The Continental Congress was the governing body and series of meetings that served as the de facto national government of the Thirteen American Colonies, and later the United States, from 1774 to 1789
During the American Revolution, a cash-strapped Continental Congress accepted loans from France. Paying off these and other debts incurred during the Revolution proved one of the major challenges of the post-independence period.
In order to pay for its significant expenditures during the Revolution, Congress had two options: print more money or obtain loans to meet the budget deficit. In practice it did both, but relied more on the printing of money, which led to hyperinflation. At that time, Congress lacked the authority to levy taxes, and to do so would have risked alienating an American public that had gone to war with the British over the issue of unjust taxation.
Under the U.S. Constitution of 1789, the new federal government enjoyed increased authority to manage U.S. finances and to raise revenues through taxation.
The U.S. federal income tax began as an emergency wartime measure during the Civil War before being permanently established in 1913 following the ratification of the 16th Amendment.
Before the Income Tax
- Tariffs and Excise Taxes: Early U.S. federal operations relied almost entirely on customs duties (tariffs on imports) and excise taxes on goods like whiskey and tobacco.
- Regressive Nature: This system meant ordinary citizens paid the same flat tax-equivalent through higher consumer prices, placing a heavier relative burden on lower-income families.
16th Amendment: Ratified in February 1913, it gave Congress the power to collect taxes on incomes from any source without apportioning them among the states.
Initial Rates: The Revenue Act of 1913 introduced a 1% normal tax on net personal income under $20,000, with surtaxes reaching up to 7% for high earners. It initially affected less than 1% of the population.
World Wars: Top marginal rates skyrocketed to help finance military conflicts, peaking at 94% in 1944. The war effort also broadened the tax base, turning the income tax into a mass system affecting middle-income households.
Modern Reforms: Landmark legislation like the Tax Reform Act of 1986 simplified brackets and lowered top marginal rates, while subsequent adjustments like the 2017 Tax Cuts and Jobs Act further reshaped standard deductions and modern brackets.
In 1980, the U.S. federal individual income tax system had 15 progressive marginal tax brackets, with rates ranging from a low of 14% to a high of 70%.
Married Filing Jointly Brackets (1980)
- 14%: $0 – $3,400
- 16%: $3,400 – $5,500
- 18%: $5,500 – $7,600
- 21%: $7,600 – $11,900
- 24%: $11,900 – $16,000
- 28%: $16,000 – $20,200
- 32%: $20,200 – $24,600
- 37%: $24,600 – $29,900
- 43%: $29,900 – $35,200
- 48% / 50%: $35,200 – $45,800 (50% cap applied at higher thresholds)
- Up to 70% max rate: Reached on taxable income over $215,400
High past rates applied to a smaller share of total income and had many deductions, meaning the wealthy often paid a lower average share of their actual income than the sticker price suggested.
2025 tax rates for Married filing jointly.
Tax rate on taxable income.
10% $0 $23,850
12% $23,851 $96,950
22% $96,951 $206,700
24% $206,701 $394,600
32% $394,601 $501,050
35% $501,051 $751,600
37% $751,601 And up
The highest federal income tax rate is currently 37% (or 40.8% with the net investment income tax). In past decades, top marginal rates were much higher, reaching 70% in the 1970s and up to 91% in the 1950s.
The results after 40 years of lower taxes:
Lower income and corporate tax rates since 1980 reduced federal revenue, contributing to an overall “infrastructure deficit” spanning transportation, water systems, and the power grid.
Analyses of IRS data (such as studies by the Center for Public Integrity) note that keeping higher top marginal tax rates from earlier decades could have yielded hundreds of billions more in tax revenue—easily enough to rebuild and repair all deficient bridges and public water systems nationwide.
Economic Drag: The cumulative shortfall manifests as delayed repairs on roads, congestion bottlenecks, aging public transit, and strained municipal water networks, costing the economy billions annually in lost efficiency and maintenance overhead.
IOWA PUBLIC SCHOOLS
- Inflation Gaps: Critics and legislative opponents point out that cumulative state K-12 funding increases have fallen hundreds of millions of dollars behind inflation over successive budget cycles.
Diverted Revenue: Recent debates focus heavily on the diversion of public funds into private school voucher programs (Education Savings Accounts), which have redirected tens of millions of dollars away from local public districts—such as Des Moines Public Schools losing nearly $47.5 million over three years—rather than broad income-tax rollbacks dating back to 1980.
Reduced State Support: Reductions in state income tax rates have directly constrained general formula funding for classrooms.
Lower state revenue forces a heavier reliance on local property taxes, which disproportionately harms low-income school districts with smaller tax bases.
Budget shortfalls have undermined efforts to trim class sizes, improve teacher compensation, and expand critical learning time.
Funding stagnation and economic downturns have triggered widespread staff layoffs and the elimination of specialized programs like the arts, sports and even bus route consolidation.
Lower income tax revenue has increased the need to raise more revenue through property tax. This has led to many seniors needing to sell their home even though they may not have a mortgage, the taxes are too high to afford while on a fixed income.
Studies by groups like the Institute on Taxation and Economic Policy (ITEP) estimated that major federal tax cuts enacted between 2001 and 2018 alone reduced federal revenue by over $10 trillion cumulatively, with nearly $2 trillion of that benefit flowing specifically to the richest 1 percent of taxpayers.
According to analyses by economists Emmanuel Saez and Gabriel Zucman (authors of The Triumph of Injustice), the overall effective tax rate—combining federal, state, and local taxes—for the ultra-rich has declined significantly since 1980, allowing top earners and billionaires to sometimes pay lower overall effective rates than working-class families.
U.S. Federal Debt by Decade
1980 - $908 Billion
1990 $3.2 Trillion
2000 $5.6 Trillion
2010 $13.5 Trillion
2020 $27.7 Trillion
2026 (Current) Over $40 Trillion
The 400 richest Americans are now worth a record $8 trillion. The entire bottom 50% of American households is worth just $4.27 trillion.
Lower income taxes means increases in other taxes as each layer of our government needs money to function. Lowering the function lowers the results.
