The income tax was originally sold to the American people in 1862 to pay for the Civil War. It was essentially a "luxury tax," and the lowest bracket was $600 to $10,000, upon which a 3 percent tax was levied. Like many taxes, it was sold as a "tax on the rich" to appeal to populist sympathies, and was claimed to be "temporary." And indeed, it was repealed in 1872.
In 1894, Congress attempted to reinstate the tax, but it was ruled unconstitutional by Supreme Court in 1895 (Pollock v. Farmers' Loan & Trust Co.) because it was a direct tax that was not apportioned among the states.
The government's solution, of course, was the Sixteenth Amendment, which overruled Pollack and gave the feds the authority to tax all income "from whatever source derived." But again, the people were sold a bill of goods. President Wilson (and others) had originally proposed that the tax be levied only against corporations at a rate of 2 percent, and later supporters again appealed to populist sympathies by advocating it as a "five and five tax," referring to a 5 percent tax levied against the wealthiest 5 percent of Americans.
My point is that the tax has been "progressive" and graduated ever since its inception, even before the ratification of the Sixteenth Amendment. It also has been deceptive, with the American people being mislead to believe that the vast majority would never have to pay it.
Personally, I believe that the Sixteenth Amendment should be repealed, the income tax abolished and replaced with nothing, and all government agencies and programs whose functions are not specifically required by the Constitution eliminated. History has shown that all governments tend to grow bigger if allowed to do so; and that the bigger they get, the more they tend toward tyranny. The best way to prevent this is by choking off their money supply. Hence, abolish the income tax and replace it with nothing.
However, I also recognize that abolishing the income tax is a fantasy. Most people just don't get the connection between taxation and tyranny.
So if we must have an income tax, then asking, "Why is it a progressive, graduated tax?" is pointless. The answer is simple: That was the only way the people would allow it to be enacted. Remember, the first income tax went into effect at a time when tarring and feathering was still an occasional occurrence. Politicians were perhaps more responsive to populist sentiments as a result.
The better question to ask is, "Why does it take so much blasted money to run the federal government?" Two corollary questions would be, "Do we really, really need all these federal programs and agencies?" and "What can we do to stop the unbridled growth of the federal government, if we're not willing to choke off its money supply?"
-Rich
