The principle behind the progressive income tax—which asserts that the more you earn, the larger the percentage of tax you must pay—is not what the nation’s Founders wanted. An attempt by Congress to impose one late in the nineteenth century was declared unconstitutional by the Supreme Court. It took a constitutional amendment, ratified in 1913, for such a tax to be legal.
The income tax of 1913 started small, but grew quickly in size and scope. The top rate was first set at a mere 7 percent—and married couples were only taxed on income over $4,000 (equivalent to $80,000 in today’s dollars). During the tax debate, William Shelton, a Georgian, supported the income tax "because none of us here have $4,000 incomes, and somebody else will have to pay the tax." Or, as another wag later said, "Don’t tax you, don’t tax me, tax that man behind the tree." The seeds of class warfare were sown in the strategy of different rates for different incomes.
Presidents Herbert Hoover and Franklin Roosevelt, using the excuses of depression and war, permanently enlarged the income tax. Under Herbert Hoover, the top rate was hiked from 24 to 63 percent. Under Franklin Roosevelt, the top rate was again raised — first to 79 percent and later to 90 percent. In 1941, in fact, Roosevelt proposed a 99.5 percent marginal rate on all incomes over $100,000. "Why not?" he said when an advisor questioned this tactic.
After that proposal failed, Roosevelt issued an executive order to tax all income over $25,000 at the astonishing rate of 100 percent.
What's Wrong with the Progressive Income Tax? [Mackinac Center]