A Short Timeline of Taxation Practices of the USA, 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 on Congress and form the Confederacy with a new constitution to sustain the new country’s right to tax in check.
1862 – The beginning of US income tax is instituted to help finance the sudden and huge 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 gets struck down.
1894 – Congress creates an income tax as a result of southerners complaining that large 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 restrictions on insituting direct tax.
1913 – The 16th Amendment is passed and removes that bar and Congress establishes an income tax system.
1917 – World War I financial needs push up tax rates, with the largest rate reaching 77% in 1918.
1924 – Publicating the names of taxpayers and the amount of taxes they owe fails to complete the goal of forcing payments and the practice ends.
1942 – Prior to World War II, the income threshold for filing income tax excluded most wage earners. However, the cost of the war bumped the threshold down the income ladder and put the top rate to ninety-four percent before the war was over.
1943 – In order to force compliance from the sharply increased amount of taxpayers, Congress institutes 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, boasted about how law-abiding Americans were in reporting their income taxes. It was an honor system – there were very few informational returns. Open resistors to the taxes were few and the underground economy was of little significance.
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!
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