History of Taxes

A brief history of taxes.

The Greeks actually refunded taxes in full. The Romans laid the philosophical foundation of our current tax system.

As for income taxes, as it was in Canada, they were levied not for any humanistic reason, but to fund wars. Of all the taxes, income taxes - or direct taxes - is the most questionable one. Throughout history indirect taxes were used.

It seems one basic axiom was understood: Don't reach into the pockets of the people.

"During the 1930's federal (U.S.) individual income taxes were never more than 1.4 percent of GNP. Corporate taxes were never more than 1.6 percent of GNP. In 1990 those same taxes as a percent of GNP were 8.77 and 1.99 respectively."

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Excerpts from For Good and Evil: The Impact of Taxes on the course of Civilization:

If you like taxes and defend them and believe they're necessary to achieve social progress then move along. You're not going to like this. For the rest of you curious enough, read the link and make up your own minds.

"Adams persuasively argues that the introduction of the income tax around the turn of the 20th century has become perhaps the greatest evil of modern-day tax systems. In Britain, John Stuart Mill was a persistent critic of the income tax. He called it "a mild form of robbery" that was "defensible on the same ground that the highwayman Highwayman,



See : Highwaymen defends his acts." In the United States, where the first income tax was introduced with a top marginal rate of 7 percent, fiscal conservatives in Congress fiercely objected on the grounds that the tax would soon reach the unthinkable rate of 10 percent. How wrong they were. Within 10 years (during World War I), the highest marginal tax rateMarginal Tax Rate


The amount of tax paid on an additional dollar of income. As income rises, so does the tax rate.


Many believe this discourages business investment because you are taking away the incentive to work harder."


"Throughout the 20th century the income tax juggernaut has been an instrument of political mischief in ways that most Americans probably would never suspect. Here is one intriguing scenario Adams draws:


"The Viet Nam disaster might have been avoided if it had not been for the American tax system which put enormous revenues in the hands of the U.S. presidency. It was easy for Mr. Johnson to hoodwink
Congress. If President Johnson had had to ask Congress to double everyone's taxes to finance the war, Congressmen would have had to explain that to their constituents. It is quite probable that if the Viet Nam war had been financed with new taxes which doubled everyone's tax burden, Congress would have questioned the need for combat forces that cost millions of dollars per minute in a remote jungle on the other side of the earth."


"...The history of taxation is a history of the law of unintended consequences. One of these is that high tax rates yield declining revenues because of tax avoidanceThe process whereby an individual plans his or her finances so as to apply all exemptions and deductions provided by tax laws to reduce taxable income."



"Through tax avoidance, an individual takes advantage of all legal opportunities to minimize his or her state or federal flight, and economic decline. Countless great empires learned this lesson centuries before the birth of Art Laffer. What is frustrating is that the lesson has had to be repeatedly relearned and still needs to be relearned (witness the Clinton administration). From the early 1900s through 1980, tax rates continually spiraled upward. The United States, Britain, and other nations adopted top income-tax rates of 90 percent and more.
Remember, historically high growth rates don't always mean a high rate of growth looking into the future. Growth slowed to a crawl while tax havens like the Grand Cayman Islands and Hong Kong flourished. During the last years of Soviet communism, the Gorbachev government lowered the top income-tax rate to 55 percent, a rate lower than now exists in much of the "free" world and lower than the top rate that prevailed in the United States from Franklin Roosevelt through Jimmy Carter."

"...Soak-the-rich schemes inevitably mean fewer rich to tax. In 1971 the Rolling Stones fled the United Kingdom and its oppressively high tax rates. As Mick Jagger explained: "We were forced to make a decision courtesy of the British government--live in England and not be able to afford another set of guitar strings, or move and keep the band together...."