The Evolution of a National Burden – Part 5/7

The 16th Amendment was not the first time there was an American income tax. The financial requirements of the Civil War prompted the first American income tax in 1861. At first, Congress placed a flat 3-percent tax on all incomes over $800 and later modified this principle to include a graduated tax.

Congress repealed the income tax in 1872, but the concept as a source for funds did not go away.

In 1894, as part of a high tariff bill, Congress enacted a 2-percent tax on income over $4,000. The tax was almost immediately struck down by a five-to-four decision of the Supreme Court, even though the Court had upheld the constitutionality of the Civil War tax as recently as 1881.

In addition, Democratic Party Platforms under the leadership of three-time Presidential candidate William Jennings Bryan (1860 – 1925), however, consistently included an income tax plank, and the progressive wing of the Republican Party also supported the concept.

In 1909, progressives in Congress again attached a provision for an income tax to a tariff bill. Conservatives, hoping to kill the idea for good, proposed a constitutional amendment enacting such a tax; they believed an amendment would never receive ratification by three-fourths of the states. Much to their surprise, the amendment was ratified by one state legislature after another, and on February 25, 1913, with the certification by Secretary of State Philander C. Knox, the 16th amendment took effect. Source: Our Documents.gov

  • Then came World War I (1917 – 1921) that cost $20 billion (equal to $256.4 Billion in 2012)

By 1920, the federal debt was $22 billion (equal to $253 Billion in 2012). It would take ten years to pay that debt down to $16.2 billion ($221.92 Billion in 2012).

  • Next was World War II and the national debt grew to $43 billion by 1940. In 1950, after defeating Nazi Germany and Imperial Japan in 1945, the national debt was $257.4 Billion (equal to $2.451 Trillion in 2012).
  • The Marshall Plan to rebuild Europe after World War II cost the US $13 Billion (equal to $112 Billion in 2012). The Marshall Plan money was in the form of grants that did not have to be repaid.  The total of American grants and loans to the world, 1945-53, came to $44.3 Billion (equal to $381.9 Billion in 2012).
  • The Korean War (1951-1953) cost $30 Billion ($273.6 Billion in 2012). In 1953, the National Debt was $275.2 Billion.
  • The cost of the Vietnam War (1959-1975) was $111 Billion ($743 Billion in 2012). In 1975, the National Debt reached $576.6 Billion
  • The Persian Gulf War (1990-1991) cost $61 Billion ($102 Billion in 2012). By 1990, the National Debt reached $3.233 Trillion
  • The Iraq War (2003 to 2012) cost $715 Billion ($784 Billion in 2012 dollars) and still growing.
  • The war in Afghanistan has cost $583.3 Billion to November 10, 2012 and it isn’t over yet.

After World War II, the National Debt was reduced from 120% to 30% of GDP by 1981 when President Carter (1977 – 1981) left the White House. During that thirty-six year period (1945 – 1981), welfare spending in the US, including unemployment and workers compensation funded by taxes paid by workers and/or employers, cost $509.8 Billion and the federal government funded wars in Korea and Vietnam but still reduced the National Debt.

I repeat: under seven US presidents, Truman, Eisenhower, Kennedy, LBJ, Nixon, Ford and Carter, the National Debt was reduced from 120% (1945 at the end of World War II) of Gross Domestic Product to 30% of GDP by 1981.

Then Ronald Reagan was elected president.

Note: The Inflation calculator used  for this series of posts may be found at Dave Manuel.com, and the primary source for government spending was US Government Spending.com

Continued on December 7, 2012 in The Evolution of a National Burden – Part 6 or return to Part 4

Also discover Each President’s share of the US National Debt and learn more from the National Debt Info-Graphic by President 1945 – 2012

_______________________

Lloyd Lofthouse, a former U.S. Marine and Vietnam Veteran, is the award winning author of The Concubine Saga.

His latest novel is Running with the Enemy. Blamed for a crime he did not commit while serving in Vietnam, his country considers him a traitor. Ethan Card is a loyal U.S. Marine desperate to prove his innocence or he will never go home again.

And the woman he loves and wants to save was trained to hate and kill Americans.

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2 thoughts on “The Evolution of a National Burden – Part 5/7

  1. Pingback: . . . 100 years ago . . . We had absolutely no national debt, ??? – not quite so! |

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