Infographic: A History of Revolution in U.S. Taxation
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A History of Revolution in U.S. Taxation

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As Benjamin Franklin once said, “Nothing is certain except death and taxes.”

While this quote was penned in 1789, his words still ring true today. U.S. taxation has changed over time, but it has always existed in some shape or form for over 250 years.

U.S. Taxation: 1765 to Today

In today’s infographic from New York Life Investments, we explore the history of U.S. taxation – from its colonial roots to its recent reform.

A History of Revolution in U.S. Taxation

The modern American tax code has little resemblance to its early iterations.

Over the last few centuries, Americans have battled against British taxation, faced sky-high tax rates to fund war efforts, and enjoyed tax cuts designed to boost economic growth.

A Timeline of U.S. Taxation

Today, total U.S. tax revenue exceeds $3.4 trillion. Below are some notable events that have shaped modern American taxation.

Colonial Roots: 1765 to 1783

1765 – Stamp Act
In its first direct tax on the colonists, Britain places a tax on all paper – including ship’s papers, court documents, advertisements, and even playing cards.

1767 – Townshend Revenue Act
Importation duties are placed on British products such as glass, paint, and tea. The taxes are expected to raise £40,000 annually, (£6,500,000 in 2018 GBP). As hostilities continue to bubble up, colonists argue for “No taxation without representation”. Although taxes are imposed on the colonists, they aren’t able to elect representatives to British parliament.

1770 – The Boston Massacre
British troops occupy Boston to end the boycott on British goods. The March 5th Boston Massacre sees five colonists killed. By April, all Townshend duties are repealed except for the one on tea.

1773 – The Tea Act (May 10)
Britain grants the struggling British East India Company a monopoly on tea in America. While no new taxes are imposed, this angers colonists as it is seen as a thinly veiled plan to gain colonial support for the Townshend tax while threatening local business.

1773 – The Boston Tea Party (December 16)
Three ships arrive in Boston carrying British East India Company tea. Colonists refuse to allow the unloading of the tea, throwing all 342 chests of tea into Boston Harbour.

1775-1783 – The American Revolutionary War
Growing tensions between Britain and the colonists erupt in a full-scale war. After eight long years, Britain officially recognizes the independence of the United States.

A Free Nation: 1787 to 1943

1787 – The U.S. Constitution
Congress gains the “power to lay and collect taxes, duties, imposts, and excises.” The government primarily earns revenue from excise taxes and tariffs, including an “importation tax” on slaves.

1791-1794 – Whiskey Rebellion
Alexander Hamilton, the nation’s first Secretary of Treasury, leads the implementation of a whiskey excise tax. In 1794, whiskey rebels destroy a tax inspector’s home. President Washington sends in troops and quells the rebellion.

1862 – The Nation’s First Income Tax
To help pay for the Civil War, President Lincoln legislates the nation’s first income tax.

Income level (1862 dollars)Income level (2019 dollars)Tax Rate
$600-$10,000$15,000-$250,0003%
$10,000+$250,000+5%
Over the coming years, income tax is repealed and reinstated twice.

1913 – 16th Amendment
As World War I looms the 16th amendment is ratified, allowing for taxation without allocation according to state populations. An income tax is permanently introduced for both individuals and corporations, and the first Form 1040 is created.

Income Level (1913 dollars)Income level (2019 dollars)Tax Rate
$3,000+$77,000+1%
$500,000+$12,800,000+7%
At this time, less than 1% of the population is paying income tax.

1918 – The Revenue Act
Tax rates skyrocket to pay for World War I efforts. The top tax rate is 77%.

1935 – Social Security Act
In light of the Great Depression, the Social Security Act introduces:

  • An old-age pension program
  • Unemployment insurance
  • Funding for health and welfare programs

To fund the programs, a 2% tax is shared equally by an employee and their employer.

1942 – The Revenue Act
Described by President Roosevelt as “the greatest tax bill in American history”, the Act increases taxes and the numbers of citizens subject to income tax. Total personal and corporate income tax revenue more than doubles:

YearRevenue2019 dollar equivalent
1941$3.4 billion$59.2 billion
1942$8.0 billion$123.8 billion

1943 – Current Tax Payment Act
It becomes mandatory for employers to withhold taxes from employees’ wages and remit them four times per year.

Modern Times: 1961 to 2018

1961 – Beginning of The Computer Age
The National Computer Center at Martinsburg, West Virginia is formally dedicated to assisting the IRS in its shift to computer data processing.

1986 – Tax Reform Act
The Tax Reform Act:

  • Lowers the top individual tax rate from 50% to 28%
  • Increases taxes on capital gains from 20% to 28%
  • Reduces corporate tax breaks

The revisions are designed to make the tax code simpler and fairer.

1992 – Electronic Filing
Taxpayers who owe money are given the option to file electronically.

2001 – Economic Growth and Tax Relief Reconciliation Act
President George W. Bush implements large tax cuts:

  • Creates a new lowest individual tax rate of 10%
  • Reduces the top individual tax rate from 39.6% to 35%
  • Doubles child tax credit from $500 to $1,000* (*From $700 to $1,400 in 2019 dollars)

2017 – Tax Cuts and Jobs Act
President Trump signs off on reductions in tax rates, while some deductions are made more restrictive.

For example, State and Local Taxes (SALT) deductions are capped at $10,000. Residents in high-tax states such as New York, New Jersey, California and Connecticut could see substantially higher tax bills.

The Future

U.S. taxation policy remains a contentious issue and shifts depending on who is in the White House.

Investors need to stay informed on current legislation, so they can engage in proactive financial planning and minimize their tax obligations.

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This Infographic Breaks Down Careers In Finance, From Hedge Funds to M&A

Corporate finance oversees trillions of dollars and makes modern markets and economies possible, but who are the main players?

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Careers In Corporate Finance, From Hedge Funds to M&A

Corporate finance is a key pillar on which modern markets and economies have been built. And this complex ecosystem consists of a number of important sectors, which can lead to lucrative career avenues.

From lending to investment banking, and private equity to hedge funds, the graphic above by Wall Street Prep breaks down the key finance careers and paths that people can take.

Let’s take a further look at the unique pieces of this finance ecosystem.

The Lending Business

Lending groups provide much needed capital to corporations, often in the form of term loans or revolvers. These can be part of short and long-term operations or for events less anticipated like the COVID-19 pandemic, which resulted in companies shoring up $222 billion in revolving lines of credit within the first month.

Investment Banking

Next, is investment banking, which can split into three main areas:

  1. Mergers and Acquisitions (M&A): There’s a lot of preparation and paperwork involved whenever corporations merge or make acquisitions. For that reason, this is a crucial service that investment banks provide, and its importance is reflected in the enormous fees recognized. The top five U.S. investment banks collect $10.2 billion in M&A advisory fees, representing 40% of the $25 billion in global M&A fees per year.
  2. Loan Syndications: Some $16 billion in loan syndication fees are collected annually by investment banks. Loan syndications are when multiple lenders fund one borrower, which can occur when the loan amount is too large or risky for one party to take on. The loan syndication agent is the financial institution involved that acts as the third party to oversee the transaction.
  3. Capital Markets: Capital markets are financial markets that bring buyers and sellers together to engage in transactions on assets. They split into debt capital markets (DCM) like bonds or fixed income securities and equity capital markets (ECM) (i.e. stocks). Some $41 billion is collected globally for the services associated with structuring and distributing stock and bond offerings.

The top investment banks generally all come from the U.S. and Western Europe, and includes the likes of Goldman Sachs and Credit Suisse.

Sell Side vs Buy Side

Thousands of analysts in corporate finance represent both the buy and sell-sides of the business, but what are the differences between them?

One important difference is in the groups they represent. Buy-side analysts usually work for institutions that buy securities directly, like hedge funds, while sell-side analysts represent institutions that make their money by selling or issuing securities, like investment banks.

According to Wall Street Prep, here’s how the assets of buy-side institutions compare:

Buy side institutionTotal assets
Mutual Funds, ETFs$21 trillion
Private equity$5 trillion
Hedge funds$3 trillion
Venture capital$0.5 trillion

Also, buy-side jobs appear to be more sought after across financial career forums.

Breaking Down The Buy Side

Mutual funds, ETFs, and hedge funds all generally invest in public markets.

But between them, there are still some differentiating factors. For starters, mutual funds are the largest entity, and have been around since 1924. Hedge funds didn’t come to life until around 1950 and for ETFs, this stretched to the 1990s.

Furthermore, hedge funds are strict in the clients they take on, with a preference for high net worth investors, and they often engage in sophisticated investment strategies like short selling. In contrast, ETFs, and mutual funds are widely available to the public and the vast bulk of them only deploy long strategies, which are those that expect the asset to rise in value.

Private equity (PE) and venture capital (VC) are groups that invest in private companies. Venture capital is technically a form of PE but tends to invest in new startup companies while private equity goes for more stable and mature companies with predictable cash flow patterns.

Who funds the buy side? The source of capital roughly breaks down as follows:

Source of capitalCapital amount
Individuals$112 trillion
Banks$51 trillion
Pension funds$34 trillion
Insurance Companies$24 trillion
Endowments$1.4 trillion

Endowment funds are foundations that invest the assets of nonprofit institutions like hospitals or universities. The assets are typically accumulated through donations, and withdrawals are made frequently to fund various parts of operations, including critical ones like research.

The largest university endowment belongs to Harvard with some $74 billion in assets under management. However, the largest endowment fund overall belongs to Ensign Peak Advisors. They represent The Church of Jesus Christ of Latter-day Saints (LDS), with some $124 billion in assets.

Primary Market vs Secondary Market

One of the primary motivations for a company to enter the public markets is to raise capital, where a slice of the company’s ownership is sold via an allotment of shares to new investors. The actual capital itself is raised in the primary market, which represents the first and initial transaction.

The secondary market represents transactions after the first. These are considered stocks that are already issued, and shares now fluctuate based on market forces.

Tying It All Together

As the infographic above shows, corporate finance branches out far and wide, handles trillions of dollars, and plays a key part in making modern markets and economies possible.

For those exploring a career in finance, the possibilities and avenues one can take are practically endless.

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Visualizing the $94 Trillion World Economy in One Chart

Which countries and regions contribute the most to the world economy? In this infographic, we break down all $94 trillion of global GDP by country.

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World Economy

The $94 Trillion World Economy in One Chart

View the expanded version of this infographic.

Just four countries—the U.S., China, Japan, and Germany—make up over half of the world’s economic output by gross domestic product (GDP) in nominal terms. In fact, the GDP of the U.S. alone is greater than the combined GDP of 170 countries.

How do the different economies of the world compare? In this visualization we look at GDP by country in 2021, using data and estimates from the International Monetary Fund (IMF).

An Overview of GDP

GDP serves as a broad indicator for a country’s economic output. It measures the total market value of final goods and services produced in a country in a specific timeframe, such as a quarter or year. In addition, GDP also takes into consideration the output of services provided by the government, such as money spent on defense, healthcare, or education.

Generally speaking, when GDP is increasing in a country, it is a sign of greater economic activity that benefits workers and businesses (while the reverse is true for a decline).

The World Economy: Top 50 Countries

Who are the biggest contributors to the global economy? Here is the ranking of the 50 largest countries by GDP in 2021:

RankCountryGDP ($T)% of Global GDP
1🇺🇸 U.S.$22.924.4%
2🇨🇳 China$16.917.9%
3🇯🇵 Japan$5.15.4%
4🇩🇪 Germany$4.24.5%
5🇬🇧 UK$3.13.3%
6🇮🇳 India$2.93.1%
7🇫🇷 France$2.93.1%
8🇮🇹 Italy$2.12.3%
9🇨🇦 Canada$2.02.1%
10🇰🇷 Korea$1.81.9%
11🇷🇺 Russia$1.61.7%
12🇧🇷 Brazil$1.61.7%
13🇦🇺 Australia$1.61.7%
14🇪🇸 Spain$1.41.5%
15🇲🇽 Mexico$1.31.4%
16🇮🇩 Indonesia$1.21.2%
17🇮🇷 Iran$1.11.1%
18🇳🇱 Netherlands$1.01.1%
19🇸🇦 Saudi Arabia$0.80.9%
20🇨🇭 Switzerland$0.80.9%
21🇹🇷 Turkey$0.80.8%
22🇹🇼 Taiwan $0.80.8%
23🇵🇱 Poland$0.70.7%
24🇸🇪 Sweden$0.60.7%
25🇧🇪 Belgium$0.60.6%
26🇹🇭 Thailand$0.50.6%
27🇮🇪 Ireland$0.50.5%
28🇦🇹 Austria$0.50.5%
29🇳🇬 Nigeria$0.50.5%
30🇮🇱 Israel$0.50.5%
31🇦🇷 Argentina$0.50.5%
32🇳🇴 Norway$0.40.5%
33🇿🇦 South Africa$0.40.4%
34🇦🇪 UAE$0.40.4%
35🇩🇰 Denmark$0.40.4%
36🇪🇬 Egypt$0.40.4%
37🇵🇭 Philippines$0.40.4%
38🇸🇬 Singapore$0.40.4%
39🇲🇾 Malaysia$0.40.4%
40🇭🇰 Hong Kong SAR$0.40.4%
41🇻🇳 Vietnam$0.40.4%
42🇧🇩 Bangladesh$0.40.4%
43🇨🇱 Chile$0.30.4%
44🇨🇴 Colombia$0.30.3%
45🇫🇮 Finland$0.30.3%
46🇷🇴 Romania$0.30.3%
47🇨🇿 Czech Republic$0.30.3%
48🇵🇹 Portugal$0.30.3%
49🇵🇰 Pakistan$0.3*0.3%
50🇳🇿 New Zealand$0.20.3%

*2020 GDP (latest available) used where IMF estimates for 2021 were unavailable.

At $22.9 trillion, the U.S. GDP accounts for roughly 25% of the global economy, a share that has actually changed significantly over the last 60 years. The finance, insurance, and real estate ($4.7 trillion) industries add the most to the country’s economy, followed by professional and business services ($2.7 trillion) and government ($2.6 trillion).

China’s economy is second in nominal terms, hovering at near $17 trillion in GDP. It remains the largest manufacturer worldwide based on output with extensive production of steel, electronics, and robotics, among others.

The largest economy in Europe is Germany, which exports roughly 20% of the world’s motor vehicles. In 2019, overall trade equaled nearly 90% of the country’s GDP.

The World Economy: 50 Smallest Countries

On the other end of the spectrum are the world’s smallest economies by GDP, primarily developing and island nations.

With a GDP of $70 million, Tuvalu is the smallest economy in the world. Situated between Hawaii and Australia, the largest industry of this volcanic archipelago relies on territorial fishing rights.

In addition, the country earns significant revenue from its “.tv” web domain. Between 2011 and 2019, it earned $5 million annually from companies—including Amazon-owned Twitch to license the Twitch.tv domain name—equivalent to roughly 7% of the country’s GDP.

CountriesRegionGDP (B)
🇹🇻 TuvaluOceania$0.07
🇳🇷 NauruOceania$0.1
🇵🇼 PalauOceania$0.2
🇰🇮 KiribatiOceania$0.2
🇲🇭 Marshall IslandsOceania$0.2
🇫🇲 MicronesiaOceania$0.4
🇨🇰 Cook IslandsOceania$0.4*
🇹🇴 TongaOceania$0.5
🇸🇹 São Tomé and PríncipeAfrica$0.5
🇩🇲 DominicaCaribbean$0.6
🇻🇨 St. Vincent and the GrenadinesCaribbean$0.8
🇼🇸 SamoaOceania$0.8
🇰🇳 St. Kitts and NevisCaribbean$1.0
🇻🇺 VanuatuOceania$1.0
🇬🇩 GrenadaCaribbean$1.1
🇰🇲 ComorosAfrica$1.3
🇸🇨 SeychellesAfrica$1.3
🇦🇬 Antigua and BarbudaCaribbean$1.4
🇬🇼 Guinea-BissauAfrica$1.6
🇸🇧 Solomon IslandsOceania$1.7
🇹🇱 Timor-LesteAsia$1.7
🇱🇨 St. LuciaCaribbean$1.7
🇸🇲 San MarinoEurope$1.7
🇨🇻 Cabo VerdeAfrica$1.9
🇧🇿 BelizeCentral America$1.9
🇬🇲 GambiaAfrica$2.0
🇪🇷 EritreaAfrica$2.3
🇱🇸 LesothoAfrica$2.5
🇧🇹 BhutanAsia$2.5
🇨🇫 Central African RepublicAfrica$2.6
🇸🇷 SurinameSouth America$2.8
🇦🇼 ArubaCaribbean$2.9
🇧🇮 BurundiAfrica$3.2
🇦🇩 AndorraEurope$3.2
🇸🇸 South SudanAfrica$3.3
🇱🇷 LiberiaAfrica$3.4
🇩🇯 DjiboutiAfrica$3.7
🇸🇱 Sierra LeoneAfrica$4.4
🇸🇿 EswatiniAfrica$4.5
🇲🇻 MaldivesAsia$4.6
🇫🇯 FijiOceania$4.6
🇧🇧 BarbadosCaribbean$4.7
🇸🇴 SomaliaAfrica$5.4
🇲🇪 MontenegroEurope$5.5
🇱🇮 LiechtensteinEurope$6.8*
🇬🇾 GuyanaSouth America$7.4
🇲🇨 MonacoEurope$7.4*
🇹🇯 TajikistanAsia$8.1
🇰🇬 Kyrgyz RepublicAsia$8.2
🇹🇬 TogoAfrica$8.5

*2019 GDP (latest available) used where IMF estimates for 2021 were unavailable.

Like Tuvalu, many of the world’s smallest economies are in Oceania, including Nauru, Palau, and Kiribati. Additionally, several countries above rely on the tourism industry for over one-third of their employment.

The Fastest Growing Economies in the World in 2021

With 123% projected GDP growth, Libya’s economy is estimated to have the sharpest rise.

Oil is propelling its growth, with 1.2 million barrels being pumped in the country daily. Along with this, exports and a depressed currency are among the primary factors behind its recovery.

RankCountryRegion
2021 Real GDP Growth (Annual % Change)
1🇱🇾 Libya Africa123.2%
2🇬🇾 Guyana South America20.4%
3🇲🇴 Macao Asia20.4%
4🇲🇻 Maldives Asia18.9%
5🇮🇪 Ireland Europe13.0%
6🇦🇼 Aruba Caribbean12.8%
7🇵🇦 Panama Central America12.0%
8🇨🇱 Chile South America11.0%
9🇵🇪 PeruSouth America10.0%
10🇩🇴 Dominican RepublicCaribbean9.5%

Ireland’s economy, with a projected 13% real GDP growth, is being supported by the largest multinational corporations in the world. Facebook, TikTok, Google, Apple, and Pfizer all have their European headquarters in the country, which has a 12.5% corporate tax rate—or about half the global average. But these rates are set to change soon, as Ireland joined the OECD 15% minimum corporate tax rate agreement which was finalized in October 2021.

Macao’s economy bounced back after COVID-19 restrictions began to lift, but more storm clouds are on the horizon for the Chinese district. The CCP’s anti-corruption campaign and recent arrests could signal a more strained relationship between Mainland China and the world’s largest gambling hub.

Looking Ahead at the World’s GDP

The global GDP figure of $94 trillion may seem massive to us today, but such a total might seem much more modest in the future.

In 1970, the world economy was only about $3 trillion in GDP—or 30 times smaller than it is today. Over the next thirty years, the global economy is expected to more or less double again. By 2050, global GDP could total close to $180 trillion.

Correction: In earlier versions of this graphic, countries such as Vietnam and Pakistan were inadvertently not included in the visualization. They have now been added. In cases where the IMF has no data for 2021 (specifically Pakistan, Syria, Afghanistan, and Lebanon), the latest available data is used.

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