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, southerners walk out of Congress and form the Confederacy with a rewritten constitution to curtail the power of their new country to tax.

1862 – The beginning of US income tax is levied to help finance the rising massive costs 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 gets struck down.

1894 – Congress creates an income tax as a result of southerners complaining that excessive 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 holds the idea that the 1894 income tax law conflicts with the US Constitution’s bars on levying direct taxes.

1913 – Ratification of the sixteenth Amendment takes that bar away and Congress establishes an income tax system.

1917 – World War I financial needs push up taxes, with the biggest rate reaching 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 payments and the practice is dropped.

1942 – Prior to World War II, the lowest income level for paying income tax excluded most wage earners. 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 force compliance from the hugely increased number of taxpayers, Congress institutes tax withholding from wages, which basically turned employers into tax collectors.

In the 1940s Justice Jackson of the Supreme Court, former chief counsel to the IRS, gloated 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 of little significance.

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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