A Letter to John Malcolm (May 20, 1723 – November 23, 1788)
Dear John,
In 1776, Americans hated taxes so passionately they launched a revolution over them…
…despite having some of the lowest taxes in the civilized world.
History contains layers.
The irony, of course, is glorious. Colonial Americans in the 1770s enjoyed remarkably light taxation compared to Europeans. There was no federal income tax. No payroll tax. No corporate tax. No IRS lurking ominously beside the mailbox like a bureaucratic cryptid feeding on receipts and emotional stability.
Most colonial taxes were local, modest, and relatively narrow. Governments funded themselves primarily through tariffs, customs duties, excise taxes, and property taxes averaging roughly 1% to 1.5% overall.
And yet people were furious.
Not because taxes were crushing economically.
Because they were insulting politically.
The famous revolutionary cry “No taxation without representation” was not really about tax rates themselves. It was about legitimacy. Parliament imposed taxes like the Stamp Act and Tea Act on colonies lacking direct representation in British governance. Americans believed free citizens should not be taxed by distant authorities disconnected from their interests and daily realities.
Taxation became symbolic.
A financial argument mutated into a philosophical one.
And you, John Malcolm, learned this quite personally. As a British customs officer in Boston, enforcing imperial trade laws and taxation policies, you became one of the most hated men in the colonies. In 1774, an angry mob tarred and feathered you in one of the Revolution’s more horrifying previews of how quickly political outrage can become public spectacle.
Democracy has always contained a little mob energy hiding in the basement.
Still, the young United States emerged deeply suspicious of centralized taxation. The founders associated heavy taxation with monarchy, corruption, and tyranny. The federal government initially relied almost entirely upon tariffs and excise taxes rather than direct taxation.
Which worked beautifully…
…right up until reality became expensive.
The 19th century exposed the limits of anti-tax idealism rapidly. America expanded territorially, industrialized economically, and fought increasingly costly wars. Tariffs funded much of the government for decades, particularly because imported goods provided convenient taxable targets.
But then came the Civil War.
And suddenly the federal government needed money on a scale previously unimaginable.
War has a remarkable ability to rearrange political philosophy.
In 1862, President Abraham Lincoln signed America’s first federal income tax into law. It was relatively modest by modern standards: 3% on incomes above $600, later adjusted upward for higher earners.
And Americans immediately complained.
As is tradition.
Still, the Civil War income tax represented a revolutionary shift in the relationship between citizens and the federal government. For the first time, Washington directly taxed individual earnings rather than relying primarily on trade.
Income itself became taxable territory.
The tax was repealed in 1872 once the war ended because public resistance remained intense. Americans still viewed direct federal taxation with suspicion bordering on theological certainty.
Then the 1890s arrived, carrying industrial inequality large enough to blot out the sun.
The Gilded Age had produced staggering concentrations of wealth. Farmers struggled. Workers organized. Populists demanded reform. In response, Congress passed a new federal income tax in 1894 targeting higher earners.
And the Supreme Court promptly destroyed it.
In Pollock v. Farmers’ Loan & Trust Co., the Court ruled the tax unconstitutional because direct taxes had to be apportioned among states by population, an absurdly impractical requirement for income taxation.
So once again, America returned temporarily to a federal government funded mostly through tariffs.
But the industrial economy kept growing more unequal.
Pressure built.
And eventually, the Constitution itself changed.
The ratification of the 16th Amendment in 1913 permanently legalized federal income taxation. At first, rates remained low and targeted mostly wealthy Americans. The top rate began around 7%.
Then the world caught fire repeatedly.
World War I drove top marginal rates above 70%. The Great Depression expanded government responsibilities dramatically. World War II transformed the income tax from a “class tax” affecting elites into a true mass tax touching ordinary workers nationwide.
And perhaps no innovation changed American life more quietly than withholding.
Before payroll withholding, citizens generally paid taxes directly themselves. After withholding, taxes disappeared invisibly from paychecks before workers ever touched the money.
Brilliant from an administrative standpoint.
Psychologically sneaky from a revolutionary standpoint.
By the 1940s and 50s, top marginal tax rates exceeded 90% for the wealthiest Americans. Let that sink in for a moment inside modern political discourse.
Over ninety percent.
Of course, wealthy individuals rarely paid those full marginal rates because deductions, loopholes, shelters, and strategic accounting softened the blow considerably. Still, the symbolism mattered. Mid-century America embraced an unusually progressive tax structure partly because shared sacrifice during depression and war created broader acceptance of collective national investment.
Taxes funded highways.
Schools.
Defense.
Scientific research.
Infrastructure.
Social Security.
The moon landing itself rode partly atop tax dollars.
Americans argued about taxes constantly while simultaneously building enormous public systems with them.
Civilization is wonderfully contradictory.
Then came the late 20th century, and the political philosophy surrounding taxation shifted dramatically again.
The Reagan era transformed tax politics into one of modern conservatism’s defining pillars. Top rates fell sharply. The Tax Reform Act of 1986 slashed the top marginal rate to 28%, ending the age of ultra-high postwar taxation. Supply-side economics promised lower taxes would unleash growth, investment, entrepreneurship, and prosperity.
Some benefits appeared.
So did rising inequality.
And now we arrive in 2026, John, where taxes remain one of the most emotionally combustible subjects in American life.
The current federal income tax system is progressive, meaning higher earners pay higher marginal rates. The top federal rate currently sits at 37%, though investment taxes can push effective top rates slightly above 40% for some wealthy households.
Yet the real complexity hides beneath the headline numbers.
Because modern taxation is no longer merely about rates.
It is about loopholes.
Deductions.
Credits.
Capital gains.
Offshore accounts.
Corporate structures.
Pass-through income.
SALT caps.
Retirement shelters.
Stock compensation.
And enough Byzantine complexity to make medieval monks look organizationally casual.
The modern tax code resembles a financial labyrinth designed collaboratively by accountants, lobbyists, economists, lawmakers, and caffeine.
And Americans know it.
Public frustration increasingly revolves not merely around how much people pay, but whether the system feels fair at all. Billionaires sometimes pay lower effective rates than schoolteachers because wealth generated through investments often receives preferential treatment compared to ordinary wages.
That reality corrodes trust.
Meanwhile, the IRS itself became politically radioactive. One half of the country views taxation as necessary civic contribution sustaining modern society. The other half increasingly sees government spending as bloated, wasteful, and intrusive. Most Americans somehow manage to believe both simultaneously depending on the issue being discussed.
A national superpower, honestly.
And then there is the strangest modern contradiction of all:
Americans often demand low taxes and expansive government services at the same time.
They want strong roads, national defense, Medicare, disaster relief, functioning airports, Social Security, public schools, veterans’ benefits, scientific innovation, and emergency response…
…while also insisting taxes remain minimal.
It is essentially the fiscal equivalent of wanting a luxury buffet priced like a vending machine sandwich.
Still, beneath all the shouting lies a profound question every democracy eventually confronts:
What do citizens owe one another collectively?
Taxes are not merely economic tools.
They are moral declarations disguised as math.
Every tax system reflects priorities. What gets funded? Who contributes most? Who benefits? What responsibilities belong collectively versus individually?
Those are philosophical questions wearing spreadsheets.
John, if you could witness America in 2026, you would probably laugh darkly at how familiar the arguments still sound. Citizens still distrust centralized authority. Politicians still weaponize tax resentment. Governments still require enormous revenue to maintain ambitious national projects.
Only now the debates happen on cable news and social media instead of taverns and docksides.
With admiration, skepticism, and one aggressively audited shoebox of receipts,
—The Radical Left 💸🖤
And dear reader, perhaps this is the deeper question income tax asks us after 250 years: what balance should exist between individual wealth and collective obligation?
At what point does taxation become unfair, and at what point does insufficient taxation undermine civilization itself?
Can democracies sustain public trust when tax systems appear increasingly complicated and unequal?
Because from tea taxes in colonial Boston to algorithmic tax shelters in the digital age, Americans have never really stopped arguing about the same thing:
Who pays for the empire.