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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 By April, all Townshend duties are repealed except for the one on tea.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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Money

Ranked: The World’s Black Billionaires in 2021

Black billionaires make up fewer than 1% of all billionaires worldwide. Who are they, and how have they built their wealth?

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Black billionaires

The World’s Black Billionaires in 2021

Black billionaires make up fewer than 1% of all billionaires worldwide. Who are the select few who made it into the ranks of the world’s richest people?

In this graphic, we used the Forbes real-time billionaire list to highlight the most financially successful Black people, and the source(s) of their wealth.

Black Billionaires, Ranked

The data is as of February 24, 2021, and includes bi/multi racial individuals with Black ancestry. Altogether, there are 15 Black billionaires with a combined wealth of $48.9 billion.

Here is the how the full list breaks down:

RankNameNet WorthCitizenshipSource
1Aliko Dangote$11.5BNigeriaCement, sugar
2Mike Adenuga$6.1BNigeriaTelecom, oil
3Robert F. Smith$5.2BUnited StatesPrivate equity
4Abdulsamad Rabiu$4.8BNigeriaCement, sugar
5David Steward$3.7BUnited StatesIT provider
6Patrice Motsepe$3.1BSouth AfricaMining
7Alexander Karp$3.0BUnited StatesSoftware firm
8Oprah Winfrey$2.6BUnited StatesTV shows
9Michael Jordan$1.6BUnited StatesCharlotte Hornets, endorsements
10Michael Lee-Chin$1.5BCanadaMutual funds
11Strive Masiyiwa$1.4BZimbabweTelecom
12Kanye West$1.3BUnited StatesMusic, sneakers
13Mohammed Ibrahim$1.1BUnited KingdomCommunications
14Shawn Carter (Jay-Z)$1.0BUnited StatesMusic, multiple
15Tyler Perry$1.0BUnited StatesMovies, television

Aliko Dangote is the richest Black billionaire, and has held the title since 2013. He owns 85% of publicly-traded Dangote Cement, Africa’s largest cement producer. The company’s stock price went up more than 30% over the last year. In addition, Dangote also has investments in salt and sugar manufacturing companies.

The fifth richest Black person, David Steward, owns the technology solutions provider World Wide Technology. Steward had decided he wanted to be part of the technological revolution and founded the company in 1990, before the first internet browser had even been created. The company has since grown to be the largest Black-owned business in America with over $13.4 billion in annual revenue and more than 7,000 employees.

Best known for his music career, Shawn Carter, more commonly known as Jay-Z, is number 14 on the list. However, the rapper’s wealth goes far beyond his music. Jay-Z has built a diversified business empire, including investments in a fine art collection, an entertainment company, a clothing line, and alcohol brands. He recently sold half of his champagne brand to LVMH, the parent company of Dom Pérignon.

Unequal Representation

Unfortunately, little progress has been made with regards to the proportion of Black billionaires. Since 2011, Black billionaires have made up fewer than 1% of all billionaires worldwide.

Black billionaires

In absolute numbers, the total number of billionaires rose by over 1,100 while the number of Black billionaires rose by just nine people.

The number of Black billionaires also falls very short of being representative of the general population. For example, only 8 or 1.2% of America’s 665 billionaires are Black. By contrast, Black people make up 12.2% of the U.S. population.

Breaking Through Barriers

There is still a large racial wealth gap between Black people and White people—even at the highest levels of financial achievement. However, despite these racial and systemic barriers, 14 of the 15 Black billionaires are self-made, meaning they built their wealth from the ground up. Who will be next to join the ranks?

“Innovation doesn’t happen without a person of color or a diversity of thought being at the table in order to challenge the status quo.”
—David Steward

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Economy

How Global Health and Wealth Has Changed Over Two Centuries

This unique animated visualization uses health and wealth measurements to chart the evolution of countries over time.

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two centuries of health and wealth

How Global Health and Wealth Has Changed Over 221 Years

At the dawn of the 19th century, global life expectancy was only 28.5 years.

Outbreaks, war, and famine would still kill millions of people at regular intervals. These issues are still stubbornly present in 21st century society, but broadly speaking, the situation around the world has vastly improved. Today, most of humanity lives in countries where the life expectancy is above the typical retirement age of 65.

At the same time, while inequality remains a hot button topic within countries, income disparity between countries is slowing beginning to narrow.

This animated visualization, created by James Eagle, tracks the evolution of health and wealth factors in countries around the world. For further exploration, Gapminder also has a fantastic interactive chart that showcases the same dataset.

The Journey to the Upper-Right Quadrant

In general terms, history has seen health practices improve and countries become increasingly wealthy–trends that are reflected in this visualization. In fact, most countries drift towards the upper-right quadrant over the 221 years covered in the dataset.

However, that path to the top-right, which indicates high levels of both life expectancy and GDP per capita, is rarely a linear journey. Here are some of the noteworthy events and milestones to watch out for while viewing the animation.

1880s: Breaking the 50-Year Barrier
In the late 19th century, Nordic countries such as Sweden and Norway already found themselves past the 50-year life expectancy mark. This was a significant milestone considering the global life expectancy was a full 20 years shorter at the time. It wasn’t until the year 1960 that the global life expectancy would catch up.

1918: The Spanish Flu and WWI
At times, a confluence of factors can impact health and wealth in countries and regions. In this case, World War I coincided with one of the deadliest pandemics in history, leading to global implications. In the animation, this is abundantly clear as the entire cluster of circles takes a nose dive for a short period of time.

1933, 1960: Communist Famines
At various points in history, human decisions can have catastrophic consequences. This was the case in the Soviet Union (1933) and the People’s Republic of China (1960), where life expectancy plummeted during famines that killed millions of people. These extreme events are easy to spot in the animation due to the large populations of the countries in question.

1960s: Oil Economies Kick into High Gear
During this time, Iran, Iraq, and Saudi Arabia all experience massive booms in wealth, and in the following decade, smaller countries such as the United Arab Emirates and Kuwait rocket to the right edge of the visualization.

In following decades, both Iran and Iraq can be seen experiencing wild fluctuations in both health and wealth as regime changes and conflict begin to destabilize the region.

1990s: AIDS in Africa
In the animation, a number of countries plummet in unison at the end of the 20th century. These are sub-Saharan African countries that were hit hard by the AIDS pandemic. At its peak in the early ’00s, the disease accounted for more than half of deaths in some countries.

1995: Breaking the 65-Year Barrier
Global life expectancy reaches retirement age. At this point in time, there is a clear divide in both health and wealth between African and South Asian countries and the rest of the world. Thankfully, that gap is would continue to narrow in coming years.

1990-2000s: China’s Economic Rise
With a population well over a billion people, it’s impossible to ignore China in any global overview. Starting from the early ’90s, China begins its march from the left to right side of the chart, highlighting the unprecedented economic growth it experienced during that time.

What the Future Holds

If current trends continue, global life expectancy is expected to surpass the 80-year mark by 2100. And, sub-Saharan Africa, which has the lowest life expectancy today, is expected to mostly close the gap, reaching 75 years of age.

Wealth is also expected to increase nearly across the board, with the biggest gains coming from places like Vietnam, Nigeria, and the Philippines. Some experts are projecting the world economy as a whole to double in size by 2050.

There are always bumps along the way, but it appears that the journey to the upper-right quadrant is still very much underway.

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