History and Progress in Taxes

“Unquestionably, there is progress. The average American now pays twice as much in taxes as he formerly got in wages”.

 Henry Louis Mencken (1880-1956) American journalist, satirist and social critic.

These words sum up the reality about taxes in the United States and generally around the world when referring to who bears the tax burden.

The history of taxation dates back to Egypt, Greece, and the Roman Empire. In Greece they taxed cooking oil, scribes (tax collectors) would audit households on the amount of cooking oil used. The Greeks taxed their population only during times of emergency like war. Once the conflict was over the tax was ended and if gains were made by the war refunds were made to the population. The Greeks also taxed those who did not have an Athenian mother or father 1 drachma for men and ½ a drachma for women. In Rome the earliest taxes were on commerce. Taxes were imposed on imports and exports called portoria. Caesar Augustus was considered the most brilliant tax strategist of the Roman Empire. During his reign the burden of tax collection was given to the cities instead of the central government. He taxed inheritances 5% except for gifts to children and spouses. The English and the Dutch used this model for their tax system. Julius Caesar had a 1% sales tax and Caesar Augustus had a 4% sales tax for slaves and 1% for everything else.

Great Britain- When Rome fell; Saxon Kings imposed taxes on land and property including substantial customs duties. During the 100 year (1337 to 1453) war between England and France there was a rebellion of the nobles of Aquitaine over the oppressive tax policies of Edward also know as the Black Prince. Taxes during the 14th century were progressive in 1377 the Poll tax imposed by the Duke of Lancaster was 520 times the tax on a peasant. The early tax structure was on the wealthy, office holders, and the clergy. The poor paid little or no taxes. It was Charles the First in his Kings Writ stated that taxes should be paid according to status and means, hence the progressive tax system. He was rewarded with this idea by being charged with treason and beheaded around 1629. In 1643 taxes were imposed on commodities to pay for Oliver Cromwell’s army. Parliament imposed taxes on meat and grains. Through an excise tax, taxes shifted the burden of taxes from the rich to the poor a very regressive tax. In 1647 there was the Smithfield riots, the riots were a result of the elimination of peasant hunting and the inability of peasants to feed their families because of the excise taxes on meat and grains.

Colonial Americans were paying taxes under many English Acts. Taxes were imposed on sugar, wine, and other commodities plus taxes on newspapers and commercial and legal documents.

Post Revolution America was noted for experimenting in taxation as well. In 1794 settlers west of the Alleghenies started the Whisky Rebellion against Alexander Hamilton’s excise tax. President Washington sent troops to quell the riots. In 1798 Congress enacted the Federal Property Tax to pay for the expansion of the Army and Navy. Does this sound familiar during Greece and Roman eras. In that same year John Fries started the Fries Rebellion in opposition to this tax who was also a militia organizer in the Whisky Rebellion. During both these rebellions individuals were charged with treason and than pardoned by our presidents at the time.

The first progressive income tax was suggested in the war of 1812 but never imposed because of the treaty of Ghent. The tax was fashioned after the British Tax Act of 1798. The tax act of 1861 proposed that “there shall be levied, collected and paid, upon annual income of every person residing in the U.S. whether derived from any kind of property or from any professional trade, employment, or vocation carried on in the United states or elsewhere, or from any source whatever. The 1861 Tax Act was passed but never put in force. Rates were 3% on income above $800.00 and 5% on income of individuals living outside the U.S. The Tax Act of 1862 was passed and signed by President Lincoln July 1, 1862. The rates were 3% on income above $600.00 and 5% on Income above $10,000.00. The rent or rental value of your home could be deducted from income in determining tax liability. The purpose was to finance the Civil War. Yet this was the beginning of the Tax Code now over 5000 pages.


Although the Tax Act was accepted only 276,661 people actually filed tax returns in a population of 38 million. After the Civil War taxpayer approval waned and the Tax Act of 1864 was modified to change to a flat 5% with the exemption of $1000.00. The tax was repealed in 1872 and Tariffs took its place to finance the U.S. government. Until 1913, when the 16th Amendment was passed which allowed the Congress to tax the citizens it was not allowed under the constitution.

In the 1930’s federal individual taxes were never more than 1.4% of GDP Corporate taxes were never more than 1.6% of GDP. In 1990 those same taxes were 8.77% and 1.99% respectively. What’s wrong with this picture? In 2006 individual taxes were 7.3% of GDP and Corporate taxes were 1.2% of GDP this was a 16.3 % decline and a 25% decline respectively from 1990.


Social Security myths:

 “In other words, a democratic government is the only one in which those who vote for a tax can escape the obligation to pay it”.

 Alexis de Tocqueville (1805-1889) French social philosopher.

Participation would be voluntary.

Covered employment was mandatory. If you worked for local government you had the option.

Participants would only pay 1% of the 1st $1,400.00

In the1935 law the rate was 1% of the first $3,000 for the employer and the employee, and would increase by 1949 in steps to 3% on the first $3000.00.

Participants could deduct their contribution from income.

          This is completely false. In fact the law forbids deductibility.


Participant contributions would be put in a Trust Fund and not used for General Operating purposes and only to fund Social Security Retirement Program.

This is basically correct. The question arises on the presentation in the overall budget. In the Johnson Administration the Trust Fund was part of a unified budget. That ended in 1990. They are shown as a separate line in the overall budget. The bottom line is that all monies collected are in the same pool of money used to finance the government operation of the United States. 

The Annuity payments would never be taxed as income to retirees.

This was never a provision of the original law. In 1983 Congress changed that and authorized taxing of Social Security. 

Ben Franklin’s said “but in the world nothing can be said to be certain except death and taxes.” 

No one can argue with this. But, what we can do is argue about how they are spent and who should bear the burden. The original intent of taxation through out world history was to finance armies for war or military needs. As populations grew primarily in the 20th Century economic systems were unable to provide a means of income for all; Governments were forced to supplement not provide 100% of subsistence for those who were unable to sustain a modest lifestyle of necessities for themselves and their families. These ideals which are faith based dominate the Democratic Party ideals more so than our Republican opposition. A review of history in American Administrations will validate this statement. There is nothing wrong with a progressive tax system, providing a fair distribution of tax burden is applied. The current tax code has become regressive. The last two Republican administrations have manipulated the code to favor the wealthy and corporate interest. Statistics prove the shifting of the burden which has continued to move families from the middle class to poverty levels. Expendable income has declined because of declining incomes and increased costs for necessities such as education, healthcare insurance premiums, food, and housing insurance costs. 

Prepared By:

Vito J. Delgorio Sr.


2 Comments to “History and Progress in Taxes”

  1. The Fair Tax is the most elegant solution to our current situation. It could be implmented for an 18 month test and then a complete switch over performed. But Congress will NEVER do it because it effectively kills lobbyists.


  2. The fair tax is a regressive tax system and a consumption tax. After the calculations are made and applied it effectively becomes an almost 30% tax on everything except education. Guess who pays the majority of taxes in that system.

%d bloggers like this: