History
A History of Revolution in U.S. Taxation
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.
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 By April, all Townshend duties are repealed except for the one on tea.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-$250,000 | 3% |
$10,000+ | $250,000+ | 5% |
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% |
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:
Year | Revenue | 2019 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.
Maps
The Incredible Historical Map That Changed Cartography
Check out the Fra Mauro Mappa Mundi (c. 1450s), a historical map that formed a bridge between medieval and renaissance worldviews.

The Incredible Historical Map That Changed Cartography
This map is the latest in our Vintage Viz series, which presents historical visualizations along with the context needed to understand them.
In a one-paragraph story called On Exactitude in Science (Del Rigor en la Ciencia), Jorge Luis Borges imagined an empire where cartography had reached such an exact science that only a map on the same scale of the empire would suffice.
The Fra Mauro Mappa Mundi (c. 1450s), named for the lay Camaldolite monk and cartographer whose Venetian workshop created it, is not nearly as large, at a paltry 77 inches in diameter (196 cm). But its impact and significance as a bridge between Middle Age and Renaissance thought certainly rivaled Borges’ imagined map.
One of ‘the Wonders of Venice’
Venice was the undisputed commercial power in the Mediterranean, whose trade routes connected east and west, stretching to Flanders, London, Algeria, and beyond.
This network was protected by fleets of warships built at the famous Arsenale di Venezia, the largest production facility in the West, whose workforce of thousands of arsenalotti built ships on an assembly line, centuries before Henry Ford.
The lion of St Mark guards the land gate to the Arsenale di Venezia, except instead of the usual open bible in its hands offering peace, this book is closed, reflecting its martial purpose. Source: Wikipedia
The Mappa Mundi (literally “map of the world”) was considered one of the wonders of Venice with a reputation that reached the Holy Land. It is a circular planisphere drawn on four sheets of parchment, mounted onto three poplar panels and reinforced by vertical battens.
The map is painted in rich reds, golds, and blues; this last pigment was obtained from rare lapis lazuli, imported from mines in Afghanistan. At its corners are four spheres showing the celestial and sublunar worlds, the four elements (earth, air, fire, and water), and an illumination of the Garden of Eden by Leonardo Bellini (active 1443-1490).
Japan (on the left edge, called the Isola de Cimpagu) appears here for the first time in a Western map. And contradicting Ptolemaic tradition, it also shows that it was possible to circumnavigate Africa, presaging the first European journey around the Cape of Good Hope by the Portuguese explorer Bartolomeu Dias in 1488.
NASA called the historical map “stunning” in its accuracy.
A Historical Map Between Two Worlds
Medieval maps, like the Hereford Mappa Mundi (c. 1300), were usually oriented with east at the top, because that’s where the Garden of Eden was thought to be. Fra Mauro, however, chose to orient his to the south, perhaps following Muslim geographers such as Muhammad ibn Muhammad al-Idrisi.
Significantly, the Garden of Eden is placed outside of geographic space and Jerusalem is no longer at the center, though it is still marked by a windrose. The nearly 3,000 place names and descriptions are written in the Venetian vernacular, rather than Latin.
At the same time, as much as Fra Mauro’s map is a departure from the past, it also retains traces of a medieval Christian worldview. For example, included on the map are the Kingdom of the Magi, the Kingdom of Prester John, and the Tomb of Adam.
Isidore of Seville, Etymologiae (c. 600–625). Source: Wikipedia
The circular planisphere also follows the medieval T-O schema, first described by Isidore of Seville, with Asia occupying the top half of the circle, and Europe and Africa each occupying the bottom two quarters (Fra Mauro turns the ‘T’ on its side, to reflect a southern orientation). Around the circle, are many islands, beyond which is the “dark sea” where only shipwreck and misfortune await.
Fra Mauro’s Legacy
Fra Mauro died some time before 20 October 1459, and unfortunately his contributions fell into obscurity soon thereafter; until 1748, it was believed that the Mappa Mundi was a copy of a lost map by Marco Polo.
In 1811, the original was moved from Fra Mauro’s monastery of San Michele to the Biblioteca Nazionale Marciana, following the suppression of religious orders in the Napoleonic era, where it can be viewed today.
Two digital editions have also been produced by the Museo Galileo and the Engineering Historical Memory project, where readers can get a glimpse into a fascinating piece of cartographic history.
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