|
|
Income Tax Season
The tax season for most all individual tax payers falls during January, February, and March each year. It's the time of year that most citizens look forward to receiving a refund or they dread because they know a balance due must be paid by April 15th. But do you know how all that came to be? Let's have a short lesson in the history of the income tax and tax season in the United States.
In the beginning, from 1791 to 1802 the US had no individual income tax system. The country and its government were supported by internal taxes on alcohol, transportation, sugar, tobacco, and slaves. But, thanks to the War or 1812, the first sales tax was implemented for purchases of gold, silver and silverware, jewelry, and watches. Then, in 1862, when the Civil War came along, the first formal system for individual taxes was implemented, and we've been taxed since. Additional sales, excise, and inheritance taxes were also made a part of our tax system, and thus the individual began to pay, and pay, and pay. But that's not the end of the story.
The income tax law of 1862 established the office of Commissioner of Internal Revenue. This office was given the power to assess, levy, and collect taxes, and the right to enforce the tax laws through seizure of property and income, and through prosecution. Not much has changed since the income tax law of 1862, as far as the powers given to the Internal Revenue Service. The income taxation of the individual citizen has changed, somewhat drastically, however. The income tax was repealed in 1872, revived in 1894 and 1895 then laid to the side.
It wasn't until the 16th Amendment to the Constitution made the income tax a permanent part of the constitution, and a permanent fixture in 1913. This amendment gave Congress the legal authority to tax income and resulted in a revenue law that taxed incomes of both individuals and corporations. During the year of 1918, annual internal revenue collections passed the billion dollar mark rising to $5.4 billion by 1920. Thanks to the next series of Wars, employment increased, and so did tax collections, rising to $7.3 billion. The withholding tax on wages was made a part of the tax system in 1943 and this was instrumental in increasing the number of individual taxpayers to 60 million and tax collections increased by to $43 billion in 1945.
Under the excellent leadership of Ronald Reagan, the biggest tax cut in history was enacted into law in 1981, and then in 1986 he (Ronald Reagan) signed into law the Tax Reform Act of 1986 that was then, and continues to this day to be one of the most far-reaching reforms of the United States tax system. The top tax rate was reduced from 50% to 28%, and this was the lowest it had been since 1916. The Tax Reform Act of 1986 did try to remain revenue neutral by calling for a $120 billion increase in business taxation and a corresponding decrease in individual taxation over a five year period.
In 1993, President Clinton signed the Revenue Reconciliation Act into law, in order to reduce the federal deficit that would otherwise accumulate in the upcoming next few years. Then, in 1997, Clinton signed another tax act that cut taxes; cut capital gains tax for individuals, and provided a child tax credit, and education incentives. President Bush has each year signed tax cuts into law, and with the Job Creation and Workers Assistance Act provided tax relief to businesses in order to foster job growth.
So, that by now, we're all quite used to having the tax visit each year, and either take or distribute taxes. We've all become accustomed to the stronghold that the IRS has on our weekly wages, our earned income, and the accountability we're forced to give, but there was a time when we were truly free of encumbrances, when money earned was money kept.
|
Tax Related News
Technology And Tax Filing (CBS News)It's tax season, and with all the options out there, filing can be a little confusing. Ray Hennessey, Editor of SmartMoney.com, offers some advice on using tax software to file and when it may be best to file with a tax pro.
Webcast To Discuss New Tax-Exempt Legislation (SmartPros Accounting)March 12, 2007 (SmartPros) This month's edition of Tax Talk Today, a Webcast sponsored by the Internal Revenue Service, will feature information on changes affecting tax-exempt organizations, the people who donate to those organizations, and tax-related property appraisals of donated items.
Middle-class Tax Relief (The Decatur Daily)MONTGOMERY — If you make less than $100,000 per year, you could save anywhere between $25 and $375 from Gov. Bob Riley’s proposed income tax cuts. The amount will depend on your marital status, number of dependents and income.
District Seeks To Send Message With Tax Plan (The Express-Times)U. MT. BETHEL TWP. | The Bangor Area School Board last week formalized a new taxing proposal despite scores of people opposing the plan. District voters will decide in May whether to create a 1.65 percent personal income tax in exchange for an estimated $537 in property tax rebates.
|
Related Articles
- Getting a Tax Credit for Your Kids
As you know, raising a family is a full time job and can put stress on your finances. Fortunately, you can claim a tax credit to help cut your IRS bill if you have kids.Getting a Tax Credit for Your KidsWith...
- Tax Tips for IT Consultants and Contractors
I live and work, quite literally, down the road from the main Microsoft campus. No surprise, then, that Im commonly asked by freelance consultants for the best ways that these self-employed independent...
- Tax Invoice
A tax invoice is a legal document that offers a look at what the GST is for a transaction. Read on to learn about your obligations for issuing, holding, and supplying the different types of tax invoices.You...
- IPA Reveals CPA Firm Trends, Record Growth
Sept 12, 2006 — The nations 100 largest public accounting firms saw fees grow a record-breaking 16.5 percent for fiscal year 2005-2006, and all 100 experienced positive growth, according to a new report....
- Do not let IRS make you Wait for the Wrong answer.
Its widely known that, if you hit a snag while doing your taxes you can call IRS for answers and you if you wait long enough you will get an answer, but is it the right answer?Quote: "Two years ago it...
- New for 2006, the Roth 401k Plan
One of the new tax strategies available in 2006 is the Roth 401k. A taxpayer may place up to $15,000 ($20,000 if age 50 or older) in a Roth 401k instead of a regular 401k plan in 2006. The 401k plan needs...
- IRS Audit - A True Story
Who does not fear an IRS audit? We all do. We all fear the face to face, exhausting, unpredictable and time consuming interaction with the Internal Revenue Services agent.We all have that scary feeling...
- Thinking of using Dubai as an offshore jurisdiction?
Think Again! Read below for a comparison.This is an interesting jurisdiction. In Dubai there are no taxes of any sort one has to contend with, so there is no tax filing and no tax audits, etc. Most offshore...
- Know A Tax Cheat? Get Paid To Tell The IRS
According to the IRS, taxpayers underpay their taxes by some $300 billion. If you know someone that is contributing to that deficit, the IRS may be willing to pay you up to $10 million for the information...
- Family Limited Partnership Overview, Part II
Income Tax BenefitsFLPs also provide a number of valuable income tax benefits to the partners. Among these benefits are the following:* Allows pass through of items of income, expense, credit and deduction...
- 1099-MISC Forms For Independent Contractors for 2005
As we begin 2005, youre probably not thinking about taxes at all. This is a mistake as deadlines are approaching for issuing and filing 1099s to independent contractors.What is a 1099 MISC?Generally speaking,...
- What To Do If You Didn't Get a Form 1099
If you earned revenues as an independent contractor in 2005, you should have received a 1099 Form for the work. So, what if you havent received one? What To Do If You Didnt Get a Form 1099If you earned...
- Social Security and Our Current Tax System
Every week that you work, there are taxes deducted from your gross payroll that are distributed to the Social Security Administration, along with other programs administered by the government. Of all the...
- Tax Fraud Attorneys
Tax fraud is a white collar crime involving offenses like tax evasion, non filing of tax returns, non declaration of income and assets, misrepresentation of conditions for exemption, forgery, and any other...
- When to use Quicken for Mutual Fund Recordkeeping
While you might assume any mutual fund investor should use Quickens mutual fund record-keeping tools, that isnt the case. Because investment record keeping, including mutual fund record keeping, requires...
- Choosing A Business Tax Service
There are a number of ways that you can find tax services companies. The yellow pages is a good place to start for companies in your area but, depending on where you live, the list of names may be extremely...
- W-2s
There has never been a more welcomed term in the adult taxpayers life, than the invention of the W-2 and January 31st; lets take a moment to examine the W-2, and what it really means to the average taxpayer....
- Tax Software Alternatives
There are many different tax programs, which are adequate to different kinds of needs, so the users have various options. For taxpayers with more complex tax situations, TurboTax software would be the...
- The History of the Internal Revenue Service
Do you ever wonder, how a country that revolted because of the unfair taxation of tea, came to be under the tight control of the Internal Revenue System? It seems kind of ironic, doesnt it, that the very...
- How Likely Are You To Be Audited?
Statistics for IndividualsUnfortunately, the IRS increased its rate of auditing individuals in 2003 when compared to 2002. The increase was approximately 14%, but still constituted only 6.5 audits for...
- How to Save Taxes with an S Corporation
How to Save Taxes with an S CorporationEver wondered why so many small businesses--more than 3,000,000 at last count--operate as an S corporation? Simple. An S corporation saves business owners big taxes...
- Taxability of Social Security Benefits
The IRS determines whether your Social Security benefits are taxable by looking at your total income and marital status. Form SSA-1099, which Social Security recipients should receive by January 31, shows...
- Failure To Pay Employment Taxes - Penalties
As an employer, you must pay employment taxes if you have employees. Fail to pay and the IRS will rain all over your parade. PenaltiesIf you have employees, you absolutely must deduct and withhold various...
- IRS Reacts to High Gas Prices
As most small businesses are aware, a tax deduction can be taken for mileage incurred in normal business travel. In light of high gas prices, the IRS has upped the mileage rate. Major IncreaseNothing is...
- Innocent Spouses - Relief from Taxes
Historically, tax issues arising from bad marriages fell into the category of "better or worse" for marriages. The IRS granted no innocent spouse tax relief, but has changed its views.Tax ReliefWhen a...
- Refund Anticipation Loans -- More Harm than Help
If someone offered to give you a loan for $2100 at interest rates of up to 222 percent youd probably laugh at them and walk away; but, this spring, 1 in 10 Americans will do just that: for the privilege...
- Tax Fraud
What is tax fraud, and how does our government control it? Thats a really big question to answer, so lets break it apart and answer it in two different paragraphs. Tax fraud is the intentional avoidance...
- Identity Theft - Impacting Your Taxes?
If your identity is stolen, your finances can quickly become a nightmare. A less obvious problem is the effect identity theft can have on your taxes.Identity TheftGenerally, thieves steal your personal...
- Tax fraud and Internal Revenue Service (IRS) Tools
What is tax fraud, and how does our government control it? Thats a really big question to answer, so lets break it apart and answer it in two different paragraphs. Tax fraud is the intentional avoidance...
- How To Prepare Your Income Tax Return
The first step in your income tax preparation is to work out your total income. A persons total income includes many kinds of receipts such as wages, interest, alimony, lottery winnings and many more....
- Employment Taxes - Depositing With The IRS
If your business has employees, you must pay employment taxes. The payment system can be a bit confusing, so this article discusses how to go about depositing employment taxes with the IRS.Depositing Employment...
- Do You Need Life Insurance
It can be very difficult to decide if you need life insurance. Life insurance can be an extremely onerous financial commitment and investment, and it will also last for a considerable period of time, so...
- What is a Dependent?
Other than fitting the description of a constant liability, what other qualifying attributes must one have, to be classed as a dependent, and how do you determine this for tax purposes? The following paragraphs...
- Income Tax Software - The Best Ones On The Market
There are several income tax software programs available on the market to help you complete your yearly taxes. These programs offer tax tips, checklists, and error checking messages to ensure that required...
- How The Gift Tax Works
Each year millions of Americans give a gift to other individuals that they know. Gifts can be considered anything from a new vehicle, to a trip, to a piece of land. A gift tax is a tax that is imposed...
- Do You Need Life Insurance
It can be very difficult to decide if you need life insurance. Life insurance can be an extremely onerous financial commitment and investment, and it will also last for a considerable period of time, so...
- Fraudulent Tax Shelters - KMPG Goes Down Hard
In the largest criminal tax case ever filed, KMPG has copped a plea to using fraudulent tax shelters to bilk the government out of 2.5 billion dollars. KMPG has agreed to pay a fine of $456 million dollars,...
- A Big Tax Loophole Just Got Bigger
Believe it or not, there are ways to convert taxable incomeinto non-taxable income, without any fear of an IRS audit.Heres one of my favorites. Its been part of our belovedtax code for over 30 years,...
- Tax Quotes and Jokes for Tax Season
Like death, paying taxes is inevitable. In the case of most Americans, tax season is just around the corner. If only paying taxes was so easy.As you begin pulling out those receipts, the eraser and reading...
- Low-Tax States Have Stronger Economies
A new study of state tax burdens ound that low-tax states outperform the higher tax states in employment, personal income and population.The report, entitled "High Taxes Lower Economic Performance," was...
- Roth IRA Contributions
Confused about whether you can contribute to a Roth IRA? Try using these simple rules:IncomeTo contribute to a Roth IRA, you must have compensation (e.g., wages, salary, tips, professional fees, bonuses)....
- A Quick Guide To Payroll Tax
The term Payroll tax actually includes the Social Security tax, Medicare tax and Federal income tax. The Social Security tax provides benefits for retired workers, the disabled their dependents and it...
- Convert To Roth IRA Regardless of Income - 2010
An odd quirk in the recent legislation to extend the Bush Tax Cuts is giving IRA holders a huge break. For one year, and one year only, the income cap will be gone. Convert To Roth IRA Regardless of Income...
- Deciding when to File a Tax Return?
April 15th - "The Day of Reckoning"! Every year, millions of Americans get ready to pay taxes to Uncle Sam, or get ready to collect a tax refund from Uncle Sam; when did this become the great day that...
- Tax Preparation Software
Web-based tax preparation services have a few advantages over their desktop counterparts for certain categories of users. So, if you have avoided doing your taxes online until now, you should start considering...
- The Internal Revenue Service
Do you ever wonder, how a country that revolted because of the unfair taxation of tea, came to be under the tight control of the Internal Revenue System? It seems kind of ironic, doesnt it, that the very...
| | |
