A Brief Timeline of Tax Law of the US, Section 2
23rd December 2009 by Tax Man No CommentsW. Marc Gilfillan, CPA, NC, individual and business CPA and Tax expert, shares about the history of taxes…
1861 - After Lincoln was elected, the South walks out on Congress and form the Confederate States of America with a rewritten constitution to keep the newly formed government power to tax in check.
1862 - The first US income tax is instituted to assist the financing of the sudden and huge 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 passes an income tax in response to complaints that excessive reliance on tariffs skyrockets the costs 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 that the 1894 income tax law conflicts with the US Constitution’s restrictions on levying direct taxes.
1913 - Ratification of the sixteenth Amendment removes that bar and Congress establishes an income tax system.
1917 - World War I revenue requirements push up taxes, with the largest rate jumping to seventy-seven percent in 1918.
1924 - Publicating the names of taxpayers and how much they owe fails to complete the task of enforcing paying the taxes and the practice is dropped.
1942 - Before World War II, the income threshold for paying income tax left most working people out. However, the cost of the war bumped the threshold down the income ladder and put the top rate to 94% before the war was over.
1943 - To enforce compliance from the sharply increased number 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, 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 black market was of little significance.
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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