History of taxation in the United States

 

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The FICA tax was increased in order to pay for this expense.

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In addition, the Constitution specifically limited Congress' ability to impose direct taxes, by requiring it to distribute direct taxes in proportion to each state's census population. It was thought that head taxes and property taxes slaves could be taxed as either or both were likely to be abused, and that they bore no relation to the activities in which the federal government had a legitimate interest.

The fourth clause of section 9 therefore specifies that, "No Capitation, or other direct, Tax shall be laid, unless in Proportion to the Census or enumeration herein before directed to be taken. Taxation was also the subject of Federalist No. In it, he explains that the wording of the "Necessary and Proper" clause should serve as guidelines for the legislation of laws regarding taxation.

The legislative branch is to be the judge, but any abuse of those powers of judging can be overturned by the people, whether as states or as a larger group. What seemed to be a straightforward limitation on the power of the legislature based on the subject of the tax proved inexact and unclear when applied to an income tax, which can be arguably viewed either as a direct or an indirect tax. The courts have generally held that direct taxes are limited to taxes on people variously called "capitation", "poll tax" or "head tax" and property.

In order to help pay for its war effort in the American Civil War , Congress imposed its first personal income tax in Rates were raised in This income tax was repealed in A new income tax statute was enacted as part of the Tariff Act. Since apportionment of income taxes is impractical, the Pollock rulings had the effect of prohibiting a federal tax on income from property. Due to the political difficulties of taxing individual wages without taxing income from property, a federal income tax was impractical from the time of the Pollock decision until the time of ratification of the Sixteenth Amendment below.

In response to the Supreme Court decision in the Pollock case, Congress proposed the Sixteenth Amendment , which was ratified in , [19] and which states:. The Congress shall have power to lay and collect taxes on incomes, from whatever source derived, without apportionment among the several States, and without regard to any census or enumeration. The Supreme Court in Brushaber v. Union Pacific Railroad , U. The Amendment removed the need for the income tax on interest, dividends and rents to be apportioned among the states on the basis of population.

Income taxes are required, however, to abide by the law of geographical uniformity. Kennedy explicitly called for a top rate of 65 percent, but added that it should be set at 70 percent if certain deductions weren't phased out at the top of the income scale. It slowly increased to Timothy Noah, senior editor of the New Republic, argues that while Ronald Reagan made massive reductions in the nominal marginal income tax rates with his Tax Reform Act of , this reform did not make a similarly massive reduction in the effective tax rate on the higher marginal incomes.

Noah writes in his ten part series entitled "The Great Divergence," that in , the effective tax rate on the top 0. However, it fell back down to the low 30s by his second term in the White House. This effective rate further dropped under the George W. Under Bush, the rate decreased from 6. Looking at the simple math, reductions in the effective income tax burden on the poor coinciding with modest reductions in the effective income tax rate on the wealthiest 0.

In pursuit of equality rather than revenue President Franklin D. In income brackets were adjusted for inflation, so fewer people were taxed at high rates. For tax year , the highest marginal tax rate was Bush made with the Congress.

In the Clinton administration proposed and the Congress accepted with no Republican support an increase in the top marginal rate to In , President George W.

However, this was done in stages: At first the income tax was incrementally expanded by the Congress of the United States , and then inflation automatically raised most persons into tax brackets formerly reserved for the wealthy until income tax brackets were adjusted for inflation.

Income tax now applies to almost two-thirds of the population. While the government was originally funded via tariffs upon imported goods, tariffs now represent only a minor portion of federal revenues. Non-tax fees are generated to recompense agencies for services or to fill specific trust funds such as the fee placed upon airline tickets for airport expansion and air traffic control.

Often the receipts intended to be placed in "trust" funds are used for other purposes, with the government posting an IOU 'I owe you' in the form of a federal bond or other accounting instrument, then spending the money on unrelated current expenditures. Net long-term capital gains as well as certain types of qualified dividend income are taxed preferentially. The federal government collects several specific taxes in addition to the general income tax.

Social Security and Medicare are large social support programs which are funded by taxes on personal earned income see below. Tax statutes passed after the ratification of the Sixteenth Amendment in are sometimes referred to as the "modern" tax statutes. Hundreds of Congressional acts have been passed since , as well as several codifications i.

The modern interpretation of the Sixteenth Amendment taxation power can be found in Commissioner v. In that case, a taxpayer had received an award of punitive damages from a competitor, and sought to avoid paying taxes on that award.

Supreme Court observed that Congress, in imposing the income tax, had defined income to include:. The Court held that "this language was used by Congress to exert in this field the full measure of its taxing power", id.

The Court then enunciated what is now understood by Congress and the Courts to be the definition of taxable income, "instances of undeniable accessions to wealth, clearly realized, and over which the taxpayers have complete dominion. The defendant in that case suggested that a rewording of the tax code had limited the income that could be taxed, a position which the Court rejected, stating:.

The definition of gross income has been simplified, but no effect upon its present broad scope was intended. Certainly punitive damages cannot reasonably be classified as gifts, nor do they come under any other exemption provision in the Code. We would do violence to the plain meaning of the statute and restrict a clear legislative attempt to bring the taxing power to bear upon all receipts constitutionally taxable were we to say that the payments in question here are not gross income. United States , [53] a couple had lost their home to a fire, and had received compensation for their loss from the insurance company, partly in the form of hotel costs reimbursed.

District Court acknowledged the authority of the IRS to assess taxes on all forms of payment, but did not permit taxation on the compensation provided by the insurance company, because unlike a wage or a sale of goods at a profit, this was not a gain. As the court noted, "Congress has taxed income, not compensation".

See Penn Mutual Indemnity Co. Commissioner [55] and Murphy v. The origins of the estate and gift tax occurred during the rise of the state inheritance tax in the late 19th century and the progressive era. In the s and s many states passed inheritance taxes, which taxed the donees on the receipt of their inheritance. There were 6, married individuals, widows or widowers and individuals who are divorced. There were 1, households that consist of only one person and households with five or more people.

Out of a total of 5, households that answered this question, Of the rest of the households, there are 1, married couples without children, 1, married couples with children There were single parents with a child or children. There were 81 households that were made up unrelated people and 71 households that were made some sort of institution or another collective housing.

The historical population is given in the following chart: In the federal election the most popular party was the FDP which received The next three most popular parties were the SVP In the federal election, a total of 4, votes were cast, and the voter turnout was From the census [update] , 9, or Of the rest of the population, there were members of an Orthodox church or about 0. There were 6 individuals or about 0. There were 20 individuals who were Buddhist , 21 individuals who were Hindu and 10 individuals who belonged to another church.

In Thierstein about 5, or Of the 1, who completed tertiary schooling, During the school year there were a total of students in the Thierstein district school system. The education system in the Canton of Solothurn allows young children to attend two years of non-obligatory Kindergarten.

The canton's school system requires students to attend six years of primary school , with some of the children attending smaller, specialized classes. Beautiful olive dish from Tirschenreuth. Made in Bavaria - Germany. White china with gold rim and hand painted with a stunning floral design.

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