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Monday, February 3, 2014

CELEBRATING THE 16TH AMENDMENT'S ANNIVERSARY

BRYCE ON TAXES

- But are we getting tired of being the whipping boys for irresponsible government spending.

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Today is the 101st anniversary of the ratification of the 16th Amendment (1913) which authorized the federal government to collect income tax:

"The Congress shall have power to lay and collect taxes on incomes, from whatever source derived, without apportionment among the several States, and without regard to any census or enumeration."

42 states ratified the amendment, four rejected it, and two didn't even bring it to the floor for consideration, including Florida. It was passed just in time to help pay for World War I.

Prior to this, the government relied on customs duties (tariffs) and excise taxes for revenue. During the Civil War, an income tax was imposed until 1872.

The point is, Americans didn't always pay income tax. It wasn't until the 20th century that it became a fixture in our country and, at first, people were proud to pay it as it was considered a symbol of patriotism. Not so anymore. According to the Tax Policy Center, 43% of the people do not pay income taxes. That places a burden on the rest of us who grudgingly pay it, but believe it is nothing more than a redistribution of the wealth.

To compound the problem, it looks like income taxes are going to continue to grow to record levels, increasing from approximately $2T today to nearly $3T in 2018 (source: usgovernmentrevenue.com). We are also acutely aware of the federal debt which has reached epic proportions. Knowing this, will citizens continue to pay income taxes unquestioning? Hardly. In all likelihood, you are going to either see more people dodge their responsibility, or an economic revolution is in the offing. Don't forget, the Revolutionary War was triggered by unfair taxes.

Unless something radical is done to curb the debt and taxes, a revolution is not just likely, it is inevitable. The people are growing weary of being the whipping boys for irresponsible government spending.

Keep the Faith!

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Tim Bryce is a writer and the Managing Director of M&JB Investment Company (M&JB) of Palm Harbor, Florida and has over 30 years of experience in the management consulting field. He can be reached at timb001@phmainstreet.com

For Tim's columns, see:   timbryce.com

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Copyright © 2014 by Tim Bryce. All rights reserved.

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