In 1913, the 16th Amendment was passed, giving the government the right to collect income tax in order to begin paying service fees to the Federal Reserve, which had just taken control of creating U.S. currency from the U.S. Treasury. According to some, the 16th Amendment was directed only at capital gains income and was never intended to tax wages or salaries, which at the time were considered an equal exchange of goods/services akin to bartering and were not considered “profit” income.
Because an income tax makes it necessary for citizens to disclose all their financial records, it be may considered an invasion of privacy. The income tax on wages could be replaced by less intrusive and less costly alternative forms of taxation, such as excise tax, tariffs and fiat currency, which were the government’s main means of collecting taxes before 1913.
Currently, about half the population pays almost no income tax because they earn so little. In 2017, the top 10% of tax payers paid 90% of the total revenue collected from individual Federal income tax (mostly on capital gains, not wage income). See Pew Research. Considering how much money, time and effort the bottom 90% have to put into filing income tax returns and paying their income taxes, it hardly seems worth it to collect just 10% of revenue. A 50K standard deduction per individual would bring much needed relief to middle-income earners.
Abolishing the income tax on wages for the bottom 90% of the population would save much of the approximately $11.5 billion used to run the IRS each year and would end up making little difference overall in the government’s balance sheet–and would significantly improve the balance sheet of most US citizens.