W. Marc Gilfillan, CPA, NC, individual and business CPA and Tax expert, shares about the history of taxes...
1861 - After Lincoln was put in office, the South walks out on Congress and form the Confederacy with a new constitution to check the right of their new country to tax.
1862 - The beginning of US income taxes is created to help finance the sudden and massive costs 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 is abolished.
1894 - Congress passes an income tax as a result of southerners complaining that large reliance on tariffs pushes up 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 insituting direct taxes.
1913 - Ratification of the sixteenth Amendment takes that bar away and Congress creates 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 - Publicating the names of taxpayers and the amount of taxes they owe fails to achieve 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 ninety-four percent prior to the war being over.
1943 - In order 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. Tax resisters were few and the underground economy 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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