Ever since World War II, all U.S. citizens have been required to pay income taxes. The income tax affects many states including Wisconsin and targets many top-earning businesses. This has led to an expansion of the national tax system over time.
Wisconsin created an individual income tax in 1911, thus becoming the first state to have such a law. There was much argument in the legislature about this tax, which initially required citizens to pay one percent of their annual incomes above $1,000 and six percent on incomes above $12,000. The Wisconsin tax did not affect many people at the time, however, because most did not make the $1,000 cut and were therefore “tax exempt.” But, the tax was still protested against by big businesses, who saw it as a money leech. Some businesses even threatened to leave the state.
The Ringling Bros Circus was one such business that wanted to leave Wisconsin due to the tax. Politicians and other businessmen offered support to the circus because they realized the economic boost that this business provided to Wisconsin. In response, the legislature exempted the Ringling Bros from the tax. Yet, it stayed in place for other wealthy people and businesses.
The federal government soon caught on to the income tax idea. In 1913, the U.S. Congress levied a national income tax that affected less than 10 percent of the American population at the time. The tax eventually expanded due to the nation's financial needs during World War II.
Although it had a shaky start, the income tax has survived many challenges—to the chagrin of many today. Now, the annual income tax is an unavoidable part of almost every American citizen's year.
[Source: Wisconsin Public Radio]