A Brief Timeline of Taxation of the United States, Chapter 2
W. Marc Gilfillan, CPA, NC, individual and business CPA and Tax expert, shares about the history of taxes…
1861 – After Lincoln was put in office, southerners walk out on Congress and create the Confederate States of America with a rewritten constitution to curtail the right of their new government to tax.
1862 – The beginning of US income taxes is levied to assist the financing of 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 pushes up 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 sustains the idea that the 1894 income tax law conflicts with the US Constitution’s bars on levying direct tax.
1913 – The 16th Amendment is passed and takes that bar away and Congress establishes an income tax system.
1917 – World War I financial needs bump up taxes, with the maximum rate jumping to 77% in 1918.
1924 – Publicating the names of taxpayers and how much they owe fails to complete the goal of enforcing paying the taxes and the practice is dropped.
1942 – Before World War II, the lowest income level for paying income tax excluded most wage earners. But the cost of the war pushed the threshold down the income ladder and put the top rate to 94% before the war was over.
1943 – In order to enforce compliance from the sharply increased number 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 of IRS, gloated 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. 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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