A Short Timeline of Taxation Practices of the US, Part One

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

Between 1868 until 1913, about 90% of the national government’s income was gotten from taxes on whiskey and tobacco. During the Civil War there was a brief income tax, but it wasn’t until 1913 that the sixteenth Amendment permitted Congress to tax incomes “from whatever sources derived.” The initial 1040’s were due on March 1, 1914. No money was taken from paychecks and none was sent in with the return. Every taxpayer’s taxes were calculated by IRS field agents and a bill sent to the taxpayer on the first of June.

1766 – Colony leaders met to protest British taxes under the Stamp Act. The Stamp Act Congress, as it was named, was the beginning of the American independence movement and the birthplace of the modern U.S.

1782 – The first Congress under the Articles of Confederation formed. This Congress had no powers of taxation.

1789 – America granted a newly formed Congress the ability to tax. Without taxing powers, the initial Congress of the United States scantly survived seven years prior to being declared a failed attempt; the second Congress, granted taxing powers, is still going strong after almost 300 years. 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!

1792 – Alexander Hamilton persuades Congress into passing an excise tax on whiskey to increase earned income for the government and curb drinking. In the western frontier whiskey was the basic mode of exchange, and the 25% tax was a bit difficult to deal with. By 1794 the area was openly in rebellion. The father of the IRS was created to enforce the tax. Go here if you want help from a modern-day CPA firm in Raleigh, NC.

1832 – The national debt that remained from the Revolutionary War and the War of 1812 is paid off. The South does not see any reason for continued high import taxes that raise prices for Southern consumers and increase the number of industrial monopolies in the North.

1850 – John C. Calhoun of South Carolina tells Congress that the South might leave the Union due to the fact that the overly oppressive taxing in the South raised funds that ended up in the North, creating a massive change in wealth from the South to the North.

Stay tuned for Parts 2 and 3 of the Timeline of US Tax Policy!

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