Birthdays are generally happy occasions. Last Sunday was a birthday that has a lot of Americans dodging, weaving and avoiding reality — Feb. 3, 1913, Congress ratified the 16th Amendment of the Constitution. Some would argue that nothing has been right since.
With April 15 just a few months away, most Americans are sweating that day that lives in infamy every year for the last 100.
Just to refresh your memory, here’s what the 16th Amendment gives the federal government the power to do: “The Congress shall have power to lay and collect taxes on incomes, from whatever source derived, without apportionment among the several states, and without regards to any census of enumeration.” Got it?
In simple terms, the federal government has the right to set taxes on income no matter if you’re Joe Six Pack or PGA legend Phil Mickelson.
One might wonder what it was like to be taxed on one’s income 100 years ago. Well, Al Neuharth, founder of USA Today, was wondering the same thing. Here’s what he found: “When Congress passed the income tax law in 1913, a couple making over $4,000 in taxable income after all deductions was subject to a 1 percent tax rate.” You read that correctly — 1 percent.
Now, hang on, it gets interesting. “With inflation that $4,000 then is equal to about $93,700 now.” However, to be taxed on that equivalent income would cost today’s couple 25 percent in federal income taxes. Let’s see, that’s $23,425 the couple would owe the Internal Revenue Service on April 15.
We may have just “celebrated” the federal income tax and figure what today’s couple would owe on their combined income, but the state of Minnesota caught on to the practice of taxing income. A couple making $93,700 would face a 7.05 percent income tax on top of the federal income tax. The couple would owe the governor $6,605.85. If my calculator is adding things up correctly, that’s $30,030.85 owed the IRS and the state of Minnesota.
Keep in mind that this highly taxed couple has to make a house payment, a possible car payment, fuel and insurance for both, I guess the government should allow them enough to eat.
Let me know if I missed the birthday celebration last Sunday for the 16th Amendment, but there was something else going on Sunday — oh yeah, Super Bowl XLVII.
Conclusion? Mark Twain said it best: “What is the difference between a taxidermist and a tax collector? The taxidermist takes only your skin.