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 By April, all Townshend duties are repealed except for the one on tea.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|
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|
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.
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.
The History of the World, in One Video
This epic attempt to condense the history of the world — including the rise and fall of empires — fits into a single video.
Throughout the history of the world, many civilizations have risen and fallen.
You may be familiar with the achievements of prominent societies like the Romans, Mongols, or Babylonians, but how do all of their stories intertwine over time and geography?
Visualizing the History of the World
Today’s video comes to us from Ollie Bye, and it attempts to integrate the histories of all major civilizations known by historians into a single, epic video.
Similar to the Histomap, it’s pretty much impossible for a video like this to be perfect due to biases and a general lack of data. However, it’s still a compelling attempt at showing global history in a short and sweet fashion.
Let’s look at some specific moments on the video that particularly stand out.
750 AD: The Umayyad Caliphate
One of the largest empires in history, the Umayyad Caliphate peaked sometime around 750 AD.
Conquering most of North Africa, the Middle East, and even parts of Europe (including modern-day Spain, Portugal, and France), the Umayyads commanded a formidable territory with an area of 11,100,000 km² (4,300,000 sq. mi) and encompassing 33 million people.
1279: Mongol Dominance
No history of the world is complete without a mention of the Mongols.
Nearby societies have always been on edge when nomadic tribes in the Eurasian Steppe entered into organized confederations. Similar to the Huns or various Turk federations, the Mongols were known for their proficiency with horses, bows, and tactics like the feigned retreat.
Under the leadership of Temüjin — also known as Genghis Khan — the Mongols conquered one of the largest empires by land.
The empire reached its greatest extent just two years after the death of Genghis Khan.
Later on, it fragmented into smaller empires that were also quite notable in the context of world history. For example, Kublai Khan — the grandson of Genghis Khan — even went on to begin the influential Yuan Dynasty in China.
1346: The Black Death
The video also shows other vital stats, such as an estimate of global population through the ages.
In the mid-14th century, you can see this number take a rare U-turn, as millions of people die from the infamous and deadly Bubonic Plague.
The Black Death — one of the most devastating pandemics in the history of the world — hit Europe in 1346, and it eventually killed 30-60% of the continent’s population. There is no exact figure on the final death toll, but historians estimate it to be somewhere between 75 and 200 million people throughout Eurasia.
1418: The Age of Discovery
The video also provides a 10,000-foot view of the Age of Discovery, a period of time in which European powers explored the world’s oceans.
This colonial period marks the beginning of globalization, creating wide-ranging impacts that set the stage for more modern history.
In the video, it’s possible to see European colonies develop in all parts of the world, as well as how they eventually morphed into the countries that dot the globe today.
Playing the History Game
While it is certainly ambitious, not everyone will agree that this is a successful attempt at portraying world history – even in the limited scope of time allotted.
One key detail that seems to be missing, for example, is showing the development of the indigenous societies that existed in North America for thousands of years. That said, it’s also not clear what data and records are available to show these maps over many centuries of time.
Despite the possible flaws, the video does pack a lot of information into a short period of time, creating a compelling opportunity for learning and discussion. Like the Histomap, it may not be a definitive history of the world – but instead, it’s a useful attempt that stimulates our appetite for more information about the world and the societies that inhabit it.
What is a Commodity Super Cycle?
The prices of energy, agriculture, livestock and metals tell the story of human development. Learn about the commodity super cycle in this infographic.
Visualizing the Commodity Super Cycle
Since the beginning of the Industrial Revolution, the world has seen its population and the need for natural resources boom.
As more people and wealth translate into the demand for global goods, the prices of commodities—such as energy, agriculture, livestock, and metals—have often followed in sync.
This cycle, which tends to coincide with extended periods of industrialization and modernization, helps in telling a story of human development.
Why are Commodity Prices Cyclical?
Commodity prices go through extended periods during which prices are well above or below their long-term price trend. There are two types of swings in commodity prices: upswings and downswings.
Many economists believe that the upswing phase in super cycles results from a lag between unexpected, persistent, and positive trends to support commodity demand with slow-moving supply, such as the building of a new mine or planting a new crop. Eventually, as adequate supply becomes available and demand growth slows, the cycle enters a downswing phase.
While individual commodity groups have their own price patterns, when charted together they form extended periods of price trends known as “Commodity Super Cycles” where there is a recognizable pattern across major commodity groups.
How can a Commodity Super Cycle be Identified?
Commodity super cycles are different from immediate supply disruptions; high or low prices persist over time.
In our above chart, we used data from the Bank of Canada, who leveraged a statistical technique called an asymmetric band pass filter. This is a calculation that can identify the patterns or frequencies of events in sets of data.
Economists at the Bank of Canada employed this technique using their Commodity Price Index (BCPI) to search for evidence of super cycles. This is an index of the spot or transaction prices in U.S. dollars of 26 commodities produced in Canada and sold to world markets.
- Energy: Coal, Oil, Natural Gas
- Metals and Minerals: Gold, Silver, Nickel, Copper, Aluminum, Zinc, Potash, Lead, Iron
- Forestry: Pulp, Lumber, Newsprint
- Agriculture: Potatoes, Cattle, Hogs, Wheat, Barley, Canola, Corn
- Fisheries: Finfish, Shellfish
Using the band pass filter and the BCPI data, the chart indicates that there are four distinct commodity price super cycles since 1899.
The first cycle coincides with the industrialization of the United States in the late 19th century.
The second began with the onset of global rearmament before the Second World War in the 1930s.
The third began with the reindustrialization of Europe and Japan in the late 1950s and early 1960s.
- 1996 – Present:
The fourth began in the mid to late 1990s with the rapid industrialization of China
What Causes Commodity Cycles?
The rapid industrialization and growth of a nation or region are the main drivers of these commodity super cycles.
From the rapid industrialization of America emerging as a world power at the beginning of the 20th century, to the ascent of China at the beginning of the 21st century, these historical periods of growth and industrialization drive new demand for commodities.
Because there is often a lag in supply coming online, prices have nowhere to go but above long-term trend lines. Then, prices cannot subside until supply is overshot, or growth slows down.
Is This the Beginning of a New Super Cycle?
The evidence suggests that human industrialization drives commodity prices into cycles. However, past growth was asymmetric around the world with different countries taking the lion’s share of commodities at different times.
With more and more parts of the world experiencing growth simultaneously, demand for commodities is not isolated to a few nations.
Confined to Earth, we could possibly be entering an era where commodities could perpetually be scarce and valuable, breaking the cycles and giving power to nations with the greatest access to resources.
Each commodity has its own story, but together, they show the arc of human development.
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