Budget talks: This is getting nasty

Baron, A welfare system may be a worthwhile endeavor. But it isn't a public good. Public good is an economic term. It refers to any good or service that suffers from a "free rider" problem.

 

We didn't have any income tax until 1913, cran, and it took an amendment to the constitution to make it possible. It only got ratified because it was sold as something that would never affect most people. Less than 1 percent of the population paid income tax when the first act passed in 1913, and the top marginal rate was only 7 percent: and that was only for the small handful of people who earmed more than half a million dollars (lord knows what that is in 2011 dollars).

By 1930, most people still didn't pay income tax. You had to earn at least $10,000 to pay any, which was a fortune then. You were only taxed at a 6 percent rate, if you did, and even though rates scaled up to 25 percent, that top marginal rate, as well, only affected a small handful of people in the country (those earning a quarter of a million dollars; again, lord knows what that is in 2011 dollars).

Even into the 1940s and 1950s, most people didn't pay any income tax, or if they were subject to it, it was at an incredibly low rate.

What we are talking about is a system that grew out of the middle of last century. Within the lifetimes of many people on this board. That was what I meant by relatively recently, which I think is fair, given that our country is more than 235 years old.

 

Are we still?