Hardly anyone likes paying taxes. But in 1913, President Woodrow Wilson signed a law establishing a tax some Americans wanted: the national income tax.
Historically, the U.S. government had raised revenues by taxing such items as liquor, tobacco and sugar. It frequently imposed steep tariffs on imported goods. But those taxes hit hard at consumers. What’s more, many Americans saw that industrialization was helping to create great fortunes, and they argued that newly wealthy citizens and businesses should pay a greater share of the tax burden.
‘Taxes are the price we pay for a civilized society’
In 1912, Wilson ran for and won the presidency on a platform that included a federal income tax. The following year he signed it into law. Americans still argue over taxes, but the income tax remains a vital source of federal revenue.
This tax on a year’s income, which must be fully paid by April 15 for the previous year, has always been “progressive,” meaning higher incomes are taxed at progressively higher rates.
While taxes are never popular, Americans pay their income tax, reasoning, along with former Supreme Court Justice Oliver Wendell Holmes Jr., that “taxes are the price we pay for a civilized society.”
This story was originally published on October 3, 2014.