Income Tax and A Wall Street Witch

The Income Tax Beginnings

The first income tax bill was first signed into law during the Civil War. Prior to the war, there had never been an income tax. The first income tax bill was passed on August 5, 1861. The war had already begun to be expensive, and the legislators in the US Congress were looking for new avenues to bring in money to pay for it. Interestingly, it was passed just a few weeks after the Union forces Battle of Bull Run debacle.

What if no one collected the tax?

That tax was 3 percent on annual incomes over $800, and believe it or not, no one tried to collect it. Wouldn’t that be nice today?

The next Income Tax bill

It was passed on July 1, 1862, and government officials collected that tax. Of course, the country already had excise taxes, bonds, and tariffs on imported goods, but the tax helped pay for a very expensive war. Most would say the loss of life of decent human beings was the greater cost. It was repealed in 1872.

A new Income Tax was passed in 1894 to help pay for a monetary crisis. The Supreme Court found the law unconstitutional. Their reason for the denial of an income tax was that it would not be distributed back to the states in a manner equal to their population.

It Took An Amendment to the Constitution

In 1913, the Congress passed the 16th Amendment, and enough states ratified it. Now we have a regular Income Tax. Darn it!

The Witch of Wall Street.

Talk about avoiding taxes. Hetty Green was a Wall Street Wizard, who lived like a pauper. To avoid paying property taxes, she shuttled her two children around to run-down hotels. If the family traveled, it was a cheaply as possible.

How did it begin? Hetty inherited her father’s million dollar estate in 1864, during the Civil War. She bought war bonds, that most rich people avoided, and, boy, did they pay off! She began investing in Wall Street and investing in failing businesses which then thrived, driving up stock prices. It’s like she had a witch’s power.

She behaved like a witch – dressing in austere black clothes, and screeching at those who would not do her bidding, and working alone in a space in a bank that she had finagled. She would do all she could to keep from paying fees or even buying herself a lunch, but she’d bring a sandwich from home.

When her son, Ned, was injured in an accident, she tried to have him cared for at a charity ward. When the witch was recognized, she refused to pay and tried to treat Ned at home herself. His injured leg grew worse and had to be amputated.

Hetty Green, the witch of Wall Street, died of a stroke in 1916 while arguing with a maid over the price of milk. She left her two kids 50 million a piece.