A Short Timeline of Tax Practices of the United States, Chapter Two
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 check the power of their new government to tax.
1862 – The beginning of US income tax is instituted to assist the financing of the rising massive costs 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 gets struck down.
1894 – Congress creates an income tax in response to southerners complaining that excessive reliance on tariffs pushes up the price 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 – Ratification of the sixteenth Amendment takes that bar away and Congress establishes an income tax system.
1917 – World War I revenue requirements bump up taxes, with the maximum rate jumping to seventy-seven percent in 1918.
1924 – Publication of the names of taxpayers and how much they owe fails to achieve the task of enforcing paying the taxes and the practice is dropped.
1942 – Prior to World War II, the lowest income level for filing income tax excluded most wage earners. But the war’s cost bumped the threshold down the income ladder and put the top rate to 94% before the war was over.
1943 – To force compliance from the hugely increased number of taxpayers, Congress creates 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. It was an honor system – there were only a few informative returns. Tax resisters were few and the black market 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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