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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