Ford's Five Dollar Work Day, January 5, 1914

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Model T Ford Forum: Forum 2016: Ford's Five Dollar Work Day, January 5, 1914
Top of pagePrevious messageNext messageBottom of page Link to this message  By Jay - In Northern California on Friday, February 05, 2016 - 09:52 am:

Using a inflation calculator $5 in 1914 is equal to $118.26 in 2016

Here's the story of Henry's $5 work day
https://www.thehenryford.org/exhibits/pic/2014/14_jan.asp#more


Top of pagePrevious messageNext messageBottom of page Link to this message  By Rob Heyen - Eastern Nebraska on Friday, February 05, 2016 - 10:10 am:

Jay, I like to use the inflation factor to put period prices into perspective. While many of us consider the Model T an inexpensive car, the reality is the first T, at $850, actually cost the equivalent of about $22,000 (today's dollars).

Fast forward to 1924, when a T touring cost $295. In today's dollars, using the inflation calculator, $4,033. That's quite a significant drop, and I think helps explain the Model T's continuing appeal over such a long period.

Thank you for posting the link.


Top of pagePrevious messageNext messageBottom of page Link to this message  By Henry Petrino in Modesto, CA on Friday, February 05, 2016 - 10:13 am:

There are typically 260 "paid" days in a work year, including work days, vacation days, sick days and holidays. So, $118.26 X 260 = $30,747.60 per year. As good as that may have seemed in 1914, it's not a lot in today's economy. While it's well above the federal poverty level, a couple who aspire to a comfortable lifestyle need both making at least this much.


Top of pagePrevious messageNext messageBottom of page Link to this message  By Rob Heyen - Eastern Nebraska on Friday, February 05, 2016 - 10:20 am:

Henry,
I think we have a tough time (dare I say this and not have this thread go off the deep end :-) ) considering the lack of taxes at the time. No federal income tax, no FICA/SS tax, no state, city or local taxes to speak of, etc. That may change this equation significantly, making $30,000 (almost tax free) much more of a substantial income than we consider it today?


Top of pagePrevious messageNext messageBottom of page Link to this message  By Jay - In Northern California on Friday, February 05, 2016 - 10:29 am:

Point well taken Rob. You can throw in health care employee contributions and retirement savings contributions (401K) that lowers in pocket paycheck $$ these days as well.


Top of pagePrevious messageNext messageBottom of page Link to this message  By Henry Petrino in Modesto, CA on Friday, February 05, 2016 - 10:32 am:

Totally valid observation Rob. I hadn't moved that far in my thinking. Relative tax burden difference 1914 to 2016 is HUGE!!


Top of pagePrevious messageNext messageBottom of page Link to this message  By Henry Petrino in Modesto, CA on Friday, February 05, 2016 - 11:04 am:

Drift, but a connected thought:
Actually, Rob's comments raise another question in my mind. If what Rob says about no fed. inc. tax, no state inc. tax, etc., is true (which I believe it is) then what did government (federal, state and local) do to generate revenue?


Top of pagePrevious messageNext messageBottom of page Link to this message  By paul iverson freeport ill. on Friday, February 05, 2016 - 11:19 am:

the government has always been like blood sucking ticks but years ago there were few ticks per person now its thousands of ticks per person


Top of pagePrevious messageNext messageBottom of page Link to this message  By Burger in Spokane on Friday, February 05, 2016 - 11:24 am:

Yeah, ... but THINK of all the services !!! :-P


Top of pagePrevious messageNext messageBottom of page Link to this message  By George_Cherry Hill NJ on Friday, February 05, 2016 - 11:32 am:

Henry,

With the hope that others will not make this political...

Up until the 16th amendment went into effect in 1913, government, whatever party, thought and actually believed that the role of government was to be secondary to the people and that government should be tight fisted and only expand elastically when needed. When world crises and effects caused government to grow for short term need, the next administration, regardless of party saw their job to shrink government.

The nation had virtually no taxes in the early history.

From 1791 to 1802, the United States government was supported by internal taxes on distilled spirits, carriages, refined sugar, tobacco and snuff, property sold at auction, corporate bonds, and slaves. Shay's Rebellion, which caused Adams to stand tall with military was because of the alcohol tax. The government from inception has always kept every penny of customs duties.

The War of 1812 according to a majority of historians was actually due to the government being bankrupt before the war and not admitting so, and brought about the nation's first sales taxes on gold, silverware, jewelry, and watches. In 1817, however, heeding the above mentioned self-constraint as to government size, Congress did away with all internal taxes, relying mostly on tariffs on imported goods to provide sufficient funds for running the government.

In 1862, in order to support the Civil War effort, Congress enacted the nation's first income tax law. It was a forerunner of progressive taxation and of withholding income at the source.

During the Civil War, a person earning from $600 to $10,000 per year paid tax at the rate of 3%. Those with incomes of more than $10,000 paid taxes at a higher rate. Additional sales and excise taxes were added, and an “inheritance” tax also made its debut.

The Act of 1862 established the office of Commissioner of Internal Revenue. The Commissioner was given the power to assess, levy, and collect taxes, and the right to enforce the tax laws through seizure of property and income and through prosecution. The powers and authority remain very much the same today.

In 1868, Congress again focused its taxation efforts on tobacco and distilled spirits only and eliminated the income tax in 1872. It had a short-lived revival in 1894 and 1895.

In 1895 the U.S. Supreme Court decided that the income tax was unconstitutional because it was not apportioned among the states in conformity with the Constitution.

In 1913, the 16th Amendment to the Constitution made the income tax a permanent fixture in the U.S. tax system. The amendment gave Congress legal authority to tax income and resulted in a revenue law that taxed incomes of both individuals and corporations. For the most part, the government played with corporations while it also kept all import duties on raw materials.

With the advent of World War II, employment increased, as did tax collections—to $7.3 billion per year in 1942.

The withholding tax on wages was introduced in 1943 and rose the number of taxpayers to 60 million and tax collections to $43 billion by 1945.

The rest of the story is current history for most of us....:-)


Top of pagePrevious messageNext messageBottom of page Link to this message  By Henry Petrino in Modesto, CA on Friday, February 05, 2016 - 11:49 am:

George,

Thanks for the thumbnail explanation. Of course the evolution of taxation in the USA is a political evolution, but I too hope this thread does not become a political rant. My question above was just a request for historical information, which you provided.

Thanks again!


Top of pagePrevious messageNext messageBottom of page Link to this message  By Rob Heyen - Eastern Nebraska on Friday, February 05, 2016 - 12:11 pm:

Thank you George. I think this thread may allow many of us to gain perspective about life, the economy, and circumstances that made the environment in which our cars were produced, and to understand the people who originally owned them.


Top of pagePrevious messageNext messageBottom of page Link to this message  By Tony Bowker, Ramona, CA on Friday, February 05, 2016 - 07:07 pm:

I remember reading one time that an early President had to pay for his secretary out of his own wage. When Kennedy moved into the White House he was stunned to find that he personally had to appoint over 3,000 people, all at the tax payers expense.


Top of pagePrevious messageNext messageBottom of page Link to this message  By Jack Pergande on Saturday, February 06, 2016 - 03:51 am:

If you read the article it states some of the criteria required to receive the bonus of $2.70 per hour. Of which I was aware of previously. It makes me wonder what percentage actually passed those requirements and got paid the bonus. It is difficult to speculate but I would guess 25% or less. Whereas, Ford's inspectors could easily disqualify workers by stating the workers were not meeting those requirements even thou they were generally. Knowing that Henry hated unions and wanted to be in complete control of the workforce and all facets of the company. It would be fair to state the Henry was the ultimate "control freak" as we call them today.


Top of pagePrevious messageNext messageBottom of page Link to this message  By Roger Karlsson, southern Sweden on Saturday, February 06, 2016 - 04:18 am:

This old newspaper clipping from the late 40's Jay posted in another thread fits here to since we get a sense for how high the taxes had got right after VWII:

inheritance tax

35 millions out of 128 in total taxes makes 27.3%


Top of pagePrevious messageNext messageBottom of page Link to this message  By Fred Dimock, Newfields NH, USA on Saturday, February 06, 2016 - 07:25 am:

All these numbers are confusing me.
All I know is that I don't have enough money to satisfy my afflictions.


Top of pagePrevious messageNext messageBottom of page Link to this message  By David Coco - Winchester Va. on Saturday, February 06, 2016 - 07:53 am:

Well, Fred, the sad part is that while you don't have enough money to satisfy your current afflictions, if you had more money, you'd acquire new afflictions that you couldn't afford.

It's the same problem that comes with building a storage building or garage, it's too small the day it's built....


Top of pagePrevious messageNext messageBottom of page Link to this message  By Tim Wrenn-Monroeville OH on Saturday, February 06, 2016 - 08:23 am:

Fred and David...as the young'ns would say... "True Dat"!! :-)


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