A Short Timeline of Taxation of the US, Section 2
December 28, 2009 by Taxcut Editor
Filed under Personal and Business Taxes
W. Marc Gilfillan, CPA, NC, individual and business CPA and Tax expert, shares about the history of taxes…
1861 – After Lincoln’s election, southerners walk out on Congress and form the Confederacy with a new constitution to curtail the power of their newly formed country to tax.
1862 – The beginning of US income tax is levied to help finance the rising massive debts of the Civil War. If you are feeling the pressure with today’s taxes, call a CPA for Tax Preparation in Raleigh, NC for all your tax-related needs!
1872 – The income tax is abolished.
1894 – Congress creates an income tax as a result of southerners complaining that excessive reliance on tariffs skyrockets the costs of imported goods for farmers and consumers. Go here if you want help from a modern-day CPA firm in Raleigh, NC.
1895 – The US Supreme Court holds that the 1894 income tax law conflicts with the US Constitution’s bars on insituting direct tax.
1913 – The 16th Amendment is passed and removes that bar and Congress creates an income tax system.
1917 – World War I revenue requirements push up tax rates, with the biggest rate reaching 77% in 1918.
1924 – Publication of the names of taxpayers and how much they owe fails to complete the goal of enforcing paying the taxes and the practice ends.
1942 – Prior to World War II, the lowest income level for paying income tax excluded most wage earners. However, the cost of the war bumped the threshold down the income ladder and sent the top rate to ninety-four percent before the war was over.
1943 – To enforce compliance from the sharply increased number of taxpayers, Congress institutes tax withholding from wages, effectively turning employers into tax collectors.
In the 1940s Justice Jackson of the Supreme Court, former chief counsel of IRS, boasted about how law-abiding Americans were in reporting their income taxes. The system was based on the user’s honesty – there were only a few informational returns. Open resistors to the taxes were few and the underground economy was relatively small.
1962 – IRS Commissioner Caplin said “no other nation in the world has ever equaled this record of voluntary compliance. It is a tribute to our people, their tradition of honesty, and their high sense of responsibility in supporting our government.”
1982 – Chief Justice Neely said – “cheating on federal and state income tax is all pervasive in all classes of society; except among the compulsively honest, cheating usually occurs in direct proportion to opportunity.”
Stay tuned for Part 3 of the Timeline of US Tax Policy!
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