WEB Notes: When we talk about “Making America Great Again” I think of removing the Federal Income tax that has not always keep in place. Not until 1913 when the Federal Reserve was founded.
The Republican tax bill (which passed 227-203 in the House and 51-48 in the Senate) marks the first reform of the tax code since the 1980s. President Donald Trump and congressional Republicans have some justification for celebration, but even during the holiday season the people should not imagine that the bill actually gives them anything.
The bill lowers the corporate rate from 35 to 21 percent and reduces rates in five of the seven tax brackets. It’s nothing approaching a flat tax, but according to the New York Times it will cut taxes for about 75 percent of filers in 2018.
This means that government will withhold from workers’ paychecks less of the money they have already earned through labor. That money is “proper” to them but in the current system the government gets it before the worker does. The new tax bill does nothing to change that practice, a relic of World War II.
As Robert Higgs (Crisis and Leviathan) notes, before World War II individuals who owed federal tax on their income paid the tax during the following year in quarterly installments. In 1943, economist Milton Friedman helped launch the practice of grabbing the workers’ money right off the top.