A Brief Timeline of Taxation of the United States, Part 2

W. Marc Gilfillan, CPA, NC, individual and business CPA and Tax expert, shares about the history of taxes…

1861 – After Lincoln was elected, southerners walk out on Congress and form the Confederacy with a rewritten constitution to check the power of their new country to tax.

1862 – The beginning of US income tax is created to help finance the sudden and massive debts 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 gets struck down.

1894 – Congress passes an income tax as a result of complaints that large reliance on tariffs pushes up the price 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 that the 1894 income tax law conflicts with the US Constitution’s restrictions on levying direct tax.

1913 – Ratification of the 16th Amendment removes that bar and Congress creates an income tax system.

1917 – World War I financial needs push up tax rates, with the maximum rate reaching 77% in 1918.

1924 – Publicating the names of taxpayers and how much they owe fails to achieve the goal of forcing paying the taxes and the practice is given up.

1942 – Before World War II, the income threshold for paying income tax excluded most wage earners. However, the war’s cost bumped the threshold down the income ladder and sent the top rate to 94% prior to the war being over.

1943 – In order to enforce compliance from the hugely increased amount 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, gloated about how honest Americans were in reporting their income taxes. It was an honor system – there were only a few informative returns. Open resistors to the taxes were few and the black market was relatively small.

1962 – IRS Commissioner Caplin stated “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!

http://www.marccpa.com/

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