Today is the deadline for sending in your income-tax returns to the federal government. Because April 15 fell on a weekend, and Easter weekend at that, the IRS allows three extra days for filing this year. I don't feel fortunate.

Paperwork, anxiety, aggravation, wasted time, and slimmer wallets reign on tax day. The government doesn't feel our pain on tax day. They make it. They make our pain because they benefit from it. Lord knows that we don't.

For most of United States history, Americans did not pay income taxes. When political leaders--e.g., Abraham Lincoln and Grover Cleveland--instituted an income tax without amending the Constitution, conservatives correctly balked. In February 1913, all this changed with the Sixteenth Amendment. No longer could the courts invalidate federal income-tax laws as unconstitutional, as the Supreme Court had done in 1894's Pollock v. Farmers' Loan and Trust Company by labeling the income tax a "communistic threat."

Initially, the top marginal tax-rate stood at seven percent. Incomes of $20,000 were taxed at a rate of one percent, and incomes below $3,000 weren't taxed at all. Times changed. Today, the top marginal rate stands at 35 percent. Sure, it's lower than during the Clinton years, and George W. Bush has gone in the right direction (down) on taxes. But W. is still more of a taxer than H.W., who caught endless grief for agreeing to a rise from 28 percent to 31 percent. With taxes, the public pays greater attention to cuts and hikes than to the total level. Relative seems to matter more than absolute.

And perhaps we should be happy that current rates are low relative to other points in history. Ronald Reagan inherited top marginal rates of 70 percent. John F. Kennedy inherited top marginal rates of 91 percent. Both men worked to lower those rates significantly. Other presidents inherited low rates and made them larger. When Herbert Hoover came into office, top rates stood at 24 percent. When he handed the baton over to Franklin Roosevelt, they stood at 63 percent. When Roosevelt left office, the top rate grew even more--to 94 percent. Briefly (and by executive order!), Roosevelt instituted a federal tax rate of 100 percent for incomes of $25,000 or more.

"And I therefore believe that in this time of grave national danger, when all excess income should go to win the war, no American citizen ought to have a net income after he's paid his taxes of more than twenty-five thousand dollars," explained Roosevelt, whose inherited wealth was not threatened by this draconian measure. "You show me where [FDR's 100 percent tax rate is] mentioned in any U.S. history textbook," offers historian Burt Folsom, "and I will eat the textbook." I don't sense that Dr. Folsom will need to drastically alter his diet anytime soon.

When we look at recent history, we think: it could be worse. But when we look at all of U.S. history, with no income tax being the norm, we think: it could be a whole lot better.

Anyone know whens states started taxing income?

I had never heard the bit about FDR. That's unbelievable. Just out of curiousity, what would 25K in the 40s be in 2006-dollars?

It could be whole lot better, indeed. Nice piece, Dan.

As much as I am anti-tax-minded, I am still conflicted when it comes to high-end marginal rates. Seems to me that much of the nonsense going on in the U.S. airline and auto industries, for example, boils down to the unfortunate fact that WAY too much money is being "earned" by the few folks who sit on boards of directors and get to decide how much they are paid. All too often this is a totally inefficient and unjust mechanism whereby nincompoops reward themselves while destroying their companies. Their incapacity to manage their firms successfully clearly proves that they are NOT worth the money they are paid. The ripple-effect is staggering--employees, shareholders, the U.S. economy at large and all U.S. taxpayers--we're all victims. Perhaps an outrageous marginal tax rate might serve as a deterrent for these types of greedy idiots who are nothing but dead-weight.

Forbes' flat tax is one of most sensible plans out there. Simple and fair.

But, it’s too simple and too fair to make sense to our government as the IRS would have to go away and the mountains of complicated tax laws designed to confuse the general public would go away. And the industry that’s grown up around the ever changing tax system would be in jeopardy as well.

I don't disagree with your point about the simplicity and fairness of a flat tax, asdf.

I do disagree with the implication that the current system was "designed to confuse the general public," though. That's giving too much credit to a bunch of legislators who score around the 50th-percentile on intelligence tests.

On another point: When you mention jeopardizing "the industry that's grown up around the ever changing tax system," I think it's important to call to mind that this includes many of our favorite charities that receive tax-deductible contributions, of course.

Perhaps out in left field: How about legalizing and taxing something like the sports betting industry that handles billions of dollars annually? Oh, but that would put all sorts of organized criminals in jeopardy...

Hey, if you think the flat tax would be cool, and I do; think what the natl. sales tax could do by capturing the "free lunch" of the underground economy and it would also do a pretty good job on the current crop of greedy top mgmt. I know Steve agrees with this; he just thinks it would be more difficult to go from a to b.

I think when you consider that the tax code can only be accurately deciphered by accountants with occasional help from lawyers and the fact that that code changes every year, this could be construed as our government working to maintain some confusion. It’s at least complicated enough that if you don’t use the proper ‘preparers’, mistakes can be made that might lead to losing money or getting audited. And I certainly don’t give a majority of our elected royalty credit for coming up with this stuff. They pass the laws but like most everything else, they rely on people who have expertise to do the real work.

Bottom line is that the current system is onerous and invites more cheating as it is difficult for both parties to keep track of. And as our tax burdens rises to support spending that’s increased seven fold in the last 20 to 25 years, unless they reign in spending, the government will never have enough money and will have to tax more and cheating will proliferate. Rest assured: if something is simple or easy, government is not interested.