This is an interesting economic time, on many timescales. It starts with this week’s Presidents’ Day holiday, and how I have never quite been able to figure out why this has been deemed the moment when one should buy a car or a mattress. With another step back, there is the curiosity surrounding how the recent tax reform bill will play out as our economy adjusts over the next year. Then, I read this article from Forbes.com, which led me to take a much bigger step back.
Overall, this was a more playful article looking at Presidents’ Day and some historical tidbits when it comes to presidents and taxes. It wasn’t intended to be serious or groundbreaking, and did not try to present new information, but I was struck by an old fact – the United States' modern income tax system did not start until 1913. There were some temporary and smaller income taxes prior to that date, but that was when the system began that included all people and was intended as a longstanding program. It even took a constitutional amendment to put into effect.
That means that the United States has existed for more time without this type of income tax than it has with it. It feels like such an unavoidable part of government and society, it’s a little mind-boggling to imagine the nation existing for over a century without it.
The concept of what government is, and what it should provide, has evolved to such a degree since then that it would be impossible to ever put that genie back into the bottle and imagine the country existing without such a tax. Sure, a handful of states operate without it, but it generally means they are taxing other things to fund themselves.
Still, however, the federal income tax has existed for a significant portion of time. That middle-level timescale of recent tax legislation, though, highlights how little consensus there is on how the system should operate. In fact, I would be much more shocked if there ever comes a time when there is general consensus over how the system should work than I was by this recent realization over how long it didn’t exist.
That means that it is only a matter of time before the next big tax change comes along. After all, it was not that long ago when the Affordable Care Act gave us our last batch of confusing changes where no one felt certain what their tax return was going to look like. And even If Republicans remain in power for a number of years, tweaks happen all the time.
I know this is different than most things I write, but hopefully you don’t mind this one-week historical interlude. I think it has value, for not only can it be slightly surprising, but it can also be heartening. It shows that changes always happen, and no matter how big they are, we always navigate those changes. Hopefully there is some wisdom to be drawn out of that in these uncertain times.
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