December 22, 2009
A Short Timeline of Taxation Practices of the US, Chapter 2
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 of Congress and form the Confederate States of America with a new constitution to keep the newly formed government right to tax in check.
1862 - The beginning of US income tax is created to assist the financing of the sudden and huge costs of the Civil War. If you’re 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 in response to complaints that large reliance on tariffs pushes up the costs of imports for farmers and consumers. Go here if you want help from a modern-day CPA firm in Raleigh, NC.
1895 - The US Supreme Court susta?ins the idea that the 1894 income tax law is in direct conflict with the US Constitution’s bars on insituting direct tax.
1913 - The sixteenth Amendment is passed and takes that bar away and Congress creates an income tax system.
1917 - World War I financial needs bump up taxes, with the largest rate reaching 77% in 1918.
1924 - Publicating the names of taxpayers and how much they owe fails to complete the goal of enforcing payments and the practice is given up.
1942 - Before World War II, the income threshold for filing income tax left most working people out. But the cost of the war bumped the threshold down the income ladder and sent the top rate to 94% before the war was over.
1943 - In order to force compliance from the hugely increased amount of taxpayers, Congress creates tax withholding from wages, which basically turned employers into tax collectors.
In the 1940s Justice Jackson of the Supreme Court, former chief counsel to the IRS, boasted about how law-abiding Americans were in turning in their income taxes. The system was based on the user’s honesty - there were very few informational returns. Open resistors to the taxes were few and the black market was of little significance.
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!