If ever there was a super good reason for every American – especially Christians – to be seriously committed to be active and informed voters in all American elections, the history of America’s income tax must surely be a catalyst for all of us to urge others to be involved.

The discussion about possibly removing the burdensome tax on personal income, should lead us all to pray for God’s will to be done on earth as it is done in heaven… especially in this department of life. Wouldn’t that be something for every American to be seriously thankful to God about?  Imagine if it could really happen in our lifetime?

Well, a little history of our American Income Tax system gives us some perspective.

In today’s rapidly changing world of international global economics and political turmoil, God’s people must rightly ask, “how are we to let God’s perspective on all that’s going on increase our trust in His providential care?” With all the uncertainty that people in every nation share about the future of the ‘almighty dollar,’ it’s got to be at least a little comforting to know the perspective of Scripture.

High on our priority list to find encouragement and perspective in times like these is to constantly regard our Lord’s ownership of everything. He owns it all.  We should always see ourselves as humble caretakers – stewards – of His property. Scripture repeatedly underscores God’s ownership of everything:

“To the Lord your God belong the heavens, even the highest heavens, the earth and everything in it” (Deuteronomy 10:14).

“The land is mine and you are but aliens and my tenants” (Leviticus 25:23).

Our friend, historian Bill Federer, sent me his link to a YouTube presentation he made about the Interesting History of the Income Tax. It’s so good, I thought you’d like to hear it. So, I’m going to turn our attention today to Bill’s little talk.

You likely heard Ben Franklin’s quip, “The only things certain are death and taxes” – Yet few know America’s interesting history of Income Tax, like the fact that our original 1787 U.S. Constitution prohibited what it labeled as a “direct” Federal tax.  

In 1862, an emergency “Revenue Tax” on incomes was passed by congress to finance the Union during the Civil War, but after the Civil War ended, (in 1873) the emergency was over, and the Income Tax was repealed.

In 1895, The Supreme Court made Income Tax unconstitutional. But, in 1913, President Woodrow Wilson thought tariffs on imports caused wars, so he worked to replace tariffs with an Income Tax.

Income Tax was originally only a 1% tax on the top 1% of the richest people in America.

In 1943, paycheck withholding began as an emergency effort to get funds to finance WWII… But President John F. Kennedy, in 1963, insisted that “Lower rates of taxation will stimulate economic activity and so, raise the levels of personal and corporate income as to yield within a few years an increased flow of revenues to the Federal Government.” (Annual Budget Message, Jan. 17, 1963)

Let’s listen to Bill Federer, and see how many surprises we discover along the way. They may help us in our discussions about these topics with our friends.

Interesting History of Income Tax

0:04 hi, did you know there was a time when there was no income tax in the United States. This is Bill Federer and in this episode of how we got where we’re going to look at some interesting history of income taxes.

0:20 Originally the US Constitution prohibited a direct federal income tax. Article 1 Section 9 no capitation or other Direct Tax shall be laid. If there was no income tax how did the federal government get its funding? The US Constitution allowed two sources of revenue for the federal government.

0:45 The first was excise taxes paid on specific items like salt, tea, tobacco, alcohol, and the second was tariff taxes on imports called customs. The Coast Guard was formed by Alexander Hamilton to catch those trying to smuggle Goods into America without paying tariffs. The Coast Guard’s fast ships, called Revenue Cutters, caught smugglers and collected Revenue.

1:22  Tariff taxes made foreign Goods more expensive so people would buy less of them, choosing instead to buy American-made Goods. American goods were mostly manufactured in factories located in the northern states. Factories used water or steam power to run Mills and spinning jennies – motorized looms which wove cotton into cloth. Factories mass-produced items from shoes, to farm equipment, to muskets, and rifles. The northern states liked tariffs because they made European Goods such as cloth and textiles more expensive, resulting in consumers buying more of their American-made products.

2:10  The southern states did not like tariffs as they had very few factories. The South was mostly agricultural which unfortunately was based on slave labor. The south then had to either buy more expensive goods from the Northern factories, or more expensive goods from Europe due to the tariffs. At one point nearly 90% of the federal government’s income came from tariff taxes collected at Southern ports. This created tensions between the North and the South. In 1832 South Carolina even threatened to secede. South Carolina’s port at Charleston had a Union Fort – Fort Sumpter – which ensured tariffs were collected.

3:06  The Civil War started in 1861 when Confederates fired cannons at Fort Sumpter. Once the war started, the federal government no longer had access to Southern tariff income. Lincoln then pushed through an emergency income tax to raise $750 million to pay for the union war effort.

3:31  After the war the income tax was repealed because the emergency of the war was over. Northern factories grew even more successful after the Civil War while Americans experienced the fastest rise in the standard of living in history. Factory owners, called industrialists, became very wealthy. They were nicknamed ‘robber barons.’ Over in Europe, a German writer named Carl Marx published his book ‘Das Kapital’ in 1867. He used what he called critical theory to divide Society into groups and then pit them against each other: business owners and workers; oppressors and victims; haves and Have Nots. Marxists would organize protests riots and violence to overthrow the ruling class. Marx gave very little thought as to who would be in charge once the ruling class was overthrown. He imagined that somehow, out of the chaos, an idyllic, utopian, socialist society would magically emerge. Unfortunately, the reality was violent gangs seized power, doling out favors to their deep State supporters, and cancelling their opponents. Marxist ideology filtered across the ocean into America with German immigrants. Socialist leader Lenin is credited with saying the way to crush the Bourgeoisie (the business owners) is to grind them between the millstones of Taxation and inflation. German immigrants pushed for an income tax on the wealthy industrialists. In contrast to Europe, America did not have centuries of ruling class Elites, who passed wealth from one generation to the next. For the most part, America’s wealthy started out with nothing, and in one lifetime, rose out of poverty to success.

5:42  In 1892 Marxist thinking resulted in not just unions being formed, but the effort to have an income tax on industrialists. But the Supreme Court declared it unconstitutional. In the 1894 decision of Pollock versus Farmers Loan and Trust. Chief Justice Melville Fuller said income tax should only be used during a wartime emergency.  The original expectation was that the power of direct taxation would be exercised only in extraordinary emergencies. Justice Steven Field added “the income tax law under consideration is class legislation whenever a distinction is made in the burdens a law imposes or in the benefit it confers on any citizen by reason of their birth or wealth or religion. It is class legislation and leads inevitably to oppression and abuses.”

6:51  The push to tax industrialists resulted in President Theodore Roosevelt pushing through the inheritance tax as only the extreme wealthy had an inheritance worth leaving. Then President William Taft pushed through a 2% corporate income tax as only the extreme wealthy owned corporate stock. Then President Woodrow Wilson was elected. He thought tariff taxes between countries caused Wars and that if all the tariffs were removed there would be world peace. To replace the lost tariff income, Wilson pushed through the personal income tax in 1913 with the 16th Amendment. It originally was just a 1% tax on the top 1% richest people… Such as Rockefeller, Carnegie, Aster, Getty, Vanderbilt, Fisk, Flagler, Gould, Harriman, JP Morgan, and Schwab. That would be like today only taxing the likes of Bill Gates, George Soros, Mark Zuckerberg, Larry Fink, and Jeff Bezos. But there was a problem. The wealthy are not wealthy because they’re dumb, but because they’re smart. No sooner did the income tax get enacted than the wealthy found a way not to pay it by forming tax-free foundations. This way they could still control their wealth. They just weren’t taxed on it. Their tax-free nonprofit educational foundations were included in a tax category that previously had only been for churches.

8:34  Churches did not pay taxes because they were essentially gatherings of individuals who had already paid their taxes. Besides, churches did all the social work. They started hospitals, medical clinics, schools, orphanages, homeless shelters, soup kitchens, benevolence, inspected bottled milk for contamination,  cared for the widows, unwed mothers, War veterans, maimed, juvenile delinquents, immigrants, and visited Shut-ins and those in prison. Churches provided all these social services, largely for free with no help from the government because they had a religious motivation. This later changed during the Great Depression with Franklin Roosevelt’s New Deal, and with Lynden Johnson’s Great Society welfare state when the government usurped this role from the church.

9:30  World War I fighter, Eddie Rickenbacker, who owned the Indianapolis Speedway, wanted to repeal the 16th Amendment income tax stating: “when Woodrow Wilson told us the evils of concentrated power, less than 9% of our entire national income was enough to keep all the federal and local governments going. by 1960 taxes took one-third of all our earnings, the entire gross income of every American is subject to complete Federal Confiscation.”  Rickenbacker continued: “Every time the Liberals discover a brand new misinterpretation of the Constitution… every time they invent a new way to circumvent the Constitutional limits of federal power, they pile up more power in Washington at the expense of individual liberty across the land. Instead of advocating Freedom, modern Liberals are striving to pile up the power of government in Washington.”

10:33  President Gerald Ford stated, October 19^th, 1974: “What they don’t tell us when they promise all these benefits that they are going to give you from our government is that a government big enough to give us everything we want is a government big enough to take from us everything we have.”

10:56  There was another practical benefit of churches to society. Churches helped maintain strong marriages and families, encourage a moral and responsible Population, all of which translated into safer neighborhoods. From the 1930s to the 1970s regular Church attendance in the United States was over 70%. Without the supported churches there are more broken marriages, more fatherless children, more crime, drug abuse, homelessness, declining property values, which decreased the tax Base, requiring taxes to be raised to pay for more police and firemen. Low and behold, there was great financial repercussions to De-Christianizing society.

11:44  When World War I started, the wartime emergency allowed income tax to be expanded. This followed the precedent of an income tax during a wartime emergency. Then, during the emergency of World War II, Franklin Roosevelt instituted the largest tax increase in history, requiring nearly everyone to pay.  John F Kennedy explained, April 20^th 1961: “In meeting the demands of War Finance the individual income tax moved from a selective tax, imposed on the wealthy to the means by which the great majority of our citizens participate in paying. The World War II patriotic fervor was displayed on billboards with slogans  such as: “Uncle Sam need you. Buy war bonds” and “smash the axis… pay your taxes.” There was a problem though. Taxes were paid at the end of the year, but nobody saved up money to pay them. Beardsley Rumel, chairman of Macy’s department store and director of the New York Federal Reserve Bank, promoted the idea of ‘withholding taxes’ from people’s paychecks. Kennedy explained, “Withholding on wages and salaries was introduced during the war when the income tax was extended to millions of new taxpayers.” Whenever you see money taken out of your paycheck, now you know that is left over from the emergency of World War II. Once the majority of the country was paying income taxes, it became an easy way to begin implementing socialism through the back door. Liberal politicians would take money in taxes away from their conservative opponents and then funnel the money as welfare payments to support their liberal voters, who would then reelect them to keep the free stuff coming.

13:48  England’s prime minister, Margaret Thatcher, once said: “The problem with socialism is that you eventually run out of other people’s money.” As income taxes increased industrialists were smart. They realized they could avoid taxes by moving their factories overseas to places like China, where there was cheaper labor. When factory owners left, their patriotism left with them, and they became globalists.  Globalists would then give money to politicians to get them to lower the tariff taxes so they could bring their cheaper foreign made goods back into America, making it even more difficult for companies located in America to compete. Kennedy added, April 20^th, 1961, “Countries where income taxes are lower than in the United States provides a tax advantage for companies operating through overseas subsidiaries. That is not available to companies operating solely in the United States.” Kennedy observed, February 6, 1961, “Present tax laws may be stimulating an undue amount of flow of American Capital to industrial countries abroad.” To remedy this Kennedy proposed a stimulus plan of lowering taxes across the board September 18^th, 1963. A tax cut means higher family income and higher business profits and a balanced federal budget. Every taxpayer and his family will have more money left over after taxes for a new car, a new home, new conveniences, education and investment. Every businessman can keep a higher percentage of his profits in his cash register or put it to work expanding or improving his business.  And as the national income grows the federal government will ultimately end up with more revenues. Taxes became more complicated.

15:52  Albert Einstein’s accountant Leo Matzdorf wrote In Time Magazine in 1963, “One year while I was at his Princeton home preparing his tax return Mrs. Einstein asked me to stay for lunch. During the course of the meal Professor Einstein turned to me and with his inimitable chuckle said, “The hardest thing in the world to understand is income taxes.”

16:24  Ronald Reagan stated in 1988, “I believe God did give mankind unlimited gifts to invent, produce, and create, and for that reason it would be wrong for government to devise a tax structure that suppresses those gifts.”

I hope you have enjoyed this episode of how we got here and the brief overview of the interesting history of income taxes. God bless you

:::

Now… after hearing Bill Federer’s little survey of America’s checkered history of using personal income taxes to fund the federal government, perhaps God is using this information to inspire us all to be more informed and involved in the process of formulating the policies that govern our lives as American citizens.

Do you think that God might be raising up at least part of the younger generation to abandon the apathy and sense of hopelessness that has dominated the last few generations regarding income tax?

Instead of letting God’s people continue to be destroyed for a lack of knowledge, we can all be at least a modest contributor of positive influence.  We can be messengers of truth and of the knowledge of the principles of God’s deliverance that guided the genius of America’s founders. God used them to conceive America’s constitution that dramatically gave us a level of Bible-based liberty that the world had never before known. Why shouldn’t we pray and do whatever we possibly can to encourage our younger fellow citizens to assure a hopeful future for the generation yet to be born?

Scripture assures us…

“Yours, O Lord, is the greatness and the power and the glory and the majesty and the splendor, for everything in heaven and earth is yours. Yours, O Lord, is the kingdom; you are exalted as head over all. Wealth and honor come from you; you are the ruler of all things” (1 Chronicles 29:11-12).

“The earth is the Lord’s and everything in it, the world, and all who live in it; for he founded it upon the seas and established it upon the waters” (Psalm 24:1-2).

“For every animal of the forest is mine, and the cattle on a thousand hills. I know every bird in the mountains, and the creatures of the field are mine. If I were hungry I would not tell you, for the world is mine, and all that is in it” (Psalm 50:10-12).

“’The silver is mine and the gold is mine,’ declares the Lord Almighty” (Haggai 2:8).

Not only does God own everything, but He grants us our money-making skills and determines how much of His wealth He will entrust to us:

“Remember the Lord your God, for it is he who gives you the ability to produce wealth” (Deuteronomy 8:18, NIV).

“The Lord makes poor and makes rich; He brings low and lifts up” (1 Samuel 2:7, NKJV).

Let’s remember these things as we consider what we’ve heard from Bill Federer today.

Bonus Segment

Here are some more encouragements to help us put our trust in Him?

In Reflections of God’s Glory, Corrie ten Boom, who traveled the world speaking and sharing about God’s love, said, “My finances are always in the realm of God’s miracles. He is my heavenly treasurer. When I need money—and I often do—I say to Him, ‘Father in Heaven, in the Bible it says that you have cattle on a thousand hills. That’s quite a lot. Will you sell Your cows and give me the money?’ He always does so.”

If we believe that God can create us, redeem us, and bring us through death to spend eternity with Him, do you think it’s possible for us to take Him at His word when He says He’ll provide for our material needs?

“The Lord is my shepherd; I have what I need” (Psalm 23:1, CSB).

Nobody likes disruptions in their sense of security. That’s why the Bible is given to us to see how God worked with His people in various ways in the past, to supply for their needs. When problems arise in life, that’s when we have to look around and discover the opportunities for us to roll up our sleeves and work with God’s illuminated pathways to find the provision we need.  He gives us all kinds of opportunities to either provide for our needs or to show us that they aren’t really needs at all.

All of us have one big need.  And that’s our need to “trust in the Lord with all your heart” (Prov 3:5). Of course, the second part of that axiom is equally challenging for us in the natural order of things. He tells us to “not lean on your own understanding.”  Human rationalization may seem logical to us, but that’s why His inspired Word gives us the model prayer in Psalm 119.

 Psa 119:169 “Let my cry come before you, O LORD; give me understanding according to your word!”

Jesus said, “Seek first his kingdom and his righteousness, and all these things [what you eat, drink, and wear] will be given to you as well” (Matthew 6:33).

When we make that command really personal by laboring to do whatever it takes to learn His ways by studying His Word and communing regularly with Him… then the attached promise is what we’re enabled to receive… “all these things will be given to you.”

Pro 2:6 “For the LORD gives wisdom; from his mouth come knowledge and understanding;”

That’s why Paul could advise Timothy…

2 Ti 2:7 “Think over what I say, for the Lord will give you understanding in everything.”

Unlike the pagans who “run after all these things” and “worry about tomorrow,” believers are charged to follow Christ, live a radical life of faith, and trust God to provide (see Matthew 6:25-34).

In this passage, Jesus says God cares for the birds. Yet birds aren’t created in God’s image. Christ didn’t die for birds. Does the Holy Spirit indwell birds? Will birds reign with Christ? No… But we will! So, Christ asks His disciples, “Are you not much more valuable than they?” (Matthew 6:26). If He takes care of the less valuable creatures, will He not take care of us, who are far more valuable?

Where Is Our Hope?

Financial concerns give us opportunities to operate our faith in two ways to establish the source of our hope: the wise principles of His Word, and the providential guidance of His Spirit. Both require us to diligently seek His “face” in private conversation. That means for us to meditate in His word regularly and to talk with the Lord about all the choices before us.

The Apostle Paul says that the rich should not “put their hope in wealth, which is so uncertain, but . . . in God, who richly provides” (1 Timothy 6:17).

Banks close. Empires fall. Stock markets crash. Economies change. Every condition in this life is temporary. If there is one thing we can know is certain, it’s certain that every man-made thing in this world is bound to be shaken.

Quoting the same passage in Haggai, declaring God owns all the silver and gold on earth (Hag 2:6-8), Hebrews 12:27 says…

Now this, “Yet once more,” indicates the removal of those things that are being shaken, as of things that are made, that the things which cannot be shaken may remain.

In times when the righteous Judge of heaven and Earth is in the process of deposing false gods in which people have put their trust, He speaks to us through the prophet Habakkuk, in the same chapter where he said “in wrath remember mercy” (v.2) as he rejoiced in the LORD, saying…

“Though the fig tree should not blossom, nor fruit be on the vines, the produce of the olive fail, and the fields yield no food, the flock be cut off from the fold and there be no herd in the stalls, yet I will rejoice in the LORD; I will take joy in the God of my salvation. GOD, the Lord, is my strength; he makes my feet like the deer’s; he makes me tread on my high places.”  Hab 3:17-19

Elliot Clark writes in Evangelism as Exiles: Life on Mission as Strangers in Our Land,

“Hope for the Christian isn’t just confidence in a certain, glorious future. It’s hope in a present providence. It’s hope that God’s plans can’t be thwarted … The Christian hope is that God’s purposes are so unassailable that a great thunderstorm of events can’t drive them off course. Even when we’re wave-tossed and lost at sea, Jesus remains the captain of the ship and the commander of the storm.”

Consider these verses from the Psalms, reminding us to put our hope in God:

“And now, O Lord, for what do I wait? My hope is in you” (Psalm 39:7).

“For God alone my soul waits in silence; from him comes my salvation. He alone is my rock and my salvation, my fortress; I shall not be greatly shaken. … For God alone, O my soul, wait in silence, for my hope is from him” (Psalm 62:1-2, 5).

“The LORD upholds all who are falling and raises up all who are bowed down. The eyes of all look to you, and you give them their food in due season. You open your hand; you satisfy the desire of every living thing. The LORD is righteous in all his ways and kind in all his works. The LORD is near to all who call on him, to all who call on him in truth. He fulfills the desire of those who fear him; he also hears their cry and saves them” (Psalm 145:14-19).

Whatever the coming days, weeks, and months may bring, my prayer is that the truth of God’s ownership of all created things, His providence over everything, and His promise to provide for His children’s needs… help you completely put your hope in Him. Amen?

References:

Bill Federer’s free emailed daily newsletter – American Minute – is accessed at https://americanminute.com/pages/sign-up-for-newsletter

Putting Our Hope in God’s Ownership and Provision in Times of Financial Worry

By Randy Alcorn https://www.faithfi.com/eternal-perspective-ministries/putting-our-hope-in-gods-ownership-and-provision-in-times-of-financial-worry-3447