Income Taxes And Who Pays Them Past and Present

A relatively minuscule number of Americans paid taxes after the federal income tax on individuals began in 1913. The entire income tax burden in 1914 was paid by 0.27% of the population. Basically the very wealthy and upper middle class carried the income tax load for America.

With a population of 98.7 million people in 1914, only 357,598 citizens paid an income tax. If you earned less than $2,500 per year, you paid no income tax.

Breaking down those 357,598 taxpayers into brackets, there were 135 individuals who had an income of half a million dollars or more. Incredibly 82 of those 135 people resided in New York State. And while half a million dollars was an enormous amount of income in 1914 that number  may not seem so exorbitant to a reader today. But realize with inflation $500,000 is the equivalent  of $14,455,450 in 2022 purchasing power.

A total of 1,598 persons had incomes of $100,000 or greater. Almost one third of all taxpayers (114,448) had income between $3,333 and $5,000.

55,212 taxpayers were single men and  23,351 were single women. 272,153 taxpayers were married men and 6,682 were married women.

Below is a chart showing the income levels and the number of people who paid taxes.

Source : New York Sun December 12, 1914

The greater source of income ($308 million) for the Government was tax on ordinary articles such as tobacco, liquors and other taxable articles. The tax on corporations only collected $43 million. While the total revenue collected by the individual income tax was $28,253,000.

2022

There are about 330 million people legally living in the United States today (with another estimated 22 million “undocumented immigrants” aka illegal aliens / immigrants).

In 2020, more than half the population, 176.2 million people, were eligible to file a tax return. An estimated 144.5 million did file. Of those who did file, more than half, 75.1 million, paid no taxes after credits and deductions according to the Tax Foundation.

The Balance reports that in 2020, the last year for which such data is available, the gross income tax collected from individuals was nearly $1.5 trillion. The one percent of wealthiest Americans pay 38.8% share of all the income tax paid.

In 2019, the top 50% accounted for more than 96% of the income taxes paid while the lower 50% demographic contributed just 3.06% of taxes paid that year.

What did I learn from all these figures? A heck of a lot more people are paying taxes than they did 108 years ago. The government has gotten bigger. So has our debt and our problems.

And we can conclude by paraphrasing an aphorism.

There is one certainty about all those people who paid taxes in 1914 –  they’re all dead.