A Short Timeline of Taxation of the United States, Chapter Two

W. 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 of Congress and form the Confederate States of America with a new constitution to sustain the new government right to tax in check.

1862 - The beginning of US income tax is created to assist the financing of the rising 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 gets struck down.

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 is in direct conflict with the US Constitution’s bars on insituting direct tax.

1913 - Ratification of the 16th Amendment removes that bar and Congress establishes an income tax system.

1917 - World War I revenue requirements bump up taxes, with the largest 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 goal of enforcing paying the taxes and the practice is given up.

1942 - Prior to World War II, the lowest income level for paying income tax excluded most wage earners. But the war’s cost pushed the threshold down the income ladder and sent the top rate to 94% before the war was 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 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!

http://www.marccpa.com/