U.S. tax history: the role of tax justice (and other stories)

Michael J. Graetz of Columbia Law School has a fascinating article published in Tax Notes (via TaxProf,) which starts by noting that 2013 marks the 100th anniversary of the modern U.S. income tax. And he soon notes:

"Make no mistake: achieving greater tax justice is what the 1913 adoption of the income tax was all about - the culmination of a two-decade, broad-based, popular effort to achieve greater fairness in our nation’s tax system, one that required the extraordinary support of the American people necessary to amend our Constitution."

The article summarises over 150 years of tax history, from the first income tax of 1863 -- which was raised not for the purposes of tax justice but to raise money, and was soon struck down again) --  through the massive tax rises to pay for the Second World War, to Reagan's 1986 landmark tax reform and beyond. He cites Steven Weisman's book The Great Tax Wars which sees the pre-1913 struggle over taxes as one between ‘‘justice’’ and ‘‘virtue:’’ proponents of the former insisted on progressive taxation according to ability to pay, with those favouring the latter countering that allowing citizens to keep the wealth they earned. As Graetz notes:

Sound familiar? A century has passed, but the debate is essentially unchanged.

The rest of the article contains some recommendations for tax reform, some of which TJN would agree with, and some not. But the brief history lesson is illuminating.

To be added to our history page.