The history of the 16th amendment known originally as the ultra rich income tax is an interesting one that backfired on the ones who supported the bill. Initially, the income tax was instated to pay for the Civil War but in 1894 while President Grover Cleveland was in office the Democrats passed the first income tax during peacetime. Anyone making more than $800 per year, about 10% of the population, according to the 16th amendment had to pay income tax, which the middle and lower classes happily watched the amendment pass thinking that they would not be effected.
This is a common belief that is still held today. Tax the rich more and tax the middle class less. Which makes sense on the surface level doesn’t it? If someone is a business owner making more than $250,000 per year he should be taxed more because he makes more. But, lets look at what happened back in the late 1800s.
The ultra rich began to get taxed but the ultra rich did not pay the tax. How did they get away with breaking the law? Simple, they made the middle and lower classes pay for their additional taxes. How did they do that? Simple, because they owned the businesses they simply increased the cost of their goods and services, fired some employees thus coming up with the additional capital while not affecting their standard of living.
They became so good at not paying the income tax that the government needed to then tax the middle class to secure the additional income that it needed to run the country. The principles have not changed.
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