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, the South walks 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 instituted to help finance the sudden and massive debts 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 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 the idea that the 1894 income tax law is in direct conflict with the US Constitution’s bars on insituting direct tax.

1913 – The sixteenth Amendment is passed and takes that bar away and Congress creates an income tax system.

1917 – World War I revenue requirements push up tax rates, with the maximum rate reaching 77% in 1918.

1924 – Publication of the names of taxpayers and the amount of taxes they owe fails to complete the task of enforcing paying the taxes and the practice is dropped.

1942 – Prior to World War II, the lowest income level for filing 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 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, boasted about how honest Americans were in turning in 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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