- Who were the most influential presidents in US history to affect our modern-day tax law?
“It is essential … that towards the payment of debts there must be revenue; that to have revenue there must be taxes; that no taxes can be devised which are not more or less inconvenient and unpleasant…”
— George Washington (1789 – 1797)
Our country was established by anti-tax rebels, but the leader of those rebels and general who brought our country’s revolution to success, however, wasn’t necessarily as anti-tax as we’d always thought.
George Washington was, contrary to common belief, a firm believer in establishing a national tax. He levied the first tax of our new republic—the ill-fated Whiskey Tax—and even used military force against those who opposed it. It is also assumed that Washington supported the first Congress’ vote towards Alexander Hamilton’s plan to fund the federal government entirely through tariff income.
“The power of taxing people and their property is essential to the very existence of government.”
— James Madison (1809 – 1817)
Flash forward to 1861: Abraham Lincoln established the first income tax to cover the debt from the Civil War. The 3% tax on income over $800 was short-lived and repealed after only 10 years in 1871. It wasn’t until 1913 that the modern-day tax return, the Form 1040, was established.
“Taxes, after all, are dues that we pay for the privileges of membership in an organized society.”
— Franklin D. Roosevelt (1933 – 1945)
We all know that FDR played a major role in lifting the US out of the Depression—but how did his tax policies help bring our country back on its feet? The year 1944 saw the highest ever top marginal tax rate at 94% which brought the yearly federal tax income from $9 billion to $45 billion in just four years. This major rate increase was necessary to help fund the new Social Security Act (1935) which imposed one of the first payroll taxes on both employers and employees.
“I don’t suppose we will ever get to the point where people are pleased to pay taxes, but we owe it to them to see that the collection is done as efficiently as possible, as courteously as possible, and always honestly.”
— Lyndon B. Johnson (1963 – 1969)
Ronald Reagan has been remembered for drastically cutting taxes through his years in office. He lowered the top marginal tax rate back to 28% and increased the standard deduction and personal exemption.
As Democrats and Republicans fluctuated in and out of the White House during the Clinton and Bush years, tax rates continued to fluctuate. During Clinton’s administration, the Taxpayer Relief Act (1997) was passed, lowering capital gains rates, introducing new tax breaks for families with dependent children, and creating the Roth IRA.
“In fact, the best thing we could do on taxes for all Americans is to simplify the individual tax code.”— Barack Obama (2009 – 2017)
“ We’re the highest-taxed nation in the world. Our middle class is just reeling from the taxes. And you know, if you think about it, the middle class and the workers of this country, who really built the country, they haven’t had a raise in 12 years.”
— Donald Trump (2017 – 2021)
The most recent presidencies have brought some of the biggest changes America has seen to federal tax laws.
The Obama administration brought the first permanent estate tax as well as The American Taxpayer Relief Act (2012) and the Affordable Care Act (2010), both of which increased tax rates. After Obama’s tax cuts, the federal bank saw a combined $531 billion drop in revenue.
The Trump administration’s greatest contribution was the Tax Cuts and Jobs Act of 2017. The “TCJA” brought about numerous changes, many of which went directly against those of Obama. Most notably, the TCJA saw major drops in tax rates and increases in standard deductions.
However, when most Americans hear “Trump” and “taxes,” they think of the controversy surrounding his tax return information. While no law requires the United States president to share his tax return, it is a tradition every president—save Gerald Ford and Donald Trump—has followed since Nixon’s administration.
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Sincerely,
Devin McQuillan
Associate, Creative Solutions
Contact:
516-541-6549 | Email