1913 back into that days inflationary standard, the $16.6 billion is equivalent to $702.8 million of tax revenue; or, to flip the scenario, today’s $2.7 trillion was the equivalent of $114.31 billion in 1913.
Another tid-bit of information that this infograph leaves out is the population of the day. In 1913, there were 97,225,000 US citizens. Today, we have roughly 315,000,000 US citizens. So, when we see in the infograph that there were 358,000 1040’s filed in 1913, that is .37% of the population. Today’s 140,000,000 1040’s represents 45% of our current population.
That means today we derive 162.65 times the amount of tax revenue that 1913 US government did, with 121.62 times the percentage of taxes being filed. These estimates may sound a bit confusing but here is what you need to know: If taxes were equally taken out of each tax filer’s revenue, in 1913 (which isn’t too far from the truth seeing as the bracket ranges were between 1 and 7%), each tax filer paid the government $1963.13 (or in today’s numbers $46,369.10). If taxes were equally taken out of each tax filer’s revenue today, in 1913 numbers, each tax filer would be paying the government $816.50 (or in today’s numbers $19,285.73).
What is the significant difference?
The percentage of the population paying the government.
What would the 1913 government’s revenue had been if the same percentage (45%) of it’s population had paid it’s equal share? $85.89 billion (or in today’s numbers $2.03 trillion). What if 45% of the 1913 population paid today’s equal share? The revenue would be $35.72 billion (or in today’s numbers $843.78 billion). The public debt at the time was $2.916 billion (or in today’s numbers $68.88 billion), which was up from the previous year by $47.83 million (or in today’s numbers $1.13 billion). But that revenue was not received until 1914, which in that year the national debt was was $2.912 billion (or in today’s numbers $68.78 billion). That means they had paid down the national debt by $3.71 million (or in today’s numbers $88 million). They took in $702.8 million and paid down the national debt by $3.71 million dollars, which means they had a national budget of $699.10 million (or in today’s numbers $16.5 billion). Today the national budget is about $3.803 Trillion (or in 1913’s numbers $161 billion). We add to our national deficit annually by $901 billion (or in 1913’s numbers $38.15 billion).
Hypothetically, that means the government could invest $7 annually into each person equally (or $170 today). Today we invest (hypothetically) $12,703 annually into each person equally (or in 1913’s numbers $511). Does being a person in Today’s world really cost that much more?
I know my brain is a bit sore and I’m sure you may be wondering where I’m going with all of this but just bare with me!
Let’s say we lowered our taxes to an even 7% across the board (each person paid 7% out of their income). So, $14.1 trillion GDP (excluding the deficit spending) would generate $980 billion of tax revenue. Our government could still invest $3,112 annually into each person equally. But the fact is, not everyone needs $3,112 invested back into them. If I make $250,000 a year, I pay (at 7%) $17,500 in taxes. I will still have $232,500, which seems to be manageable. But let’s say I make $15,000 a year. I would owe $1,050 in taxes but could be invested into by the general tax revenue, yielding a $2,058 gain for that lowest class. If I make $100,000 a year, I would pay $7,000 dollars in taxes and still have $93,000 left over. I’m not advocating that a fair and flat tax should be in place necessarily (I would argue that no one but yourself should be able to determine how much of your own income you pay into the federal budget and federal programs), but that just by simply comparing the amount of tax revenue taken in historically, and adjusting certain aspects of that historical data, the only thing that has seriously changed, is the amount of people paying into the tax system and the amount of spending our government thinks it needs. Even if the same percentage of 1913 population was extracting taxes and even if we lowered our tax bracket to just one equal percentage, we are still spending 73 times the amount on each individual (equally distributed)!
An average single individual can expect 300 dollars a month from welfare assistance (which comes out to a little over the amount of assistance they could receive via my flat tax). That doesn’t take into account that half the population wouldn’t need such assistance. That over half of the federal budget would be freed up to expand needs for the bottom 5%, to continue spending a reduced military budget, and to provide other services, all without adding to our national debt. Our current safety net spending is roughly $411 billion. If we had a $981 billion budget (shoot let’s just say we set a flat tax that gets us to $1 trillion budget) we could pay for our safety net, plus medicare, plus CHIP, Plus Education, Plus Science and Medical Research. Yet, for some reason, we don’t spend enough, and we don’t consider that every dollar of deficit has to be paid back later with interest.
Now, I’m not suggesting that we keep any of these programs intact without change. I’m not even considering the fact that another $700 billion is being spent on military, which isn’t the same as spending $400 billion dollars on food (because food is consumed and then disappears, where as tanks and guns last for many years [ I had a friend recently tell me his local law enforcement is toting around guns from the Korean war]). There are definitely aspects of military, welfare, medical, educational, science, arts, and other federal spending that should be completely obliterated and other aspects that ought to be expanded. Why don’t we spend less money on creating military chemical weapons (something so horrible that we have forced other countries into submission over), and spend more money on laser defense systems that can protect the world from nuclear destruction? Why don’t we spend less money on medical abortions and more money on sexual education? Really both Republicans and Democrats have grown so complacent with their rhetoric that they are not willing to abandon their sacred cows and have a serious discussion about what is necessary and proper spending. I think the American people are ok with having an honest and open talk and I’m certainly ready to point out that if we continue spending at 150% the implosion will be disastrous, cause it’s already coming.
Obviously this is not a very thorough solution, and hopefully I can expand on the idea in the future, but for now I hope it’s clear that we have got to stop the spending.