Why do tax brackets work this way why is it that a Rich/Wealthy person the first few 000 dollars may be taxed?

With the taxes at the high figures you mention there were more deductibles. That changes how much you get taxed upon. Income tax is paid on the adjusted gross income, not the gross income. Adjusted gross income is gross income minus deductions and if applicable credits like the amount of taxes already taken out of your pay. Something people always ignore when they think of rich people and income tax is that billionaires already have enough money for life. They don't need an income and never will. If people were taxed and the consumer level like a sales tax people buying new yachts and Ferraris would be paying more taxes than people buying rowboats and used cars. There would be no need for graduated taxes and deductibles. People who had no income would still pay taxes.