As Benjamin Franklin once said, “Nothing is certain except death and taxes.”
While this quote was penned in 1789, his words still ring true today. U.S. taxation has changed over time, but it has always existed in some shape or form for over 250 years.
U.S. Taxation: 1765 to Today
In today’s infographic from New York Life Investments, we explore the history of U.S. taxation – from its colonial roots to its recent reform.
The modern American tax code has little resemblance to its early iterations.
Over the last few centuries, Americans have battled against British taxation, faced sky-high tax rates to fund war efforts, and enjoyed tax cuts designed to boost economic growth.
A Timeline of U.S. Taxation
Today, total U.S. tax revenue exceeds $3.4 trillion. Below are some notable events that have shaped modern American taxation.
Colonial Roots: 1765 to 1783
1765 – Stamp Act
In its first direct tax on the colonists, Britain places a tax on all paper – including ship’s papers, court documents, advertisements, and even playing cards.
1767 – Townshend Revenue Act
Importation duties are placed on British products such as glass, paint, and tea. The taxes are expected to raise £40,000 annually, (£6,500,000 in 2018 GBP). As hostilities continue to bubble up, colonists argue for “No taxation without representation”. Although taxes are imposed on the colonists, they aren’t able to elect representatives to British parliament.
1770 – The Boston Massacre
British troops occupy Boston to end the boycott on British goods. The March 5th Boston Massacre sees five colonists killed. By April, all Townshend duties are repealed except for the one on tea.
1773 – The Tea Act (May 10)
Britain grants the struggling British East India Company a monopoly on tea in America. While no new taxes are imposed, this angers colonists as it is seen as a thinly veiled plan to gain colonial support for the Townshend tax while threatening local business.
1773 – The Boston Tea Party (December 16)
Three ships arrive in Boston carrying British East India Company tea. Colonists refuse to allow the unloading of the tea, throwing all 342 chests of tea into Boston Harbour.
1775-1783 – The American Revolutionary War
Growing tensions between Britain and the colonists erupt in a full-scale war. After eight long years, Britain officially recognizes the independence of the United States.
A Free Nation: 1787 to 1943
1787 – The U.S. Constitution
Congress gains the “power to lay and collect taxes, duties, imposts, and excises.” The government primarily earns revenue from excise taxes and tariffs, including an “importation tax” on slaves.
1791-1794 – Whiskey Rebellion
Alexander Hamilton, the nation’s first Secretary of Treasury, leads the implementation of a whiskey excise tax. In 1794, whiskey rebels destroy a tax inspector’s home. President Washington sends in troops and quells the rebellion.
1862 – The Nation’s First Income Tax
To help pay for the Civil War, President Lincoln legislates the nation’s first income tax.
|Income level (1862 dollars)||Income level (2019 dollars)||Tax Rate|
1913 – 16th Amendment
As World War I looms the 16th amendment is ratified, allowing for taxation without allocation according to state populations. An income tax is permanently introduced for both individuals and corporations, and the first Form 1040 is created.
|Income Level (1913 dollars)||Income level (2019 dollars)||Tax Rate|
1918 – The Revenue Act
Tax rates skyrocket to pay for World War I efforts. The top tax rate is 77%.
1935 – Social Security Act
In light of the Great Depression, the Social Security Act introduces:
- An old-age pension program
- Unemployment insurance
- Funding for health and welfare programs
To fund the programs, a 2% tax is shared equally by an employee and their employer.
1942 – The Revenue Act
Described by President Roosevelt as “the greatest tax bill in American history”, the Act increases taxes and the numbers of citizens subject to income tax. Total personal and corporate income tax revenue more than doubles:
|Year||Revenue||2019 dollar equivalent|
|1941||$3.4 billion||$59.2 billion|
|1942||$8.0 billion||$123.8 billion|
1943 – Current Tax Payment Act
It becomes mandatory for employers to withhold taxes from employees’ wages and remit them four times per year.
Modern Times: 1961 to 2018
1961 – Beginning of The Computer Age
The National Computer Center at Martinsburg, West Virginia is formally dedicated to assisting the IRS in its shift to computer data processing.
1986 – Tax Reform Act
The Tax Reform Act:
- Lowers the top individual tax rate from 50% to 28%
- Increases taxes on capital gains from 20% to 28%
- Reduces corporate tax breaks
The revisions are designed to make the tax code simpler and fairer.
1992 – Electronic Filing
Taxpayers who owe money are given the option to file electronically.
2001 – Economic Growth and Tax Relief Reconciliation Act
President George W. Bush implements large tax cuts:
- Creates a new lowest individual tax rate of 10%
- Reduces the top individual tax rate from 39.6% to 35%
- Doubles child tax credit from $500 to $1,000* (*From $700 to $1,400 in 2019 dollars)
2017 – Tax Cuts and Jobs Act
President Trump signs off on reductions in tax rates, while some deductions are made more restrictive.
For example, State and Local Taxes (SALT) deductions are capped at $10,000. Residents in high-tax states such as New York, New Jersey, California and Connecticut could see substantially higher tax bills.
U.S. taxation policy remains a contentious issue and shifts depending on who is in the White House.
Investors need to stay informed on current legislation, so they can engage in proactive financial planning and minimize their tax obligations.
How Heart Health Can Keep Your Portfolio Beating
Through thematic investing strategies lies an opportunity to invest in a long-term, powerful trend that impacts nearly one in two people: heart health
This infographic is available as a poster.
Visualizing the Big Business of Heart Health
Heart health affects almost one out of every two Americans, creating implications on both personal and economic levels. At the same time, this means that there is an opportunity for investors to get behind heart-health innovations and holistic solutions.
In this infographic from New York Life Investments, we explore this growing ecosystem and how it can benefit both the future of health and your portfolio.
Why Invest in Heart Health?
Each day, the heart beats 100,000 times—equal to a staggering 3.5 billion beats in a lifetime.
However, this crucial organ is affected by many ailments. Heart disease tops the list as the number one killer among Americans: 650,000 people in the U.S. die of heart disease annually.
In response, multiple industries from Big Tech to wellness are actively working on heart health solutions. By 2030, the cardiovascular disease tech market is projected to reach $40B, making it a growing market for investors to dive into.
Below, we explore some case studies of companies that are aligned with healthy hearts and preventative solutions.
The Fight to Detect Heart Disease
Irregular heartbeats are a key symptom of stroke and hospitalization. In fact, the most common and costly reason for preventable hospital stays is heart failure:
- 1.1M hospital stays annually
- $11.2B total annual costs
To combat this, Apple and Stanford Medicine launched the Heart Health Study to develop an algorithm that detects irregular activity.
How the Apple Heart Study app worked
- Participants wore Apple Watches that detected irregular heart rhythms, known as atrial fibrillation
- 2,161 (0.52%) were notified of irregular heart rhythms, prompted to schedule a telehealth consultation, and were sent ECG patches to wear for a week
Of these notified participants…
- 34% Experienced atrial fibrillation
- 76% Sought medical attention
Along with the algorithm’s 84% positive predictive value, the Apple Heart Health study promoted higher engagement with health services and telehealth providers. Heart health is big business, and Big Tech is only getting started.
Innovating the Tools for Living
Type 2 diabetes is another major risk factor for heart disease. To help fight against diabetes, Fitbit is at the intersection of heart health and technology with glucose monitoring.
Among the projects it has under development:
- $6 million investment in Sano, a company developing a coin-sized patch for glucose tracking
- Partnering with Dexcom to monitor how physical activity influences diabetes in a pilot program
While it’s clear that preventative tools are critical on an individual level, their impact on a community-wide scale is striking. For example, for every $1 invested in bike and walking trails, almost $3 in health costs are prevented.
Reversing the Trend: Why It’s a Good Move
A key part of preventing heart failure is to get moving—both before and after critical issues arise.
Importantly, activewear has become one of the top performing categories in fashion since quarantine took hold. As a leader in activewear, Lululemon is designing smart clothing with innovative and lightweight materials.
Another avenue they have ventured into is home fitness, with its acquisition of Mirror in July, 2020 for $500 million. Health and wellness have boomed in the age of COVID-19, and Lululemon’s shares have climbed significantly:
Price Return (2020)
- LULU: 49.6%
- S&P 500: 16.3%
- DJIA: 7.3%
It’s clear that activewear is deeply interwoven into consumer demand.
The Future of Life-Saving Strategies
The problem with heart disease is that the related costs are only intensifying.
By 2035, the direct medical costs linked to cardiovascular disease are estimated to top $748 billion, while indirect costs are projected to reach $368 billion.
But this also means that there’s a promising area of investment opportunity—with the potential for life-changing impact. As societies are hit with the twin threats of COVID-19 and aging populations, the demand for integrative heart solutions is more urgent than ever.
What Lies Ahead: 2021 Economic Projections and the Year in Review
Are 2021 economic projections looking up? As we look back on a historic year, this graphic outlines key growth forecasts for the year ahead.
What Lies Ahead? 2021 Global Economic Projections
With over 1.4 million deaths worldwide, COVID-19 has impacted nearly every corner of society.
Yet, hope seems suddenly near. Crucial vaccine developments are emerging, with many of the 320 vaccines in advanced trials. Still, questions remain around the timing and effectiveness of the potential vaccine. With this in mind, the International Monetary Fund (IMF) projects that this year, global real GDP will fall –4.4%, bouncing back 5.2% in 2021.
As we look back on a historic year, this infographic from New York Life Investments traces the notable events of 2020, along with growth forecasts for the year ahead.
2020: Year in Review
From a deadly virus to U.S. elections, how did we get to where we are now?
Since COVID-19 was declared a pandemic, $12 trillion in global fiscal response helped stabilize the economy. Despite financial markets facing their sharpest drop in 30 years, the S&P 500 rebounded in record speed—recovering losses in under four months.
|S&P 500 Price Returns||Global COVID-19 Cases|
Source: European CDC via Our World in Data
*As of November 27, 2020
In April, oil prices dropped into negative territory for the first time ever. The combination of both a demand shock and supply shock led oil futures to fall to -$37.63. Since then, oil prices recovered modestly, hovering close to $45 in November.
In another historic event, wildfires ravaged through the West Coast of the U.S., burning five million acres across Oregon, California, and Washington. Meanwhile, COVID-19 cases continued to climb. Global reported cases exceeded the 25 million mark by September.
Finally, on November 16, Moderna announced that its COVID-19 vaccine was 94.5% effective, just days after the 2020 president-elect, Joe Biden was announced.
Despite the number of record-breaking incidents over the year, the tech-dominated S&P 500 held steady. Here is how key economic figures have materialized against the backdrop of 2020:
1. Government Debt
Government debt rose 20% relative to GDP in advanced economies, while debt has grown at a slower pace in emerging market and low-income countries.
|Gross Debt Position (% of GDP)||2019||2020|
|Emerging market and middle-income economies||53%||62%|
|Low-income developing countries||43%||49%|
Overall, inflation was lower than pre-pandemic levels, sitting at around 1.5%.
While commodities and medical supplies saw their prices rise, weak global demand for overall goods cancelled out these inflationary effects.
3. Sector Performance
Service sectors were hit among the hardest as social distancing measures were enacted to stave off the pandemic.
In the first half of 2020, accommodation, arts, and entertainment sectors fell close to 15% compared to 2019. Meanwhile, banks were cushioned with cash reserves in the event of unexpected risks, breaking roughly even in year-over-year growth.
While the economy has encountered numerous challenges, the IMF expresses cautious optimism for the year ahead.
2021: Global Growth Outlook
Since the IMF’s June projections, economic growth forecasts have somewhat improved. Primarily, optimism is being driven from Q2 GDP growth that exceeded expectations.
|Global Growth Forecasts||April||June||October|
By contrast, pre-pandemic projections for 2020 and 2021 were 3.3% and 3.4%, respectively.
Over 2020, China enacted several strict measures to contain COVID-19 early in the outbreak, a key factor behind its economic momentum. Meanwhile, India is projected to rebound 8.8%—higher than any other country in 2021, according to IMF-reported countries.
While several factors remain uncertain, what will pave the way for a global recovery?
Analysis of a Successful Global Recovery
Growth projections are improving, but economic success will hinge on these three layers.
|3 Layers for Economic Success|
|1||The path of COVID-19||Public health measures & the race for a vaccine
Impact on domestic economic activity
|2||Global consumer demand||Tourism activity
|3||Financial market sentiment and capital flows||Supply disruptions
To prevent further unwanted outcomes, it will be essential that policy support is not withdrawn too soon.
The Road to Recovery
With these factors in mind, how could global conditions transform in the months ahead?
|Best Case Scenario||Worst Case Scenario|
|Accelerating global demand|
Maintaining liquidity for countries in need
Fair and equal vaccine
implementation across countries
|Weakened economic activity
Tightening lending conditions for countries in need
Country-level vaccine disparities
In the face of these obstacles, the health of the global economy rests on sufficient consumer demand, capital flows and COVID-19 containment. With news of vaccine developments underway, the outlook is appearing a bit brighter.
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