Earned Income Tax Credit | A Brief Timeline of Taxation of the United States, Chapter Two

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

Raleigh NC Accountant

W. Marc Gilfillan, CPA, NC, individual and business CPA and Tax expert, shares about the history of taxes…

1861 – After Lincoln’s election, southerners walk out of Congress and create the Confederacy with a new constitution to sustain the new government power to tax in check.

1862 – The beginning of US income taxes is levied to help finance the rising 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 passes an income tax in response to southerners complaining that large 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 is in direct conflict with the US Constitution’s bars on insituting direct taxes.

1913 – Ratification of the sixteenth Amendment removes that bar and Congress creates an income tax system.

1917 – World War I financial needs bump up taxes, with the largest rate reaching seventy-seven percent in 1918.

1924 – Publication of the names of taxpayers and the amount of taxes they owe fails to achieve the task of enforcing payments and the practice is given up.

1942 – Prior to World War II, the lowest income level for paying income tax left most working people out. However, the war’s cost pushed 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 force 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 honest Americans were in turning in their income taxes. The system was based on the user’s honesty – there were only a few informational 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!

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