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 create the Confederate States of America with a rewritten constitution to sustain the newly formed government right to tax in check.
1862 - The first US income taxes is created to help finance the sudden and massive 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 as a result of complaints that excessive 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 sustains that the 1894 income tax law conflicts with the US Constitution’s restrictions on levying direct taxes.
1913 - The sixteenth 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 maximum rate jumping to seventy-seven percent in 1918.
1924 - Publication of the names of taxpayers and the amount of taxes they owe fails to complete the task of forcing payments and the practice ends.
1942 - Prior to World War II, the lowest income level for paying income tax left most working people out. However, the cost of the war bumped the threshold down the income ladder and sent the top rate to 94% before the war was over.
1943 - In order to force compliance from the hugely 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 to the IRS, gloated about how honest Americans were in reporting their income taxes. It was an honor system - there were very few informational returns. Tax resisters were few and the underground economy 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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