Detail, east Portland photo, courtesy Miles Hochstein / Portland Ground.

For old times' sake
The bojack bumper sticker -- only $1.50!

To order, click here.

Excellent tunes -- free! And on your browser right now. Just click on Radio Bojack!

E-mail us here.


This page contains a single entry from the blog posted on February 13, 2013 9:25 AM. The previous post in this blog was Grant High remodel won't start for more than four years. The next post in this blog is Reader poll: Should Stephen Kessler be paroled?. Many more can be found on the main index page or by looking through the archives.



Law and Taxation
How Appealing
TaxProf Blog
Mauled Again
Tax Appellate Blog
A Taxing Matter
Josh Marquis
Native America, Discovered and Conquered
The Yin Blog
Ernie the Attorney
Above the Law
The Volokh Conspiracy
Going Concern
Bag and Baggage
Wealth Strategies Journal
Jim Hamilton's World of Securities Regulation
World of Work
The Faculty Lounge
Lowering the Bar
OrCon Law

Hap'nin' Guys
Tony Pierce
Parkway Rest Stop
Along the Gradyent
Dwight Jaynes
Bob Borden
Dingleberry Gazette
The Red Electric
Iced Borscht
Jeremy Blachman
Dean's Rhetorical Flourish
Straight White Guy
As Time Goes By
Dave Wagner
Jeff Selis
Alas, a Blog
Scott Hendison
The View Through the Windshield
Appliance Blog
The Bleat

Hap'nin' Gals
My Whim is Law
Lelo in Nopo
Attorney at Large
Linda Kruschke
The Non-Consumer Advocate
10 Steps to Finding Your Happy Place
A Pig of Success
Attorney at Large
Margaret and Helen
Kimberlee Jaynes
Cornelia Seigneur
And Sew It Goes
Mile 73
Rainy Day Thoughts
That Black Girl
Posie Gets Cozy
Cat Eyes
Rhi in Pink
Ragwaters, Bitters, and Blue Ruin
Rose City Journal
Type Like the Wind

Portland and Oregon
Isaac Laquedem
Rantings of a [Censored] Bus Driver
Jeff Mapes
Vintage Portland
The Portlander
South Waterfront
Amanda Fritz
O City Hall Reporters
Guilty Carnivore
Old Town by Larry Norton
The Alaunt
Bend Blogs
Lost Oregon
Cafe Unknown
Tin Zeroes
David's Oregon Picayune
Mark Nelsen's Weather Blog
Travel Oregon Blog
Portland Daily Photo
Portland Building Ads
Portland Food and
Dave Knows Portland
Idaho's Portugal
Alameda Old House History
MLK in Motion

Retired from Blogging
Various Observations...
The Daily E-Mail
Saving James
Portland Freelancer
Furious Nads (b!X)
Izzle Pfaff
The Grich
Kevin Allman
AboutItAll - Oregon
Lost in the Details
Worldwide Pablo
Tales from the Stump
Whitman Boys
Two Pennies
This Stony Planet
1221 SW 4th
I am a Fish
Here Today
What If...?
Superinky Fixations
The Rural Bus Route
Another Blogger
Mikeyman's Computer Treehouse
Portland Housing Blog

Wonderfully Wacky
Dave Barry
Borowitz Report
Stuff White People Like
Worst of the Web

Valuable Time-Wasters
My Gallery of Jacks
Litterbox, On the Prowl
Litterbox, Bag of Bones
Litterbox, Scratch
Ride That Donkey
Singin' Horses
Rally Monkey
Simon Swears
Strong Bad's E-mail

Oregon News
The Oregonian
Portland Tribune
Willamette Week
The Sentinel
Southeast Examiner
Northwest Examiner
Sellwood Bee
Mid-County Memo
Vancouver Voice
Eugene Register-Guard
OPB - Portland
Salem Statesman-Journal
Oregon Capitol News
Portland Business Journal
Daily Journal of Commerce
Oregon Business
Portland Info Net
McMinnville News Register
Lake Oswego Review
The Daily Astorian
Bend Bulletin
Corvallis Gazette-Times
Roseburg News-Review
Medford Mail-Tribune
Ashland Daily Tidings
Newport News-Times
Albany Democrat-Herald
The Eugene Weekly
Portland IndyMedia
The Columbian

The Beatles
Bruce Springsteen
Joni Mitchell
Ella Fitzgerald
Steve Earle
Joe Ely
Stevie Wonder
Lou Rawls

E-mail, Feeds, 'n' Stuff

Wednesday, February 13, 2013

Happy birthday, federal income tax

In the tax world, where we spend most of our time, it's a big month, because the 100th anniversary of the federal income tax is upon us. The 16th Amendment to the Constitution, which authorizes the tax, was ratified on Feb. 3, 1913, and the first law implementing the newly authorized tax was passed on October 3 of that year.

When that first income tax act was passed, it was made retroactive to March 1, and so that's when the first income subject to tax was received or earned. We suppose that some folks will celebrate the 100th birthday in October, but for us, we're going with the effective date, which is two weeks from Friday. We're still not sure exactly how the celebration is going to go, but a party is called for.

The income tax was a progressive measure, designed to, well, tax the wealthy. It was a Teddy Roosevelt project, although it didn't make it into law until Woodrow Wilson was in the White House. Democrats and western Republicans were the main promoters of the tax. It was inserted into a law that also lowered tariffs on imported goods. Nowadays, tariffs have been greatly diminished in importance, and the income tax has morphed, from an esoteric matter of concern only to the rich to an annual ordeal endured by nearly every working American, and even by foreigners with income from the United States.

Perhaps the best way to celebrate the 100th anniversary would be to start talking about scrapping the income tax in favor of some other form of taxation. We like the suggestion of making the income tax applicable to only the top 10% of income levels, with a national sales tax of some kind to replace most of the income tax. A national sales tax, such as a value-added tax similar to those in place in many industrialized countries, would be a drag to have to pay. But can you imagine not having income tax taken out of your paycheck? And not having to deal with taxes every April? It's a tradeoff worth talking about.

Comments (20)

Problem is that wouldn't stay at the top 10% for long. Then we'd have a VAT and a universal income tax.

If you take that attitude, the tax system will never change. The current, dysfunctional system will remain in place forever. You must like that.

No. I'm not opposed to switching to a VAT or sales tax if the income tax is eliminated. Hell I favor it.

Then we'd be more or less back to 1912. Not that that would necessarily be a bad thing, but the Taft years were not the nation's best.

...but the Taft years were not the nation's best.

Other than the 16th Amendment, what's the beef with the "Taft years". Seems like he'd have been your kind of guy.

The Federal Income tax arrived the same year as the private international banks got a hold of our money supply.

Printing money out of nothing and then charging interest takes revenue from somewhere.

Guess where?

I think household income top 10% is 125k and above. Exempting from income tax single or MFJ incomes below that amount would do a lot of good for our economy. In addition to benefits Jack describes, the scheme would also get the IRS out of administrating the social welfare program that is the earned income tax credit. The Service has done a woefully bad job at preventing fraud in the credit.

Is a national sales tax the right answer? Regressive yes but you can exempt food and medicine to shield the lowest income households from the tax.

Imagine what impact a consumption tax would have on the american family's balance sheet if it was to improve the savings rate and ultimately take pressure off Social Security in the coming decades. In a land of rampant consumerism, and on the heels of a generation of spoiled children who spent everything, we may yet be able to move the needle on improving the balance sheet if you target the Code towards consumption.

Complex topic...

You failed to mention the FED also came in to existence that year; an unaudited, unregulated, for profit agency who is accountable to no one (by Congress on paper, right). Where do those profits actually go?
What has Congress done to stop the FED from sending our $80 B in monthly purchases (supposedly of MBS) to overseas banks that are in trouble to prop them up?

I think the larger problem is with the bankers running things and their relationships with the politicians (see GS) not so much specific tax laws but the system as a whole as it is. Politicians seem to always want to approach cause and effect problems at the wrong end. Funny they never complain about their tax obligations,their health care, their retirement funds, etc..

Also see the rule of law (if it can be found anywhere any longer)which trumps anything in theory, if you want to attract investment $ and growth. Money will flow there... See Argentina for what not to do.

Globally money is flowing from east to west. Tax laws and enforcement are critical whatever the structure and we seem now to not have rules or laws unless you make under $250k.

Flat taxes rates are in place in a number of countries now. Rates from 12 to 25%.

I'd like to see a flat tax on consumption (three tiers).

So without some constitutional cap on those rates, nothing will ever stop the creep toward additional revenue for questionable expenditures. You see how VATs go if you've traveled, a tax on a tax on a tax, much like a government run capital project.

Maybe all of this is moot since we now have more debt than can ever be repaid.

I spend far too many hours and pay far too much constructing data for examination by the IRS. This lost production in both the private sector as well as supporting the IRS and its many associated agencies is a monumental drag on our economy.

How much do these agencies and regulations cost, compared to the flat tax structure? They try to justify themselves by the PR spin that for every $ spent they collect x$ but if we eliminate the thousands of pages of tax law, this argument is invalid.

Unfortunately, we will never get relief since those who benefit from these rules are the ones we'd have to rely on to change them. They like them just as they are. What we like matters not.

We need to find a way to repatriate those oversees business accounts that add nothing to our revenue base. They just sit there avoiding US tax rules. (see AAPL / $92B offshore)

The beauty of the VAT (or ugliness, depending on point of view) is that ultimately it comes down to everyday garden-variety consumers to be the ones who end up footing the bill, and they don't even know it because they can't see it, hidden as it is in the price of everything they buy. A tax and spend politician's wet dream.

Getting rid of the earned income credit would be highly regressive. There are other ways to deal with fraud in the program other than by eliminating it completely, Will. (Fraud which is usually perpetrated by unscrupulous tax preparers who justify exorbitant fees by promising unwary clients huge refunds, BTW.) Should someone who makes $15,000 a year really be taxed at the same rate as someone making $124,000?

How about we levy social security deductions on all income, rather than capping them like we do now?

ex-bartender, I did not make myself clear. I am in complete agreement with the spirit of the EITC and would not want to see the citizens who qualify for it to be cut off from that type of assistance. I just do not think that the IRS should be paymaster for the program. Maybe DHHS?

And yes, agreed, paid preparers are largely to blame for the fraudulent refund claims. There is a profit motive for them to game that credit. How can we let this type of social assistance be a profit center for H&R Block et al?

If you try to deliver social assistance through the revenue code I just think there are all kinds of problems that spring up. If simplicity and limiting the drag on our economy from tax compliance costs is the goal, then I think you have to simply raise revenue with the revenue code.

"If you try to deliver social assistance through the revenue code I just think there are all kinds of problems that spring up. If simplicity and limiting the drag on our economy from tax compliance costs is the goal, then I think you have to simply raise revenue with the revenue code."

That's my vote. The only thing the tax code should be used for is to raise revenue. Not shaping social, fiscal or economic policy or behavior. No punishing this or rewarding that.

As I understand, most of what has become the behemoth IRS code is via riders to other bills, riders that are favors to this interest or that or trade-offs for something else.

In the festive spirit of this centennial celebration I present a link to the 1913 1040 -

mark - "the FED also came in to existence that year; an unaudited, unregulated, for profit agency who is accountable to no one (by Congress on paper, right). Where do those profits actually go?" Tsk, tsk, you and the great unwashed don't understand that we know better than you. As you say, it's a complex topic. Keep complaining, but no one is listening.....

Meanwhile the Feds are making it harder and harder to submit income taxes. The last couple of years they tiptoed over to the 1st & Main Building downtown while the Edith Green Building was being renovated, without posting a sign or making any real effort to let people know they had moved. They're still on the 13th (appropriate) floor over there where the forms are accessible without going through security, but otherwise you're wanded and whatever you're carrying is x-rayed before you get to speak to an IRS employee.

I was down there today because some of the forms I needed couldn't be downloaded and submitted from the online site. And guess what? All of the 1040 instruction books were gone with no more expected for 1 1/2 weeks. It was bitcherama deluxe as I stood there watching disappointed people who couldn't find the forms they needed to submit their tax return by mail.

And then they wonder why not everyone files on time.

I appreciate what you're saying Will, but with all due respect, I've dealt with both the IRS and DHS. And the IRS is far more efficient - and their paperwork far easier to complete - to gain roughly the same dollar amount of benefit - for those of us in the lower income rungs who are eligible for the EITC, anyway.

The same is true of other common tax deductions or credits that benefit mainly the lower and middle class - the deductions for mortgages and student loans, for instance. They are extremely easy to figure and I am not swayed by the argument that we need to dispose of them in order to simplify the tax code. I certainly don't feel they constitute a "drag on our economy from tax compliance." It takes Turbo Tax about 8 seconds to compute my eligibility for, and dollar amount of, my EITC.

I ask again... Should someone who makes $15,000 a year really be taxed at the same rate as someone making $124,000?

Well there are some tough political sells to make for most reforms, but proposing a new kind of sales tax may be an Oregon windmill best left untilted.
Look up Al Ullman, one of the most powerful Congressman Oregon every had, in Wikipedia:
"In the midst of the "Reagan landslide" -- which also led to the defeat of President Jimmy Carter and the Republican takeover of the United States Senate -- Ullman narrowly lost his bid for a thirteenth term from the Second District" in 1980. His loss was "widely attributed to the nationally prevalent anti-incumbent and anti-government mindset; the presence in his House race of an independent candidate; the increasing conservatism of the Second District; and to his advocacy for a value-added tax similar to that now used in the European Union and other nations as a partial alternative to what he viewed as inequities in the existing Federal income tax system."
Maybe someday, but not soon.

I have no doubt that I will retire with the income tax still in place. It's been quite a career so far, making money off the complexity. But it's truly a national disgrace.

The scenario for a VAT is Republicans in control of both Houses, especially the Senate, and a firebrand Republican in the White House. Then a disaster of some kind to cripple the income tax -- maybe some kind of protest in which employers participate. If the withholding agents rebel en masse, and the IRS is starved for enforcement money by a stingy Congress, the income tax will crash.

The top marginal rate in 1913 was 7% (seven percent) on income over $500,000, which was a whole lot of money back then.

Now the top rate is 39.6% after $450,000. And other taxes define "the rich" down to well under that. Most earners just got hit by restoration of the full Social Security tax.

I would just as soon abolish the income tax, and replace it with a VAT. It would make more sense to see the same money pass through the system five times at 10% than one time (and quite reluctantly) at 40%.

" If the withholding agents rebel en masse, and the IRS is starved for enforcement money by a stingy Congress, the income tax will crash."

The way to get rid of the income tax and the payroll tax along with it is to stop all withholding and require payment with the filings.


As a lawyer/blogger, I get
to be a member of:

In Vino Veritas

Lange, Pinot Gris 2015
Kiona, Lemberger 2014
Willamette Valley, Pinot Gris 2015
Aix, Rosé de Provence 2016
Marchigüe, Cabernet 2013
Inazío Irruzola, Getariako Txakolina Rosé 2015
Maso Canali, Pinot Grigio 2015
Campo Viejo, Rioja Reserva 2011
Kirkland, Côtes de Provence Rosé 2016
Cantele, Salice Salentino Reserva 2013
Whispering Angel, Côtes de Provence Rosé 2013
Avissi, Prosecco
Cleto Charli, Lambrusco di Sorbara Secco, Vecchia Modena
Pique Poul, Rosé 2016
Edmunds St. John, Bone-Jolly Rosé 2016
Stoller, Pinot Noir Rosé 2016
Chehalem, Inox Chardonnay 2015
The Four Graces, Pinot Gris 2015
Gascón, Colosal Red 2013
Cardwell Hill, Pinot Gris 2015
L'Ecole No. 41, Merlot 2013
Della Terra, Anonymus
Willamette Valley, Dijon Clone Chardonnay 2013
Wraith, Cabernet, Eidolon Estate 2012
Januik, Red 2015
Tomassi, Valpolicella, Rafaél, 2014
Sharecropper's Pinot Noir 2013
Helix, Pomatia Red Blend 2013
La Espera, Cabernet 2011
Campo Viejo, Rioja Reserva 2011
Villa Antinori, Toscana 2013
Locations, Spanish Red Wine
Locations, Argentinian Red Wine
La Antigua Clásico, Rioja 2011
Shatter, Grenache, Maury 2012
Argyle, Vintage Brut 2011
Abacela, Vintner's Blend #16 Abacela, Fiesta Tempranillo 2014
Benton Hill, Pinot Gris 2015
Primarius, Pinot Gris 2015
Januik, Merlot 2013
Napa Cellars, Cabernet 2013
J. Bookwalter, Protagonist 2012
LAN, Rioja Edicion Limitada 2011
Beaulieu, Cabernet, Rutherford 2009
Denada Cellars, Cabernet, Maipo Valley 2014
Marchigüe, Cabernet, Colchagua Valley 2013
Oberon, Cabernet 2014
Hedges, Red Mountain 2012
Balboa, Rose of Grenache 2015
Ontañón, Rioja Reserva 2015
Three Horse Ranch, Pinot Gris 2014
Archery Summit, Vireton Pinot Gris 2014
Nelms Road, Merlot 2013
Chateau Ste. Michelle, Pinot Gris 2014
Conn Creek, Cabernet, Napa 2012
Conn Creek, Cabernet, Napa 2013
Villa Maria, Sauvignon Blanc 2015
G3, Cabernet 2013
Chateau Smith, Cabernet, Washington State 2014
Abacela, Vintner's Blend #16
Willamette Valley, Rose of Pinot Noir, Whole Clusters 2015
Albero, Bobal Rose 2015
Ca' del Baio Barbaresco Valgrande 2012
Goodfellow, Reserve Pinot Gris, Clover 2014
Lugana, San Benedetto 2014
Wente, Cabernet, Charles Wetmore 2011
La Espera, Cabernet 2011
King Estate, Pinot Gris 2015
Adelsheim, Pinot Gris 2015
Trader Joe's, Pinot Gris, Willamette Valley 2015
La Vite Lucente, Toscana Red 2013
St. Francis, Cabernet, Sonoma 2013
Kendall-Jackson, Pinot Noir, California 2013
Beaulieu, Cabernet, Napa Valley 2013
Erath, Pinot Noir, Estate Selection 2012
Abbot's Table, Columbia Valley 2014
Intrinsic, Cabernet 2014
Oyster Bay, Pinot Noir 2010
Occhipinti, SP68 Bianco 2014
Layer Cake, Shiraz 2013
Desert Wind, Ruah 2011
WillaKenzie, Pinot Gris 2014
Abacela, Fiesta Tempranillo 2013
Des Amis, Rose 2014
Dunham, Trautina 2012
RoxyAnn, Claret 2012
Del Ri, Claret 2012
Stoppa, Emilia, Red 2004
Primarius, Pinot Noir 2013
Domaines Bunan, Bandol Rose 2015
Albero, Bobal Rose 2015
Deer Creek, Pinot Gris 2015
Beaulieu, Rutherford Cabernet 2013
Archery Summit, Vireton Pinot Gris 2014
King Estate, Pinot Gris, Backbone 2014
Oberon, Napa Cabernet 2013
Apaltagua, Envero Carmenere Gran Reserva 2013
Chateau des Arnauds, Cuvee des Capucins 2012
Nine Hats, Red 2013
Benziger, Cabernet, Sonoma 2012
Roxy Ann, Claret 2012
Januik, Merlot 2012
Conundrum, White 2013
St. Francis, Sonoma Cabernet 2012

The Occasional Book

Phil Stanford - Rose City Vice
Kenneth R. Feinberg - What is Life Worth?
Kent Haruf - Our Souls at Night
Peter Carey - True History of the Kelly Gang
Suzanne Collins - The Hunger Games
Amy Stewart - Girl Waits With Gun
Philip Roth - The Plot Against America
Norm Macdonald - Based on a True Story
Christopher Buckley - Boomsday
Ryan Holiday - The Obstacle is the Way
Ruth Sepetys - Between Shades of Gray
Richard Adams - Watership Down
Claire Vaye Watkins - Gold Fame Citrus
Markus Zusak - I am the Messenger
Anthony Doerr - All the Light We Cannot See
James Joyce - Dubliners
Cheryl Strayed - Torch
William Golding - Lord of the Flies
Saul Bellow - Mister Sammler's Planet
Phil Stanford - White House Call Girl
John Kaplan & Jon R. Waltz - The Trial of Jack Ruby
Kent Haruf - Eventide
David Halberstam - Summer of '49
Norman Mailer - The Naked and the Dead
Maria Dermoȗt - The Ten Thousand Things
William Faulkner - As I Lay Dying
Markus Zusak - The Book Thief
Christopher Buckley - Thank You for Smoking
William Shakespeare - Othello
Joseph Conrad - Heart of Darkness
Bill Bryson - A Short History of Nearly Everything
Cheryl Strayed - Tiny Beautiful Things
Sara Varon - Bake Sale
Stephen King - 11/22/63
Paul Goldstein - Errors and Omissions
Mark Twain - A Connecticut Yankee in King Arthur's Court
Steve Martin - Born Standing Up: A Comic's Life
Beverly Cleary - A Girl from Yamhill, a Memoir
Kent Haruf - Plainsong
Hope Larson - A Wrinkle in Time, the Graphic Novel
Rudyard Kipling - Kim
Peter Ames Carlin - Bruce
Fran Cannon Slayton - When the Whistle Blows
Neil Young - Waging Heavy Peace
Mark Bego - Aretha Franklin, the Queen of Soul (2012 ed.)
Jenny Lawson - Let's Pretend This Never Happened
J.D. Salinger - Franny and Zooey
Charles Dickens - A Christmas Carol
Timothy Egan - The Big Burn
Deborah Eisenberg - Transactions in a Foreign Currency
Kurt Vonnegut Jr. - Slaughterhouse Five
Kathryn Lance - Pandora's Genes
Cheryl Strayed - Wild
Fyodor Dostoyevsky - The Brothers Karamazov
Jack London - The House of Pride, and Other Tales of Hawaii
Jack Walker - The Extraordinary Rendition of Vincent Dellamaria
Colum McCann - Let the Great World Spin
Niccolò Machiavelli - The Prince
Harper Lee - To Kill a Mockingbird
Emma McLaughlin & Nicola Kraus - The Nanny Diaries
Brian Selznick - The Invention of Hugo Cabret
Sharon Creech - Walk Two Moons
Keith Richards - Life
F. Sionil Jose - Dusk
Natalie Babbitt - Tuck Everlasting
Justin Halpern - S#*t My Dad Says
Mark Herrmann - The Curmudgeon's Guide to Practicing Law
Barry Glassner - The Gospel of Food
Phil Stanford - The Peyton-Allan Files
Jesse Katz - The Opposite Field
Evelyn Waugh - Brideshead Revisited
J.K. Rowling - Harry Potter and the Sorcerer's Stone
David Sedaris - Holidays on Ice
Donald Miller - A Million Miles in a Thousand Years
Mitch Albom - Have a Little Faith
C.S. Lewis - The Magician's Nephew
F. Scott Fitzgerald - The Great Gatsby
William Shakespeare - A Midsummer Night's Dream
Ivan Doig - Bucking the Sun
Penda Diakité - I Lost My Tooth in Africa
Grace Lin - The Year of the Rat
Oscar Hijuelos - Mr. Ives' Christmas
Madeline L'Engle - A Wrinkle in Time
Steven Hart - The Last Three Miles
David Sedaris - Me Talk Pretty One Day
Karen Armstrong - The Spiral Staircase
Charles Larson - The Portland Murders
Adrian Wojnarowski - The Miracle of St. Anthony
William H. Colby - Long Goodbye
Steven D. Stark - Meet the Beatles
Phil Stanford - Portland Confidential
Rick Moody - Garden State
Jonathan Schwartz - All in Good Time
David Sedaris - Dress Your Family in Corduroy and Denim
Anthony Holden - Big Deal
Robert J. Spitzer - The Spirit of Leadership
James McManus - Positively Fifth Street
Jeff Noon - Vurt

Road Work

Miles run year to date: 113
At this date last year: 155
Total run in 2016: 155
In 2015: 271
In 2014: 401
In 2013: 257
In 2012: 129
In 2011: 113
In 2010: 125
In 2009: 67
In 2008: 28
In 2007: 113
In 2006: 100
In 2005: 149
In 2004: 204
In 2003: 269

Clicky Web Analytics