I said in the email that the IRS was rumoring that people would be able to make a deduction for donations to Haiti on this year’s (2009) tax return – instead of having to wait until you file your 2010 tax return. Obviously this could be quite an incentive for people who desired to give a part of their wealth to the victims of disaster in Haiti to help them get back on their feet! Are you feeling the pressure of today’s taxes? Right now you can get $100 off your tax return for Cary NC Tax Preparation needs!
As it turns out, the rumors I heard and that you could have heard are TRUE! On January 22nd, the IRS adopted a certain tax relief policy that allows contributions for the Haiti relief made after January 11, 2010 and prior to March 1, 2010, will be taken from your 2009 tax return. Or, you could choose to put the deduction on your 2010 tax return instead, just in case you did not want to take advantage of the wonderful incentive to assist the world community.
The inhabitants of Haiti are hurting quite a bit. Earthquake disasters cannot be avoided, and are well, devastating. Earthquakes and other forms of environmental disaster create huge amounts of destruction and widespread loss of homes. Entire families are without food or clean water. In many cases these families don’t even have any sort of stable living environment without the assistance of other countries’ efforts (funded by donators like you!). Do your part right now and donate whatever you can to assist the people of Haiti. I would certainly appreciate the added effort, and I am sure every one of the struggling people in Haiti would appreciate it to!
Stay tuned for more articles and information regarding tax season, taxes, and Haiti!
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!
W. Marc Gilfillan, CPA, NC, individual and business CPA and Tax expert, shares about the history of taxes…
So, what happened with the tax system in the United States?
US tax makers have been collecting what they have sown for a long time. Our honor system has been trumped by a system in which every tax payer is under surveillance due to the strong threat of evasion. In other words, compulsion has replaced consent. Honor has been replaced with espionage. If you’re feeling the pressure with today’s taxes, call a Cary NC CPA for all your tax-related needs!
In the mid-20th century, there wasn’t a bank in the US that informed the IRS about customer affairs, interest rates went unreported, withdrawals of money weren’t reported, and nothing that went through accounts were photographed. In addition to this, real estate transactions weren’t reported, stock transactions were not reported, dividends were not reported, income from other sources (Form 1099) wasn’t reported, and US Customs did not require a declaration of the amount of money carried. Go here if you want help from a modern-day Tax Preparation in Cary, NC.
Before it was espionage, it was an honor system, and it functioned quite well. The deterioration that occurred over the last fifty years to the present is that anything of any fiscal significance is now reported.
Adam Smith observed that people will evade taxes and tax laws shown no credence when there is a general suspicion of a lot of unnecessary expense and great misapplication of tax revenue. In other words, $500 toliet seats, high-dollar grants to study the sex lives of ants, etc.
Because the government wanted to catch a handful of tax resisters and evaders in the 1950s Congress created a tax monster of the US tax system that more and more taxpayers try to bypass. As a general rule, mass tax evasion is a clear signal that a government’s tax system isn’t working. People will pay taxes, even income taxes, if the rates are reasonable.
W. Marc Gilfillan, CPA, NC, individual and business CPA and Tax expert, shares about the history of taxes…
“Slavery – the one cause of the Civil War.” – John Stuart Mill, 1862
Can there be a doubt concerning this topic? Certainly the American Civil War was about the slavery issue… wasn’t it? Well actually, one of the greatest popular myths in our history is that the Civil War was started because of slavery and that Lincoln, the Great Emancipator, started a terrible war to sever the chains of bondage that shackled over three million black Americans. Just prior to the war, the South had all it could have wanted.
In 1860, Southerners held the Supreme Court and Lincoln and Congress were beginning the process of passing a constitutional amendment to keep slavery forever! What happened?
We should move the clock back to the year 1832. By 1832 the national debt from the War of 1812 had been re-paid and the South didn’t see a need to continue the exorbitant import taxes that seemed to only raise price tags for the South’s consumers. Either the South paid high import taxes on imported goods or it bought Northern manufactured goods at terribly overpriced prices. Either way, the South’s funds transferred to the North. To say the least, the South was not happy with this arrangement. 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!
So, in 1832 a convention was held in South Carolina to get rid of these federal import taxes. The South decided the tax was unconstitutional and authorized the governor to resist the enforcement of these taxes instituted by the national government. It seemed like a civil war was in the making. Mild tempers won over, however, and the Great Compromise of 1833 lowered import taxes over the next several years to an area the South could tolerate. Go here if you want help with a modern-day Tax Return in Raleigh, NC.
Over the ensuing years, however, Northern corporate and manufacturer interests forced through Congress more taxes that again stressed Southern planters and allowed Northern Manufacturers to become rich once again. In 1850, John C. Calhoun, the South’s greatest outstanding spokesman, gave a speech to Congress. It listed three wrongs done to the South that may lead to secession from the Union and war. The first two involved fears concerning the gradual decline of power of the South in general and the states as well.
The third, and really the only concrete grievance, was about tax policy. In Calhoun’s view, federal import taxes was a class legislation against the South. Heavy taxation on the South raised funds that were used in the North. The focus of economic strength in the United States was steadily changing strongly to the North. Calhoun spoke of secession if the taxes weren’t lowered. But what about the slavery issue? Well, during his campaign for the presidency in 1860, Lincoln repeatedly said he wouldn’t do anything about slavery in the South. Truly, most Northerners did not really care about enslaved blacks, any more than they cared about the Indian in the West or impoverished illiterate workers in factories. By and large many black slaves received substantially better quality treatment and more compassion than their working-class counterparts in the North. Lincoln, actually, told Southern plantation-owners that run-away slaves would be caught. The Congress and then the Supreme Court (Dred Scott decision) continually acknowledged that slavery wasn’t going anywhere.
But, right as Lincoln was elected and Congress came together in 1861, they enacted new high import tariffs. Slavery wasn’t the problem – higher import taxes were. In his inaugural address Lincoln said he would go get the customs in the South even if there was a secession!
Fort Sumter, near the entrance of the Charleston Harbor, began filling with federal troops to enforce the collection of the new taxes. The Civil War started in 1861 when South Carolinians shot at the federal garrison at Fort Sumter. The conflict had been stewing for years – but it wasn’t about the slaves. It was about tax policy.
2 years after that, Lincoln put into action the Emancipation Proclamation, and then only following several military defeats, as the last resort to rally the North to a noble cause. With respect to the slave issue – the majority of the North cared little concerning black people in bondage, no more than they cared about Native-Americans to the west and the impoverished illiterate peasants in the factories. For the most part, many black slaves received better treatment and more compassion than their impoverished counterparts in the North.
W. Marc Gilfillan, CPA, NC, individual and business CPA and Tax expert, shares about the history of taxes…
Between 1868 to 1913, about 90% of the national government’s revenue was derived from tax on alcohol and tobacco. During the Civil War the government instituted a short income tax, but it was not until 1913 that the sixteenth Amendment permitted Congress to tax incomes “from whatever sources attained.” The initial 1040’s were due on March 1, 1914. There was not any money withheld from paychecks and no money was sent away with the return. Each taxpayer’s taxes were calculated by IRS field agents and a bill mailed to the taxpayer on June 1st.
1766 – Colonial leaders met to extinguish British taxes in place by the Stamp Act. The Stamp Act Congress, which it was called, was the start of the American independence movement and the beginning of the United States.
1782 – The first Congress under the Articles of Confederation met. This Congress had no ability to tax the people.
1789 – Americans granted a newly formed Congress the ability to tax. Without taxing powers, the initial Congress of the U.S. scantly survived 7 years prior to being dubbed a failed attempt; the second Congress, with taxation powers, is currently going strong after more than two hundred years. 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!
1792 – Alexander Hamilton persuades Congress to pass an excise tax on whiskey to raise revenue and steady the increase in drinking. In the western frontier whiskey was the basic medium of exchange, and the 25% tax was harsh. By 1794 the region was in open revolt. The forerunner of the IRS was spawned to give the tax enforcement. Go here if you want help from a modern-day CPA firm in Raleigh, NC.
1832 – The national debt that remained from the Revolutionary War and the War of 1812 is finally accounted for and paid. The South doesn’t see any reason for continued high import taxes that raise prices for Southern consumers and promote industrial monopolies in the North.
1850 – John C. Calhoun of South Carolina warns Congress that the South might secede from the Union because the overly oppressive taxing of the South raised funds that were spent in the North, causing a great shift in money from the South to the North.
Stay tuned for Parts 2 and 3 of the Timeline of US Tax Policy!
W. Marc Gilfillan, CPA, NC, individual and business CPA and Tax expert, shares about the history of taxes…
Ah…. finally a historical event clearly about abusive taxes. Was the Boston Tea Party a protest against the British tax on tea, as we were told? No, not at all. The colonies had continuously been boycotting English tea for 5 years prior to the Boston Tea Party! They had actually smuggled in Dutch tea and were quite prosperous. There was tea for anyone who wanted it and no British tea tax paid. Obviously, the British did not like the boycott. So, the British bypassed the duties at home. The Parliament told British tea sellers to disregard the import tax of getting the tea to England and then transfer the money saved along to the colonies when they shipped the tea over and thereby sold British tea at a price lower than the Dutch smuggled tea. 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!
But who would sell this British tea?
They sold it through loyal British merchants located in the colonies. But will the colonists buy the cheaper British tea even though it had a tax? Yes. So much so that what ended up happening was loyal British merchants got all the business and a tax was still be paid to England. However, the colonists didn’t care about the tax very much; they ended up receiving cheaper tea. BUT, the non-British MERCHANTS didn’t enjoy this gig. The British merchants, gaining the assistance of England, had essentially established a monopoly on tea sales. The colonial merchants feared it was only a matter of time before more British enterprises would be created with an identical mechanism and they would be forced out of business. Go here if you want help with a modern-day Tax Return in Raleigh, NC.
So, a collection of MERCHANTS who appeared to be Natives, boarded a boat containing British tea and tossed it into the water. Was this a shining peak in American tax protest? Not at all. The Boston Tea Party was viewed as the senseless desecration of private property at a time when private property was viewed as very important. The Boston Tea Party was extremely looked down upon and did not sit well with the colonists. Ben Franklin was shocked and demanded that full restitution would be paid at once to the owners of the tea. However, it turned into war.
However, the colonists would soon learn that fleets of warships, battalions of redcoats, and cannons were a lot scarier than a couple tax collectors. The funny part is, America won the war, primarily due to the fact that England realized it was too expensive to wage war so far from home. BUT after the war, America faced huge debts and taxes, and even with representation they were going to be huge.
Keep an eye out for W. Marc Gilfillan’s next chapter in his History of Taxes series: Taxes and Slavery and the Civil War.
W. Marc Gilfillan, CPA, NC, individual and business CPA and Tax expert, shares about the history of taxes…
There has been no modern revolution that was more solidly based in taxation. Taxation not only caused it, but assisted in providing unity for the disorganized and disagreeing colonies. However, maybe not precisely the way you think. 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!
First, the British taxation on the colonies were neither unfair nor oppressing on the people. In fact, Americans had it great: we had the help of Britain, the land was rich, businesses thrived, and jobs were widely available. Europe’s social structures did not enchain the citizens and our sons were not conscripted to fight in wars in far-away lands… we had it good. So why? Well, there were many missteps and misstatements by both sides. Go here if you want help with a modern-day Tax Return in Raleigh, NC.
“Taxation without representation” was indeed a problem. But no one quite knew the solution to it (after the American revolution, many colonies such as Canada and Australia found adequately achievable solutions). But at this point in history there was no agreement by the British parliament or American leaders on what could be done to avoid “taxation without representation”. Ben Franklin, unknowingly I presume, complicated the issue. He went over to England as our spokesman and said that internal taxes were bad but external taxes were OK.
By internal taxes, he meant the stamp tax and any other taxes that were paid on transactions in the actual colonies themselves. External taxes, by the colonists’ definition, were taxes such as import taxes that were on transactions that only in part took place within the colonies. They thought import taxes were external to the colonies. Yes, if you’re puzzled about this, you ought to be. It makes almost no sense. Apparently no one understood the connection with import/export taxes and the final prices paid for the products. In other words, import/export taxes affected the “other guy” so they were OK.
OK, said the British parliament. if that’s what you want we’ll play along and give you whatever it takes to make you happy. So, the British enacted new tariffs, import and export taxes. Then, Americans decided they made a mistake. They saw the flaw of their logic… but it was too late and the issue got worse.
Keep an eye out for W. Marc Gilfillan’s next chapter in his History of Taxes series: Taxes and the Boston Tea Party.
W. Marc Gilfillan, CPA, NC, individual and business CPA and Tax expert, shares about the history of taxes…
Mithridates the Great ruled a tiny nation near what is now Turkey. He had the amazing ability to arouse discontent among disgruntled taxpayers. In 88 BC he led a rebellion fighting the Romans. By granting 5 years of tax exemption to every city that joined his army, he gathered substantial help.
The Roman Senate quickly took swift action and told General Sulla to muster an army and restore Roman authority in the rebellious area. Sulla was victorious in suppressing the rebels, but only following a 4-year war. When the rebellion was crushed, Sulla ordered the leaders of the disgruntled cities to meet him at Ephesus. At Ephesus the citizens were to remit 5 years of back taxes plus pay the general for the cost of the war.
To enforce this tax, Sulla established “special agents.” These special agents had the ability to scourge and kill, which was plenty to make any taxpayer cooperative. Up until this period there were self-assessment tax collectors, private tax collection, army tax collection and the traditional government tax collectors. However, these newly instituted “special agents” were highly skilled specialists with the arrogance of bureaucrats and the power of military executioners. Taxpayers lost all inclination to evade. If you’re feeling the pressure with today’s taxes, call a Tax Preparer in Raleigh, NC for all your tax-related needs!
Special Agents have emerged several times in the past, persisting into modern times as “fiscal police” or simply “special agents”, using the name initially given by Sulla over two thousand years past. As the practice of the general’s special agents was instituted in neighboring nations, soldiers came to understand that the rich spoils of war came from their commander, not the Roman Senate. Roman generals returned to Rome with the blind loyalty of their soldiers. Great civil wars broke out as rival armies fought. With these moderately private armies, the institution of a military dictator was inevitable. So, the Roman Republic dissolved. Royalty, dictators, and military strategists would now rule for the next two thousand years. Democratically designed governments and republics wouldn’t see a large role in civilization again until the 1800s. Go here if you want help with modern-day Tax Preparation in Cary, NC.
Keep an eye out for W. Marc Gilfillan’s next chapter in his History of Taxes series: Taxes and the American Revolution.
W. Marc Gilfillan, CPA, NC, individual and business CPA and Tax expert, shares about the history of taxes…
Now that we are moving away from the Greeks, we finally are at the Roman Empire. Historians often refer to Roman tax policy as “more or less legal stealing” and Roman tax men as “a band of robbers.” However, Roman tax law was not always corrupt. There was a 200-year period at the zenith of the Roman civilization when taxation was moderate. Actually, every kind of tax, as well as no taxation, marked the Roman period. Taxation was as necessary yet as unpredictable in the Roman story as were the legions, the Senate and the Caesars. The arguably insane emperor Nero once advised to abolish every indirect tax and create an “amazing present to the human race.” If you are feeling the pressure with today’s taxes, call a Tax Preparer in Cary, NC for all your tax-related needs!
Romans – The Early Years
The early Roman Republic did not require much taxation because it operated with free labor. The military, which is arguably the greatest expense in any civilization, was a citizen’s army, comprised of land-owners who served for 1 year without pay. They even provided their own uniforms and equipment. This spirit of volunteer free public service inspired all government offices. Even the magistrates worked for the city for free. It is difficult to understand the importance of this ancient practice, especially in our age, when no one seems willing to lift a finger for the government without a fat paycheck. Go here if you want help with modern-day Tax Preparation in Raleigh, NC.
The ideal way to reduce heavy taxation is to instil in all citizens a spirit of unselfish service for the greater good. It isn’t needed to limit public programs and services; what is necessary is the curtailment of the spirit of gain and profit that infects public servants and contractors.
The Romans, like other ancient civilizations, used the great men of their society to handle tax assessments. Taxpayers loved and admired the censors, and no doubt the integrity of these powerful men rubbed off on the taxpayers. By contrast, modern tax systems use professional public relations contractors to manipulate taxpayers with advertising campaigns that play on fear more than integrity. Trouble began, however, when Roman armies lived off of the populace and collected tribute in block form called “stipendium”.
Keep an eye out for W. Marc Gilfillan’s next chapter in his History of Taxes series: Taxes and the American Revolution.
W. Marc Gilfillan, CPA, NC, individual and business CPA and Tax expert, shares about the history of taxes…
The Rosetta Stone, discovered by Napoleon, was possibly the most seminal Egyptian archaeological find in history. The Stone had the same writing in three different languages: Egyptian hieroglyphs, demotic (known as Egyptian script) and Greek. Using the Greek version, archaeologists were able to decipher the demotic and then the hieroglyphs. But the query remains: Egyptians had paper, called papyrus, so why was the writing carved into a rock? Also, why 3 languages? And why Greek?
The Stone has been in existence before 3000 B.C. The Rosetta Stone was etched in 200 B.C. while Ptolemy V was in power (an emperor of Greek origin). So what happened to the Pharaohs? By this time, Egypt was taken over in 700 B.C. by the Assyrians, after that the Persians, and finally the Greeks in 330 B.C. After an existence of 2000+ years, Egypt was finally declining.
The Ptolemy’s were by and large decent rulers, but in 200BC, when the Rosetta Stone was created, Egypt had recently ended a 10-year long civil war. The civil war broke out because of exorbitant and oppressive taxation put in place by corrupt Greek tax collectors. When the struggle ceased there was continuous unrest. Ptolemy V created a Proclamation of Peace which gave forgiveness for any rebel and tax debtors, eased tax laws, stopped forced draft into the navy, and reinstated tax exemption to the priesthood, temples, and their crops and lands, as it had been in the days of the ancient pharaohs. If you are feeling the pressure with today’s taxes, call a Cary NC Accountant for all your tax-related needs!
This was a great advantage and financial ease for the priesthood and temples and they desired to be sure first everyone knew it and, secondly, did not want it to be taken away again at some point in the future.
As a result, “Rosetta Stones” were created and placed in front of every temple in Egypt. The Rosetta stones acted as warnings to everyone that tax immunity had been given to the priesthood and this temple and was a “Do Not Enter” sign to curtail the lawlessness of the king’s tax men. Go here if you want help with modern-day Tax Preparation, bookkeeping, and payroll in Cary NC.
This still leaves the question: why carved in stone? The answer is because the priesthood desired to make sure it would not disappear or able to be simply disposed. Another question was why put it in three languages? The Stone was carved in three languages so that all could read and follow the command the priesthood wanted to send to all people of the country. The stone was written in Greek to be especially clear to the king’s tax collectors that they couldn’t even set foot inside the gates of the temple.
As a result of the most important Egyptian archaeological find in history, the stone translated the mysterious language of the Egyptians, enabled us to discover the secrets of hieroglyphic writing and subsequently the secret to unlocking the mystery of ancient Egypt and the understanding of the Egyptian empire for 3000 years was, in truth, a tax document.
Keep an eye out for W. Marc Gilfillan’s next chapter in his History of Taxes series: Taxes and The Colussus of Rhodes.
