Prompt Cast
The History and Evolution of Income Tax in the United States
TLDR The income tax in the United States was initially demanded by poorer and middle-class people in the late 19th century as a way to create a fairer tax system and extract resources from the wealthy industrialists of the time. Over the years, the tax system has evolved, with debates over who should pay for major wars, the creation of a hidden welfare state, and the shift towards tax cuts as a means of stimulating economic growth.
Timestamped Summary
00:00
The IRS has announced a change that will lower the tax bill for many Americans due to inflation, and the top 25 richest people in the US, including Warren Buffett, Jeff Bezos, and Elon Musk, pay little to nothing in federal income tax.
04:49
The income tax in the United States was initially demanded by poorer and middle-class people in the late 19th century as a way to create a fairer tax system and extract resources from the wealthy industrialists of the time.
10:19
Opposition to taxes, particularly consumption taxes, in the late 19th century was often tied to opposition to reconstruction and the costs associated with it, but there was also a growing demand for a progressive income tax to replace the tariff system and levy fairer taxes on the producing classes of the United States.
15:42
The progressive era in the early 20th century saw a demand for progressive reforms, including the income tax, as a response to the concentration of wealth in the hands of a powerful elite, leading to the passing of the 16th Amendment in 1913, which initially had a relatively high exemption level and affected few people, but later changed during World War I when there was a debate about who should pay for the war.
20:46
By 1913, the 16th Amendment to the Constitution was established and taxes on personal income became official with the hopes of creating a more fair revenue system, but just four years later the system started to shift during World War I.
25:46
The tax system becomes a battleground over ideology as the US engages in major wars and expands its influence, with elite forces objecting to income tax and significant moments in history where people didn't talk about taxes, but rather focused on unfair taxation and getting a good deal for their dollar.
30:41
As the 20th century progresses, people begin to feel that their taxes are not translating into benefits for them in their lives, partly because the government incentivizes private businesses to provide certain benefits, like health insurance, through the tax code, making it seem like it's coming from the private sector rather than the public sphere.
35:52
The US tax code incentivizes private businesses to provide benefits like health insurance through the tax code, creating a hidden welfare state, while also treating earned income differently than capital gains income, which benefits the wealthy.
40:49
The idea of cutting taxes, particularly for the wealthy, to stimulate economic growth emerged in the 1970s and 1980s as a response to a combination of unemployment, inflation, and economic stagnation, shifting the focus from government support to individual tax burdens.
45:46
The Republican Party's shift towards a doctrinaire commitment to tax cuts in all circumstances has made it more difficult to strike compromises and respond to emergencies, ultimately challenging the social compact and the purpose of taxes themselves.
Categories:
History
Society & Culture
