A Brief Timeline of Tax Law of the US, Section 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 keep the new government power to tax in check.
1862 – The first US income tax is created to assist the financing of the sudden and massive 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 gets struck down.
1894 – Congress creates an income tax in response to complaints that large reliance on tariffs skyrockets 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 holds that the 1894 income tax law is in direct conflict with the US Constitution’s restrictions on insituting direct tax.
1913 – Ratification of the 16th Amendment takes that bar away and Congress creates an income tax system.
1917 – World War I revenue requirements push up taxes, with the maximum rate reaching seventy-seven percent in 1918.
1924 – Publicating the names of taxpayers and how much they owe fails to achieve 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 pushed the threshold down the income ladder and put the top rate to 94% prior to the war being over.
1943 – In order to force compliance from the sharply 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 to the IRS, boasted about how honest Americans were in turning in their income taxes. It was an honor system – 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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