Is it true that Income Tax was created to finance troops for World War I?
"The Income Tax was put into effect during the Civil War, but was later revoked because it was deemed ""Unconstitutional"".  It was re-instated in 1913, just one year before World War 1. This is largely the reason why people think it was created ""for the war"", when it actually pre-dated World War 1. Edit: I don't have any sources, per-se. This is just what little information I remember from Grade 10 History class.  I remember this because I had a real ethical problem with how the government instituted the Income Tax, since it is effectively a tax on Productivity. I find this absurd, since it motivates people to do less, in an effort to be taxed less. This in turn promotes workers doing ""cash jobs"" and other such things to get around it. I personally have refused a raise because it would put me into a higher tax bracket, and I wouldn't actaully see the new money. In exchange, I asked for other non-monetary perks instead. I personally think this situation should not exist. ...however, I don't have a better solution. So I suppose I can't really pass judgment.  :)" "Canada did not introduce income taxes before World War I.  Specifically deficits forced them to in the later part of the war: The Conservatives opposed income tax as they wanted to attract immigrants primarily from the United Kingdom and the United States, as opposed to Eastern Europe, and they wanted to give their preferred choice of newcomers some incentive to come to Canada. Wartime expenses forced the Tories to re-consider their options and in 1917 the wartime government imposed a ""temporary"" income tax to cover expenses. Despite the new tax the Canadian government ran up considerable debts during the war and were unable to forego income tax revenue after the war ended. With the election of the Mackenzie King-led Liberal government, much of the National Policy was dismantled and income tax has remained in place ever since. So from a Canadian point of view they were introduced as part of the war effort." Income tax was seen as a way to exploit the revenues available from the rapidly expanding ranks of people with mid to high incomes. It was initially targeted at the very wealthy. Previously, most Federal revenues came from excise taxes and tariffs, both of which have many negative economic effects, leave the government with limited revenue generating ability and bring a host of international and domestic political problems.  Since the successful implementation of the income tax required a constitutional amendment, it is very unlikely that anyone at the time seriously considered the income tax a temporary measure.
I have read in many personal finance books that stocks are a great investment for the long term, because on average they go up 5-7% every year. This has been true for the last 100 years for the S&P500 index, but is there reason to believe this trend will continue indefinitely into the future? It has also been wrong for 20+ year time periods during those last 100 years. It's an average, and you can live your whole career at a loss. There are many things to support the retention of the average, over the next 100 years. I think the quip is out of scope of your actual investment philosophy. But basically there are many ways to lower your cost basis, by reinvesting dividends, selling options, or contributing to your position at any price from a portion of your income, and by inflation, and by the growth of the world economy. With a low enough cost basis then a smaller percentage gain in the index gives you a magnified profit. "While I can appreciate you're coming from a strongly held philosophy, I disagree strongly with it.  I do not have any 401k or IRA I don't like that you need to rely on government and keep the money there forever. A 401k and an IRA allows you to work within the IRS rules to allow your gains to grow tax free. Additionally, traditional 401ks and IRAs allow you to deduct income from your taxes, meaning you pay less taxes. Missing out on these benefits because the rules that established them were created by the IRS is very very misguided. Do you refuse to drive a car because you philosophically disagree with speed limits?  I am planning on spending 20k on a new car (paying cash) Paying cash for a new car when you can very likely finance it for under 2% means you are loosing the opportunity to invest that money which can conservatively expect 4% returns annually if invested. Additionally, using dealership financing can often be additional leverage to negotiate a lower purchase price.  If for some reason, you have bad credit or are unable to secure a loan for under 4%, paying cash might be reasonable.  The best thing you have going for you is your low monthly expenses. That is commendable.  If early retirement is your goal, you should consider housing expenses as a part of your overall plan, but I would strongly suggest you start investing that money in stocks instead of a single house, especially when you can rent for such a low rate. A 3 fund portfolio is a classic and simple way to get a diverse portfolio that should see returns in good years and stability in bad years. You can read more about them here: http://www.bogleheads.org/wiki/Three-fund_portfolio You should never invest in individual stocks. People make lots of money to professionally guess what stocks will do better than others, and they are still very often wrong. You should purchase what are sometimes called ""stocks"" but are really very large funds that contain an assortment of stocks blended together. You should also purchase ""bonds"", which again are not individual bonds, but a blend of the entire bond market.  If you want to be very aggressive in your portfolio, go with 100-80% Stocks, the remainder in Bonds. If you are nearing retirement, you should be the inverse, 100-80% bonds, the remainder stocks.  The rule of thumb is that you need 25 times your yearly expenses (including taxes, but minus pension or social security income) invested before you can retire. Since you'll be retiring before age 65, you wont be getting social security, and will need to provide your own health insurance." "&gt;  This is horse shit. You're citing liberal propaganda as fact. ""Cited as the anti scientist president."" By whom? Just liberals with their dress over their heads.  Did you say ""By whom?""??  Have you been living under a rock?  And, even then, do you not know how to google?  Nearly every science oriented magazine and organization has described Trump as anti-science:  1\.  Scientific American ( https://www.scientificamerican.com/article/trumps-5-most-ldquo-anti-science-rdquo-moves/ )  &gt;  **Trump's 5 Most ""Anti-Science"" Moves.**   The president-elect has taken what is widely seen as a hostile stance toward the scientific community ...  2\.  Union of Concerned Scientists ( https://psmag.com/environment/a-brief-survey-of-trumps-assault-on-science )  3\.  Science ... *the magazine* for the American Association for the Advancement of Science ... the worlds largest general science organization (https://sciencemag.org http://www.sciencemag.org/news/2017/01/what-trumps-nominees-have-said-about-science-their-senate-hearings ,  http://www.sciencemag.org/news/2017/02/hundreds-rally-science-demonstration-near-aaas-meeting , and many others).  And many other news organizations:  4\.  Worst anti-science president ever.  http://www.newsweek.com/trump-expected-be-most-anti-science-president-ever-519226   5\.  Trump anti-science policies imperil the world  http://www.scmp.com/business/global-economy/article/2094269/opinion-trumps-anti-science-policies-imperil-world  6\.  President Trump's War on Science.  https://www.nytimes.com/2017/09/09/opinion/sunday/trump-epa-pruitt-science.html  7\.  Trump has launched a blitzkrieg in the wars on science   https://www.theguardian.com/environment/climate-consensus-97-per-cent/2017/mar/28/trump-has-launched-a-blitzkrieg-in-the-wars-on-science-and-earths-climate    &gt;  This Nature article is junk, it's just an opinion piece, a few quotes from literally who, and a random bar graph.  That was a news piece, not an opinion piece.  And that doesn't matter anyway.  The result is the graphs which are from the UCLA HERI study.  There was also a Pew Study done in 2009.  http://www.people-press.org/2009/07/09/section-4-scientists-politics-and-religion/  But I don't know why you're arguing ... because you summarized my point (poorly, I may add) with:  &gt;  Trump won on income and was inversely proportional on education.  This was basically my point.  You would know that if you actually read what I wrote.  I say ""basically"" here, because:  1\.  You confused ""inversely proportional"" with negatively correlated ... or proportional with a negative proportionality constant.   Certainly you're aware that ""inversely proportional"" actually means a relation like y = C 1/x + k.     2\.  ""won on income"" is just poor phraseology.  Polls suggest that Trump had a slightly higher edge (2% vs. Hilary) for those whose income was in the higher tiers (most tiers above $50K/yr income).  Polls suggest that he was strongly disfavored for lower incomes.  Of course ... it's best seen in the poll I linked into my first post on this page.  &gt;  Jeez who would have thunk it, lifers post docs are bought it on their liberal academic surroundings. As if that was indicative of intelligence.  Most of your sentences above had poor grammar and, at first, I suspected some advanced Russian bot.  But this is atrocious. Try to express yourself in complete thoughts.  Read what you wrote ... it's complete garbage.  I almost didn't respond at all since it doesn't deserve a response." "All the other answers posted thus far discuss matters from the perspective of US tax laws and are unanimous in declaring that what the OP wants to do is indeed a very bad idea. I fully agree: it is a bad idea from the perspective of US tax laws, and is likely a bad idea from the perspective of Indian tax laws too, but what the OP wants to do is  (or used to be) common practice in India. In more recent times, India has created a Permanent Account Number (""PAN number"") for each taxpayer for income tax purposes, and each bank account or investment must have the owner's (or first-named owner's, in case of a joint account) PAN number associated with it.  This most likely has decreased the popularity of such arrangements, or has led to new twists being used. The OP has not indicated the residence and citizenship of his family (or his own status for that matter), but if they are all Indian citizens resident in India and are Hindus, then there might be one mechanism for doing what the OP wants to do: apply for a PAN number in the name of the Hindu Undivided Family and use this number to carry out the investments in the name of the Hindu Undivided Family.  (There presumably are similar statuses for undivided families for other religions, but I am not familiar with them). There are lots of matters here which are more legal questions than personal finance questions: e.g. if the OP is a US tax resident, then the family presumably will not be able to claim Hindu Undivided Family status since the OP has been divided from the family for tax purposes (or so I think). Even if HUF status is available, the OP might not be able to act as the pater familias while his father is alive, and so on.  Consultation with tax lawyers, not just chartered accountants, in India is certainly advisable." The US prefers an endless conflict.  It is an excuse to keep large military forces in the heart of Asia, and endless war helps line pockets of well connected folks in DC.    The point of US wars tends to be justifying huge Pentagon budgets and enriching the owners of the Military Industrial complex.  At its heart, the purpose is to extract wealth from US Tax Payers in a way they are unlikely to oppose because of propaganda related to security and patriotism. "I largely agree with you; but there's *no way* to make a true apples-to-apples comparison, because we've never had a ""flat"" across-the-board tax rate, and we never will.  And obviously, in the degenerate cases of taxes at 0% and 100%, revenue drop to zero.  Given that, the closest we can come to evaluating the potential effects of Trump's proposal is to look at what happens when major shifts in tax policy have occurred in the past; and since 1943 (when something approaching our modern tax structure first solidified)... The short answer to that is, ""nothing at all happens"".  The *explanation* for that is a more interesting issue (though it boils down to ""if you tax X, people will Y instead""), but the implications for fiscal policy are both fascinating and terrifying:  Effectively, if the government spends more than 15-16% of GDP, *regardless* of how they structure taxes, they're spending against the deficit." There's nothing wrong with your reasoning except that you expect the tax laws to make perfect sense. More often than not they don't. I suggest getting in touch with a professional tax preparer (preferably with a CPA or EA designation), who will be able to understand the issue, including the relevant portions of the French-US tax treaty, and explain it to you. You will probably also need to do some reporting in France, so get a professional advice from a French tax professional as well. So, in my tax return, can I say that I had no US revenue at all during   this whole year? I doubt it. "Taxes are a tool for achieving social policy goals. While Americans consider ""Socialism"" to be a curse, the US is in fact quite socialistic. Mostly towards corporations, but sometimes even the normal people, not only the ""Corporation are people, my friend"" (M. Romney) get some discounts. The tax deduction on mortgage interest comes as a tool to encourage Americans to own their homes. It is important, socially, for people to own their home to be independent, and in general contributes to the stability of the society. As anything, when taken to the extreme, it in fact achieves exactly the opposite, as we've seen in 2008, but when balanced - works well. Capital gain is taxed in the US, because it is income. Generally, any income is taxed. However, gain sourced from the sale of primary residence is excluded, up to a certain (quite large) amount from this tax (if lived in the residence long enough - 3 of the last 5 years prior to sale). This, again, to encourage Americans to upgrade their houses and make it easier for Americans to relocate when needed (sell one house and buy another without losing cash on taxes). As to ""asset producing income"" - that is true in the US as well. You cannot deduct your personal expenses, in general. Mortgage interest on primary residence is a notable exception, because it serves a social cause. Similarly, medical expenses are allowed as a deduction, if they're above certain limit, and many other things (for example - if a US person totals his car, and insurance doesn't cover the loss - it is tax deductible, above certain limit, the higher the income - the higher the limit). These are purely social policy breaks. Socialism, something Americans like to have, and love to hate. Many ""anti-socialists"" in the US are in fact taking advantage of these specific tax breaks the most, because for rich folks these are limited or non-existent (mortgage interest limited up to 1 million, medical expenses are allowed only above certain percentage of income, etc)."