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 on Congress and form the Confederate States of America with a rewritten constitution to keep the new government power to tax in check.
1862 – The first 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 complaints that excessive reliance on tariffs skyrockets the price 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 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 establishes an income tax system.
1917 – World War I revenue requirements push up tax rates, with the largest rate jumping to 77% in 1918.
1924 – Publicating the names of taxpayers and how much they owe fails to achieve the goal of enforcing paying the taxes and the practice ends.
1942 – Before World War II, the income threshold for filing income tax left most working people out. However, the cost of the war bumped the threshold down the income ladder and sent the top rate to 94% 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 to the IRS, gloated about how honest Americans were in turning in their income taxes. The system was based on the user’s honesty – there were very few informative returns. Open resistors to the taxes were few and the black market was relatively small.
1962 – IRS Commissioner Caplin said “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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W. Marc Gilfillan, CPA, NC, individual and business CPA and Tax expert, shares about the history of taxes…
So, what went wrong with the tax system in the US?
US tax makers have been reaping what they have been sowing for quite a while. The honor system has been replaced by a system in which every tax payer is under surveillance because of the strong threat of evading their taxes. In other words, consent has been replaced with compulsion. Honor has been replaced with espionage. If you’re feeling the pressure with today’s taxes, call a Cary NC CPA for all your tax-related needs!
In the 1950s, there wasn’t a bank in the US that told the IRS about the affairs of citizens who went to that bank, interest was not reported, withdrawals of money weren’t reported, and nothing that went through accounts were photographed. In addition to this, real estate transactions weren’t reported, stock transactions were not reported, dividends were not reported, income from other sources (Form 1099) was not reported, and US Customs did not require a declaration of the amount of money carried. Go here if you want help from a modern-day Tax Preparation in Cary, NC.
Before it was espionage, it was an honor system, and it worked. The erosion that occurred over the previous fifty years to now is that anything of any fiscal significance is now reported.
Adam Smith said that taxes will be evaded and tax laws shown no credence when there is a general suspicion of a lot of meaningless expense and a lot of misspending of tax revenue. For example, $500 toliet seats, huge grants to study the sex lives of ants, etc.
Because the government wanted to catch a handful of tax resisters and evaders in the 1950s Congress created a tax abomination of the US tax system that more and more taxpayers attempt to bypass. As a general rule, mass tax evasion is a clear signal that a government’s tax system isn’t working. Citizens will pay taxes, even income taxes, if the rates are acceptable.
Thanks for reading! Stay tuned for more updates!
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W. Marc Gilfillan, CPA, NC, individual and business CPA and Tax expert, shares about the history of taxes…
The Rosetta Stone, unearthed by Napoleon, was possibly the most helpful Egyptian archaeological discovery in history. The Stone had duplicated text in 3 different languages: Egyptian hieroglyphs, demotic (Egyptian script) and Greek. Using the Greek translation, archaeologists were able to decipher the demotic and then the pictographs. But the question remains: Egyptians had a form of paper, known today as papyrus, so why was the work etched in a rock? Furthermore, why 3 languages? And why Greek?
The Stone has been around before 3000 B.C. The Rosetta Stone was etched in 200 B.C. while Ptolemy V was in power (a king of Greek origin). So what happened to the Pharaohs? At this time, Egypt had been taken over in 700 B.C. by the Assyrians, after that the Persians, and finally the Greeks in 330 B.C. After reigning 2000+ years, Egypt was finally declining.
The Ptolemy’s were by and large good kings, but around 200BC, when the Rosetta Stone was etched, Egypt had recently concluded a decade long civil war. The civil struggle started because of excessive and oppressive taxes strengthened by tough Greek tax collectors. As the war ended there was continuous unrest. Ptolemy V issued a Proclamation of Peace which gave forgiveness for any rebel and tax debtors, lowered taxation practices, eliminated forced conscription into the navy, and reinstated tax immunity to the priesthood, temples, and their crops and lands, as it had been in the reign of the great pharaohs. If you’re feeling the pressure with today’s taxes, call a Raleigh NC CPA for all your tax-related needs!
This was a great edge and monetary windfall for the priesthood and temples and they desired to make certain first all people knew it and, second, didn’t want it to be taken away again at some time in the future.
As a result, “Rosetta Stones” were etched and put in front of every temple in Egypt. The Rosetta stones acted as warnings to everyone that tax immunity had been given to the priests and this temple and acted as a “Do Not Enter” sign to curtail the lawlessness of the king’s tax collectors. Go here if you want help with modern-day Tax Preparation, bookkeeping, and payroll in Cary NC.
This still leaves the question: why carved in stone? The answer? Because the priesthood wanted to make sure it wouldn’t fade in history or able to be easily destroyed. Another question was why put it in 3 languages? The Stone was written in three languages so that everyone may see and heed the command the priests desired to spread to all of the country. It was written in Greek to be especially direct to the king’s tax collectors that they could not even come inside the gates of the temple.
So, the most important Egyptian archaeological discovery ever, the stone translated the mysterious language of the Egyptians, made us capable of discovering the key to hieroglyphic writing and subsequently the key to unlocking the mystery of ancient Egypt and the understanding of the Egyptian empire for 3000 years was, in fact, a tax document.
Keep an eye out for W. Marc Gilfillan’s next chapter in his History of Taxes series: Taxes and The Colussus of Rhodes.
http://www.marccpa.com/
W. Marc Gilfillan, CPA, NC, individual and business CPA and Tax expert, shares about the history of taxes…
Ancient Egypt wasn’t a place of cruel oppressors and oppressed slaves – that is only the stigma we get from the story of Moses, which formed at a time of turmoil in Egypt. Modern translations of Egyptian language indicate that life in ancient Egypt was usually pleasant and peaceful. The land was fertile, men and women had roughly equal rights and life was enjoyed. But, there were tax collectors, as numerous as “the sands of the seas”. The order of Egyptian life was kept by these “scribes” whose job was enforcing the pharaoh’s tax policies. Almost all aspects of life were taxed – sales, slaves, foreigners, imports, exports, and businesses. Agriculture was taxed at an astounding 20%. There was also a tax on cooking oil and inspectors would make continuous visitations to kitchens to ensure that free drippings were not being wasted as opposed to the taxed oil.
The word “freedom” ironically in ancient times didn’t refer to someone’s political or social liberty but to a person’s tax level. If you were “free,” it meant that you did not have to pay taxes. Ironically, the word is not found anywhere in the Egyptian language. Good thing we live in this time eh? Go here if you want help with modern-day Tax Preparation, bookkeeping, and payroll in Cary NC.
However, the scribes were not brutal (at least in theory). They were told to act kindly towards the poor and defenseless. An example from an ancient translation instructs: “if a poor farmer is in trouble with his taxations, remit 2/3 of them.”
Another translation admonishes officials to “cheer up everyone and to put them into a good mood.”
And, if someone is struggling under the pressure of taxation, or is at the end of his means to pay them, you must let the case go unchecked.” If you’re feeling the pressure with today’s taxes, call a Raleigh NC Accountant for all your tax-related needs!
This lenient policy was coined “philanthropa”. From this word we get the word philandthropy.
Over the 3000 years of the Egyptian empire, there were many times of humane and decent tax administration.
Keep an eye out for W. Marc Gilfillan’s next chapter in his History of Taxes series: Taxes and the Greeks. http://www.marccpa.com/
W. Marc Gilfillan, CPA, NC, individual and business CPA and Tax expert, shares about the history of taxes…
The isle of Rhodes: a seminal connection to Rome and Greece. All shipped goods from the east stopped for restocking or to transfer cargo at Rhodes. The harbor at Rhodes, like all other harbors, had a tax on all transaction, which was two percent. Rhodes prospered and was fabulously wealthy in the banking and commerce industries especially. The wealthy heads of Rhodes funded the creation of a 100-foot-tall bronze statue of Apollo near the entrance to the port. It was deemed as one of the seven wonders of the ancient world (whether it actually straddled the harbor entrance is unknown). If you are feeling the pressure with today’s taxes, call a Raleigh NC Accountant for all your tax-related needs!
Rhodes flourished until 225 BC. An earthquake caused the statue to topple and not much more is known of Rhodes following the disaster. Did the earthquake wipe them out? Destroy the harbor? Well, here’s the remainder of the tale. The Roman Senate was angered at Rhodes because during the late Rome-Macedonia War, Rhodes had declared neutrality. After relying so much on Rome for so many years, Rome expected more. They wished Rhodes to take their side and contribute to the war effort. So, after the war, the Romans chose their move. They established a tax-free harbor on the nearby Isle of Delos. There wasn’t a 2% harbor tax! In the first year since the port was created, trade declined eighty-five percent in Rhodes. Rhodes was finished. Go here if you want help with modern-day Tax Preparation, bookkeeping, and payroll in Raleigh NC.
Did the earthquake do it? The answer is no, Rhodes had since rebuilt after the earthquake (however, they did not replace the colossus). What brought Rhodes down was no earthquake or natural disaster or war or famine. It was Roman tax policy. Everything to dodge a two percent tax. The Switzerland of the ancient world, the commerce giant of the east was brought down because people wanted to avoid a two percent tax.
Keep an eye out for W. Marc Gilfillan’s next chapter in his History of Taxes series: Roman Taxes.
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