The Untold Truth of U.S. Income Tax History, Power & Illusion
- Gents Hair Styles
- Oct 20
- 3 min read
Updated: 2 days ago
1. The Birth of U.S. Income Tax
The concept of taxing income is relatively modern in U.S. history. U.S. income tax history is barely spoken and mostly unknown. The first federal income tax was introduced in 1861 during the Civil War, but was temporary and modest. It wasn’t until 1913, with the ratification of the 16th Amendment, that Congress gained constitutional authority to levy a permanent income tax. Initially, tax rates were very low—around 1% for the lowest brackets—with only the highest incomes taxed at a few percentage points more.
Behind the legislation, powerful interests and political maneuvering played a role. Many Americans at the time viewed such a tax as an intrusive power grab by the federal government—even though the rates seemed modest by today’s standards.
2. The Rise, Corruption & Weaponization
Over the decades, the income tax became embedded in the fabric of American life. But with that embedding came corruption, abuse, and political weaponization.
Political graft & loopholes: Legislators, influence peddlers, and wealthy individuals exploited loopholes, special exemptions, and favorable rulings to avoid taxes, while enforcement was stricter on ordinary citizens.
Disproportionate enforcement: The IRS has historically had power imbalances. Corporate tax evasion often went under-punished, while smaller taxpayers faced audits, penalties, and liens.
Printing and debt: Even as taxes were collected, the government continued borrowing and printing money. This double-play meant that taxes often funded interest on debt or administrative costs, rather than core societal services.
3. Tax Rates Then vs Now
What began as 1% for many has spiraled. By the mid-20th century, top marginal tax rates soared above 90% before being reduced in later decades. Today, effective rates vary widely depending on income, state, deductions, and tax law—but many Americans find themselves paying 20%, 30%, or even more when factoring in federal, state, and other withholdings.
The change was not purely logical growth—it was political pressure, inflation, wars, social programs, and institutional expansion that forced tax rates higher. What once was considered a radical intrusion is now accepted as a baseline duty, even as the machinery behind it has grown exponentially.
4. The IRS: Power, Influence & Reality
The Internal Revenue Service (IRS) wields enormous authority. From garnishing wages to levying penalties, audits to liens, the IRS can enforce compliance in ways no other agency can. Over time, this control has enabled:
Shrinking privacy: Demands for more financial disclosure, surveillance, and data-sharing.
Selective targeting: Allegations have existed of political targeting of nonprofit groups or individuals based on ideology.
Overreach & complexity: The tax code has grown so convoluted that millions of Americans rely on accountants, filing services, and specialists simply to comply.
5. The Illusion of “High Taxes” & The Real Funding Mechanism
In the article “The Illusion of High Taxes: How Bukele Exposed the Real Funding Mechanism of the U.S. Government”, the author argues that taxes are not what truly funds the government. Rather, the government issues Treasury bonds, which the Federal Reserve (or other central banking operations) buys—effectively creating money “out of thin air.” Taxes, in this view, serve as a tool to control and regulate public perception rather than to raise revenue in a direct way. TDS NEWS
Bukele’s critique raises a key question: if the government can issue debt and money, what role do taxes play? They maintain the illusion of legitimacy—a sense that “we all contribute”—while the real financial pump is debt issuance, money creation, and interest flows benefiting those close to levers of power.
6. Why This Matters & The Path Forward
The truth is uncomfortable: income tax is not just a cost; it’s a mechanism of control. When combined with inflation, debt monetization, and institutional power, taxes become part of a broader system where wealth protection and extraction often favor the elite.
For everyday citizens, the implication is clear: understanding tax history, recognizing illusions, and demanding transparency matter. Only with awareness can there be accountability, reform, and perhaps—eventually—a fairer system.
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