W. Marc Gilfillan, CPA, NC, individual and business CPA and Tax expert, shares about the history of taxes…
1861 – After Lincoln’s election, the South walks out on Congress and form the Confederacy with a new constitution to sustain the new government right to tax in check.
1862 – The beginning of US income tax is instituted to assist the financing of the sudden and huge 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 is abolished.
1894 – Congress creates an income tax in response to complaints that excessive 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 holds the idea that the 1894 income tax law conflicts with the US Constitution’s restrictions on insituting direct taxes.
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 biggest rate reaching 77% in 1918.
1924 – Publicating the names of taxpayers and how much they owe fails to achieve the task of enforcing payments and the practice ends.
1942 – Before World War II, the income threshold for paying income tax left most working people out. But the war’s cost bumped the threshold down the income ladder and put the top rate to ninety-four percent before the war was over.
1943 – To enforce compliance from the hugely increased amount 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 honest Americans were in turning in their income taxes. It was an honor system – there were very 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!
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