Even with the president promising to tax only the rich, why did 75% of Americans believe they were the ultimate targets of any threatened tax hike? The history of trickle-down taxation over the last 100 years and the last two Democratic administrations suggests an answer.
The Alternative Minimum Tax was imposed in 1969 because 115 households investing in municipal bonds reportedly paid little or no federal income tax. This tax on the rich who were paying what the president and others call a “fair share” now affects four million households. On Jan. 1, 2013, it is set to hit 27 million more—raising an estimated $120 billion, according to the Obama 2013 budget. In 40 years, a tax on 115 households will have grown to threaten 31 million.
The personal income tax, brought courtesy of the 16th Amendment, also promised to be a tax on the wealthiest Americans. It began in 1913 with a top rate of 7% and hit only those with a taxable income of $500,000 or more. (According to the Bureau of Labor Statistics inflation calculator, that would be $11.5 million now.) Today, roughly half of American families pay the personal income tax.
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