Since the ratification of the 16th amendment in 1913, Federal income taxes have been one of the prices of living in this country. Over the past 100+ years, however, the US has seen significant tax fluctuations and corresponding political riffs:
- In the 25 year period between 1993 and 2017, average Federal tax rates changed by 5 percentage points overall and 10 percentage points in the bottom income quintile (the top income quintile saw a 4.6 percentage point change).
- The highest Federal tax brackets fluctuated from 7% in 1913 to 94% during World War 2 back to 37% in 2020.
It is no surprise tax rates capture attention every election cycle - taxes directly impact your home, your lifestyle, the support you can provide your children, the age you retire, and the quality of your retirement. More importantly, be it hours worked at a construction site, time and effort spent to become a doctor, or existing wealth risked on other ventures, generating income almost always requires our time and energy and thus, our freedom.
As Americans, we must accept the tax changes that come from our elected officials, but given the direct correlation between our income (taxes) and our lives/freedom, tax rates are far too important to leave to a simple majority vote and partisan agendas (as a point of context, in the past 30 years, each party has had complete control of the government - House, Senate, and Presidency - 2 alternating times).
Similar to Constitutional amendments, tax changes (up or down) should also require 3/4 majority. With a higher bar on tax changes, we have a better chance at ensuring taxes reflect aligned, bi-partisan need while reducing fear and divisiveness between parties.
The tax rates of the wealthy are often leveraged to build emotional arguments in favor of increased taxes, but focusing the conversation on the wealthy is missing the point:
- This principle neither advocates for high nor low taxes, it simply suggests tax changes should not be left to a simple majority which frequently polarize the country.
- When combined with the #Principle Make tax simple and Decentralize, the wealthy can still “pay their fair share.”
- As highlighted by the above tax rate details, this is not an issue that only impacts the wealthy.
It may sound like a high bar to require a 3/4rds majority to change the tax structure, and to that we should ask: given the impact on our lives, why shouldn’t it be? Push to raise the bar on tax changes.
