The Price We Didn’t Know We Were Paying
How a century of financial management — born in America, exported to the world — eroded our health, freedom, and peace of mind
What this article covers
This is a long read and intentionally so. The first half traces the history of income tax from its quiet 1913 origins in America through its global spread, and makes the case that the chronic financial stress most of us carry is not a personal failing but a structural one, embedded in the design of the modern economy.
The second half gets personal: as an Australian entrepreneur and founder of five companies, I share what eight years of serious study into this space has taught me — including the legal structures I use, how I redirect money away from the ATO and toward causes I actually believe in, and the resources and mindset shifts that made the biggest difference. If you’ve ever felt like the system was working against you, this article is for you.
Stress is everywhere. Nearly 77% of Americans regularly experience physical symptoms caused by stress, and financial pressure consistently ranks as the number one cause. In Australia, the picture is almost identical, with surveys consistently show money as the leading source of anxiety for Australian households, cutting across income levels and demographics.
We treat this as a modern condition, a byproduct of busy lives and too many screens. But what if it runs deeper than that? What if the very structure of our economies, built piece by piece over the past century, was quietly engineered in a way that made chronic financial anxiety almost inevitable?
To understand where we are, we need to go back to where it started: to 1913, the year America fundamentally changed its relationship with money and government, and set in motion a model that would eventually circle the globe.
Before the Tax Man: Life in a Free Economy
For most of American history, there was no federal income tax. A worker in 1900 kept every dollar they earned. The federal government funded itself almost entirely through tariffs on imported goods and excise taxes on alcohol and tobacco. Federal spending was tiny: roughly $500 million per year, compared to over $6 trillion today.
Because taces came from imported goods, which funded everything, this meant that imported products were exepnsive and this heavily protected American manufacturers, a very different economic philosophy from today.
But this wasn’t a perfect world. The Gilded Age was marked by brutal inequality, dangerous working conditions, and virtually no safety net. If you got sick, lost your job, or grew old without savings, you were largely on your own.
But there was something in that era that we’ve quietly lost: a direct and unmediated relationship between effort and reward. You worked, you earned, you decided what to do with what you made. The government was largely absent from that transaction. For better and worse, your economic life was your own.
1913: The Year Everything Changed
On February 3, 1913, the 16th Amendment was ratified, giving Congress the power to levy a federal income tax. The Revenue Act that followed set the initial rate at just 1%, with a top surtax of 6% for the very wealthy. Only about 3% of the population even earned enough to owe anything. It seemed modest, almost inconsequential.
It wasn’t. What was really being ratified wasn’t just a tax rate, it was a principle: that the government had a legitimate, permanent claim on a portion of your income, at whatever rate it deemed necessary. The 1% was a foot in the door.
By 1918, with World War I raging, the top rate had exploded to 77%. It fell briefly in the prosperous 1920s, then surged again during the Great Depression and World War II, hitting an almost incomprehensible 94% at the top bracket in 1944. The idea that income taxation would remain modest had evaporated within a single generation.
The Blueprint Then Went Global
What happened in America did not stay in America. The income tax model spread rapidly across the developed world through the 20th century, accelerated by two World Wars that left governments everywhere desperately in need of revenue and with freshly proven mechanisms to collect it.
Britain had actually introduced a modern income tax earlier, temporarily during the Napoleonic Wars and then permanently from 1842, making it one of the earliest adopters. Canada introduced federal income tax in 1917, again justified as a temporary wartime measure. New Zealand followed a similar trajectory. Germany, France, Japan and one by one, the world’s major economies adopted the same fundamental model: the state as a silent, permanent partner in every citizen’s earnings.
What made this spread so consequential was not just the taxation itself, but the accompanying infrastructure. Withholding systems. Filing requirements. Tax agencies with investigative powers. Penalties for non-compliance. Each country built its own version of the apparatus, but the core architecture was the same, and so were the psychological consequences for ordinary citizens living inside it.
By the second half of the 20th century, the income tax was no longer an American innovation or a wartime emergency measure. It had become the default assumption of modern governance worldwide. To question it was to question something that felt as natural as gravity.
Australia’s Own Story
Australia’s relationship with income tax has its own distinct and revealing history. The Commonwealth introduced a federal income tax in 1915, two years into World War I, following the same wartime logic that drove adoption elsewhere. Like its counterparts, it was initially modest and targeted at higher earners. But like America, it did not stay that way.
What makes Australia’s story particularly interesting is what came before. The colonies and early Commonwealth relied heavily on land taxes, customs duties, and tariffs. There was a genuine philosophical tradition, especially among liberals and agrarian reformers, that land and resource wealth, rather than labour income, should bear the primary tax burden. Henry George’s ideas about land value taxation had real currency in Australian political thought in the late 1800s and early 1900s.
That tradition was progressively eclipsed. By the 1940s, the Curtin Labor government centralised income tax collection at the federal level, which was a wartime consolidation of power that was never reversed. States, which had previously levied their own income taxes, were effectively bought out and left dependent on Commonwealth grants. The federal government became the dominant taxing authority, and income tax its primary instrument.
Today, Australia runs one of the more heavily managed tax systems in the developed world. The top marginal income tax rate sits at 47% (including the Medicare levy). The GST adds 10% to most purchases. There are capital gains taxes, stamp duties, council rates, payroll taxes paid by employers, and superannuation, a compulsory savings system that, while genuinely beneficial for retirement, represents yet another mandatory allocation of income that workers never directly control.
The ATO (Australian Taxation Office) administers one of the most comprehensive tax collection systems on earth. Australians are required to lodge annual tax returns, and the penalties for errors, even unintentional ones, can be significant. For small business owners and the self-employed, the compliance burden is especially heavy: time, fees for accountants, and the persistent low-grade anxiety of navigating a system that most people don’t fully understand.
The Managed Economy and the Managed Mind
Whether you live in Atlanta or Adelaide, the experience of modern financial life has a common texture: complexity, obligation, and a pervasive sense that you are never quite in control of your own earnings.
This is not accidental. The infrastructure of the managed economy- income taxes, payroll taxes, consumption taxes, compliance requirements, creates a permanent cognitive load. You are always calculating. Always aware that a portion of everything you earn, spend, save, and invest is subject to rules you didn’t write and may not fully understand.
The US tax code runs to over 70,000 pages. Australia’s tax legislation, while shorter, is among the longest and most complex in the world relative to population. The average Australian spends significant time and money each year on tax compliance, and that’s before accounting for the mental overhead that runs year-round.
Psychologists call this kind of persistent, low-level uncertainty a chronic stressor. Unlike acute stress, which spikes and resolves, chronic stress grinds. It elevates cortisol, disrupts sleep, suppresses the immune system, raises blood pressure, and over time contributes to serious health outcomes including cardiovascular disease, metabolic disorders, and depression.
What Financial Stress Actually Does to the Body
The medical research on financial stress is stark. Chronically elevated cortisol, the body’s primary stress hormone, is associated with a long list of serious health outcomes. Heart disease. Type 2 diabetes. Obesity. Anxiety disorders. Autoimmune conditions. These are not edge cases. These are the leading causes of death and disability in both Australia and the United States.
The APA has documented for years that money is the leading source of stress for Americans across income levels. The Australian Psychological Society’s annual Stress and Wellbeing surveys have shown remarkably similar patterns on the other side of the Pacific. The specifics differ— Australians worry about housing costs and cost of living particularly acutely — but the underlying structure of financial anxiety is near-identical.
What makes this especially significant is that the stress is not proportional to income in the way we might expect. Middle-class and upper-middle-class households, people who are, by any historical standard, materially comfortable, report persistent financial anxiety. The culprit isn’t poverty. It’s complexity, obligation, and the feeling of never being fully free of the system’s demands.
The Slow Boil
No single moment caused this. That’s what makes it so hard to see. The shift from a free economy to a managed one happened gradually, incrementally, often with genuinely good intentions behind each individual step. Each new program, each new tax, each new regulation made a kind of sense in isolation. Together, they created something no one quite chose: a system that consumes an extraordinary share of individual economic life and imposes a permanent psychological cost.
In Australia, the average worker today pays income tax, Medicare levy, and has 11.5% of their wage directed into superannuation before they make a single personal financial decision. Then GST on most purchases, stamp duty on property, and various state-level levies. The total tax burden as a share of GDP in Australia sits around 29-30%, lower than some European nations but substantially higher than the 20th century average, and far higher than anything the founders of the Commonwealth would have recognised.
We have become so accustomed to this reality that we rarely question it. Financial stress feels personal, and we often feel a sense of failure of budgeting, discipline, or earning enough. But when stress is this widespread and this consistent across income levels and two very different countries, it stops being a personal failing and starts looking like a structural feature.
This Isn’t About Left or Right
It’s worth being clear about what this argument is and isn’t. This is not a case for eliminating government or dismantling the social safety net. Roads, schools, healthcare access, Medicare, the NDIS, these have genuine value. Societies with no public investment do not automatically produce happy, healthy citizens. Scandinavia, with some of the world’s highest tax rates, also produces some of the world’s highest wellbeing scores.
But Scandinavia is instructive precisely because it shows that it’s not just the level of taxation that matters and where my critique comes from, it’s the simplicity, transparency, and perceived fairness of the system. Danish citizens, for example, pay high taxes but experience relatively low tax-related stress because the system is simple, trusted, and seen as delivering visible value. The complexity, opacity, and adversarial character of the Anglo-American tax model is a design choice, not an inevitability.
What this is a case for is honest reckoning. The growth of the managed economy was not free. It had cost: not just financial costs, but psychological and physiological ones that almost never appear on the ledger. We measure the benefits of government programs carefully. We almost never measure the cumulative stress burden of the system that funds them.
The Questions Worth Asking
A century after the income tax was born as a modest 1% levy in America, it has circled the globe and embedded itself in the fabric of daily life from Sydney to San Francisco. Whatever its merits, it has also produced populations that are, by many measures, chronically financially stressed and physiologically worse off for it.
What would it feel like to live in an economy where your relationship with money was simple? Where the rules were short enough to understand without a specialist, where planning for the future didn’t require navigating a system designed by thousands of legislators and lobbyists over more than a century?
We can debate tax rates and government spending endlessly. But perhaps the more important conversation is about what we’ve normalised. Stress at this scale and persistent, financial, structural, and global is not an inevitable feature of modern life. It is a consequence of choices made, mostly during wartime emergencies, that were never revisited when the emergencies ended.
The first step is simply noticing that what feels personal almost never is.
What I’m Personally Doing About It
A note from Sigourney Belle — Australian entrepreneur, health and wellness educator, and founder of five companies
I have spent the better part of eight years studying this. When I started building businesses in Australia, I did what most entrepreneurs do: I handed my financials to an accountant, trusted the system, and paid whatever I was told I owed. It took years of accumulated frustration, and a growing sense that something fundamental was wrong, before I started asking harder questions.
What I found changed everything. The tax system, as most people experience it, is not the only tax system available to you. It is simply the default, ie. the path of least resistance for those who never learn there are alternatives. The system is complex by design, and that complexity works in favour of those who understand it and against those who don’t.
I want to be clear: everything I am about to share is legal. This is not about evasion. It is about education: the kind most accountants won’t proactively give you, because most accountants are trained in compliance, not strategy. There is a profound difference between the two, and learning that difference has been one of the most valuable things I have ever done.
