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Happy 100th Birthday, Income Tax!

Income Tax Happy BirthdayOn Sunday, the Sixteenth Amendment, the one that laid the groundwork for a permanent federal income tax, celebrated its 100th birthday. Needless to say, not everybody was lining up to celebrate. In Forbes, wealth manager David Marotta used the anniversary as an opportunity to exhort readers to "Let the Income Tax Die at 100." Meanwhile, over at The Global Dispatch, Robert Harriman paired anti-tax quotes from a trio of Founding Fathers with a pro-tax quote from Karl Marx.

Even the biggest fans of the income tax system are generally quick to admit that they don't really like paying taxes, and some of its most furious foes have gone so far as to claim that the Sixteenth Amendment was never actually ratified. But whether you think federal income taxes are an unconstitutional power grab or, as Ray Raphael argued in Article 3, a natural progression from the property-based tax system that existed almost since the country's founding, one thing is certain: If it weren't for the federal tax system, America would never have been able to reach its current position in the world.

The interstate highway system that was key to America's postwar dominance? Fully 90 percent of it was funded by federal income taxes. The space exploration program that put the American flag on the moon? That money came from income taxes, too. The same goes for the standing army, the EPA, the Food and Drug Administration, and hundreds of other programs, large and small, that help keep Americans healthy, educated, and protected. And, as we've seen recently, reduced tax revenue makes it much harder to keep those programs operating.

As for all those entitlement programs that have gotten so much criticism in recent years, they're paid for through taxes as well. And, lest we wonder how Medicare and unemployment, WIC and student loan programs help keep America strong and safe, it's worth remembering that a healthy, well-educated work force is the key to keeping -- and, hopefully, strengthening -- America's place in the world.

So, while Feb. 3 may not quite rank with July 4 among our favorite days to celebrate, it's worth remembering that it's a key part of how we rose to become the most powerful nation in the world. So, without a hint of irony, here it is: Happy Income Tax Day!

And here (courtesy of our friends at Americans for Tax Reform) are a few fun facts about income taxes:

  • Top tax bracket in 1913: 7%
  • Top 1913 tax bracket threshold, in today's dollars: $11.6 million
  • Top 2013 tax bracket threshold: $450,000
  • Total number of 1040s filed in 1913: 358,000
  • Total number of 1040s filed today: 140 million
  • Total pages in the 1913 tax code: 400
  • Total pages today: 73,954

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Cities with the Lowest Tax Rates

The total amount of tax you pay reaches far beyond what you owe the federal government. Depending on where you live, most likely you're required to pay additional taxes, including property and sales tax. The disparity between the amount of tax you pay in a low-tax city and that in a high-tax city can be dramatic. Living in any of these 10 cities could save you a bundle, although the exact amount may fluctuate based on your income and lifestyle choices.

Cities with the Highest Tax Rates

Much ado is made in the press about federal tax brackets, but cities can carry a tax bite of their own. Even if you live in a state that has no income tax, your city may levy a variety of taxes that could eat away the entire benefit of living in an income tax-free state, including property taxes, sales taxes and auto taxes. Consider all the costs before you move to one of these cities, and understand that rates may change based on your family's income level.

Great Ways to Get Charitable Tax Deductions

Generally, when you give money to a charity, you can use the amount of that donation as a deduction on your tax return. However, not all charities qualify as tax-deductible organizations. While there are many types of charities, they must all meet certain criteria to be classified by the IRS as tax-deductible organizations. There are legitimate tax-deductible organizations in many popular categories, such as those listed below.

A Freelancer's Guide to Taxes

Freelancing certainly has its benefits, but it can result in a few complications come tax time. The Internal Revenue Service considers freelancers to be self-employed, so if you earn income as a freelancer you must file your taxes as a business owner. While you can take additional deductions if you are self-employed, you'll also face additional taxes in the form of the self-employment tax. Here are things to consider as a freelancer when filing your taxes.

Tax Deductions for Voluntary Interest Payments on Student Loans

Most taxpayers who pay interest on student loans can take a tax deduction for the expense ? and you can do this regardless of whether you itemize tax deductions on your return. The rules for claiming the deduction are the same whether the interest payments were required or voluntary.

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I think the GOP arent conservative enough in many respects. They arent environmentally conservative, They really arent fiscally conservative either, by looking at national debt graph since Carter. They arent conservative with our military when they knowingly use falsified information to coax the nation into war. They arent conservative with our international sovereignty as global trade agreements favor US based multinationals at the expense of our own domestic work force and sovereign rights, Etc,....

They have hijacked "conservative" to mean corporate favoritism, and stifling of social freedoms.

February 05 2013 at 9:10 PM Report abuse rate up rate down Reply

Thanks to the extremely high taxes in this country, the American family has been destroyed. Both Mother and Father must work to support themselves and their children. The children are left alone most of the time to fend for themselves. No way we should have to live like this!

February 05 2013 at 1:41 PM Report abuse +1 rate up rate down Reply

How about we lower taxes and eliminate the tax loops that allow companies to offshore their profits so they don't pay taxes like the rest of us.

I wonder how much lower that could drive taxes to take the burden off of the individual???? 10%, 20%???

February 05 2013 at 12:19 PM Report abuse rate up rate down Reply

Interesting how nobody here will say how much they actually paid in total taxes. Our total taxes, that's payroll, state, federal, social security, medicare, medicaid, was $24,000, which is $12 an hour in total taxes. Some states don't have an income tax, so people living in those states don't feel the pinch of taxes during the year as much as those of us that live in states with a state income tax. Think of how many families are paying over $20,000 of their income in total taxes every year, it certainly has to be over 50 million families. Now think about how much that actually is and think about how much that actually removes from the economy. How many car payments is $24,000? How many second homes is that $24,000? How much wealth is the income tax confiscating from the people? So how are people getting around paying the income tax? Buying more home than they need so they can write off the mortgage interest and thus write their income down. Investing their money pre-tax in an IRA, if they can afford to. Most people need the after tax income to pay for things they bought, or just to pay their bills, thus cannot hide their money pre-tax in IRA's and such. Face it, most people can't lower their tax bills, which really is everyone's biggest bill, bigger than your mortgage and your car payment. And when taxes are your biggest bill, the system is broken.

February 05 2013 at 12:16 PM Report abuse +1 rate up rate down Reply
Michael Keohane

When the income tax was first proposed, one Representative proposed a Constitutional Amendment limiting the maximum tax rate to 3%. His suggestion was laughed down by his fellow Represatives as unnecessary as any Congress that tried to tax the American people at a rate greater than 3% would be voted out of office at the next election. Boy, were they wrong!

February 05 2013 at 11:01 AM Report abuse rate up rate down Reply

This guy says all the good things that income tax has done? This country would be far greater if Federal intrusion was starved out. He mentions all the agencys. None of them are Constitutiional and most should be eliminated. REPEAL the 16th amendement and restore America.

February 05 2013 at 10:59 AM Report abuse +1 rate up rate down Reply

Happy Birthday IRS. Now die!

Until we collect the taxes from the trillion dollar per year underground economy, politicians need to quit saying the revenue answer to fixing the debt is to raise taxes. Common sense that both parties should first unite to collect the massive amount of uncollected taxes from the trillion dollar underground economy. And do it aggressively and quickly.

Passing a flat federal tax to collect revenue has built in cost cutting for government and citizens. The IRS can be closed. Citizens won't have to pay to have their taxes done. Won't have to face IRS audits. Hire a lawyer, etc. And we won't need as big a tax increase to pay down debt, run government. In the end, citizens have more money to pay our monthly bills.

A flat federal tax should also make crime less attractive, to include illegal entry. They now spend their ill gotten incomes without paying federal tax. With a flat federal tax, they pay when they spend. Less crime saves us even more money.

At the same time we must end all tax exemptions, deductions, credits, preferences, subsidies for every person, company, and organization. To include farmers, religions, and all charities. No more smoke and mirrors and deception. Ending these political ploys will keep it simple and that will save taxpayers more money. And help reduce the operating cost of government.

The best thing about a flat federal tax, it serves to unite Americans, as in the United States of America. The current tax system/code is a great divider that must stop. When all pay when we buy, nobody will tune out of a tax increase.

We still help all that need and earned help, but they put in on the front end. They may get it all back and more on the back end when they apply for help, but they must pay federal tax on the front end as they buy.

February 05 2013 at 9:44 AM Report abuse +1 rate up rate down Reply

Who was surprised when they heard 1913 was the magic year? 1913, Woodrow Wilson (D). By 1913 we had retired 50% of the National Debt we ran up during the Civil War and without an income tax, since 1913 we have retired 0% of the National Debt, but increases it to 16 Trillion Dollars. Wow what a good idea Income Tax was.

February 05 2013 at 9:30 AM Report abuse -1 rate up rate down Reply

Happy? NOT!
just give us a one page tax code please.
tax compliance should not be a major job sector.
and everyone should pay some.

February 05 2013 at 8:54 AM Report abuse rate up rate down Reply

So while john Boehner & his band of Republican Crooks( The Democrats are just as crooked) would crush unions,workers rights to organize,block all efforts to "A LIVING WAGE"any effort to keep GOOD JOBS in AMERICA, eliminate the middle class,& plunge us into poverty & slavery as was in the end of the 19th century,& begining of the 20th century A lower standard of living,means lower wages,which means people cannot or don't make enough money to pay income tax.Lower wages means people cannot afford to have families,raise children to fight future senseless wars, & not have enough money to pay for said future senseless wars DUHHH ! So If WALMART is the largest employer in America,selling SCHITT made in CHINA, how much tax revenue is being generated from minimun wage,or part time Walmart Employees? Do the CHINESE PAY INCOME TAX on the income being generated from PRISON LABOR ? if NOT,WHY NOT?

February 05 2013 at 8:44 AM Report abuse rate up rate down Reply