The History of the Income Tax
The federal progressive income tax has been an issue that has been argued on the floors of Congress, in front of the United States Supreme Court, in front of television cameras, and around the dinner table. The tax served its purpose in supplementing revenue during the Civil War and World War I, but continued taking from Americans' income in peacetime, allowing fewer dollars to be spent on goods and services. When the American government was in a deficit, it was harder to argue for the abolishment of the income tax, but now that Congress is looking at a government surplus for the first time in decades, the question is raised again: Do we have to have a progressive federal income tax? Prior to the Civil War, the vast majority of government funds came from tariffs on imports. The only exception was during the War of 1812, when blockades by the British, as well as the war being with the young country's number one trade partner, lowered income from tariffs. Government revenues were accompanied by funds from the sale of public lands, such as the Louisiana Territory and the Oregon Country, as well as excise taxes, which were introduced during the War of 1812 (Hansen 62). As Abraham Lincoln, who once said "t
Bill Bradley for President. 13 Dec. 1999. 14 Dec. 1999. . Davies, David G. United States Taxes and Tax Policy. Cambridge: Cambridge UP, 1986. George W. Bush for President: Prosperity With a Purpose. 14 Dec. 1999. 14 Dec. 1999. . History of the Income Tax. 12 Oct. 1998. 18 Nov. 1999. . "How the U.S. Income Tax System Grew." Nation's Business April 1995: 21. John McCain for President Official Site. 13 Dec. 1999. 14 Dec. 1999. . Paul, Randolph E. Taxation in the United States. Boston: Little, Brown, and Co., 1954. President Alan Keyes 2000. 14 Dec. 1999. 15 Dec. 1999. . Seligman, Edwin R.A. The Income Tax: History, Theory, and Practice of Income Taxation. New York: The Macmillan Co., 1914. Smiley, Gene and Richard H. Keehn. "Federal Personal Income Tax Policy in the 1920s." Journal of Economic History. 55 (1995): 285-303. The Steve Forbes National Online Headquarters. 13 Dec. 1999. 14 Dec. 1999. . Waltman, Jerold L. Political Origins of the U.S. Income Tax. Jackson, MS: Mississippi UP, 1985. Witte, John F. The Politics and Development of the Federal Income Tax. Madison, WS: Wisconsin UP, 1985. hat he had no money sense and never enough money to fret him, came into office with a national debt of nearly $75 million and Slocum 2 little to no inflow of customs duties, as well as an outflow of investments to foreign countries by investors who feared war. After attempts to raise money by selling bonds, doubling tariffs, increasing excise taxes, and creating license fees, it was realized that another form of tax was needed (Paul 7-8, Witte 67). The details of the tax, however, were not agreed on easily. The tax was originally proposed to tax land in each state, with revenue to be handed out according to population. The idea of this tax created a "congressional rebellion," led by the South and West, because money from their land would go to states in the Northeast (Witte 68). The land tax shortly fell apart, and an income tax was proposed to the floor of the House of Representatives, enclosing "a tax of three percent on all incomes over $600 a year" (68). The Senate passed a bill asking for a five percent tax on all income over $1000 a year on the same day. The Conference Committee came up with a three percent tax on annual incomes over $800 and the first income tax was born (68). The tax was not progressive, and it was also not implemented. By 1862, the tax was altered by setting progressive rates "at three percent on incomes between $600 and $10,000; five percent between $10,000 and $50,000; and 7.5 percent over $50,000" (68). The progressive rates were not, however, set for "redistributing income from higher to lower income classes" or to distribute taxes "across the population in such a way as to cause the least hardship (Davies 21, 77). The progressive rates were set simply to raise more income (Witte 69). Slocum 3 The income tax, along with other efforts to raise revenue in wartime, were repealed almost immediately after Lee's surrender at Appomattox Court House. The cries for income tax repeal came strongest from the Northeast, who as a region paid a much higher percentage into the tax than other parts of the country. The progressive structure was dropped for a flat tax in 1867, and the entire tax was repealed in 1872. Although disliked by Northeastern states and California, who voted 61-14 as a group in favor of repeal, the income tax, according to Randolph Paul, "produced needed revenue at a critical period of American history when other revenue-raising methods would have probably failed" (29). Paul also points out that tax revenue accounted for 25 percent of government expenditures in 1864 and 1865, compared to only ten percent in 1862, the first full year of the income tax (29). For more than twenty years, Congress turned to tariffs and excise taxes to again be the primary sources of government revenues. Cries for the return of the income tax continued inside and outside of government, but efforts were voted down by the Rep
Some common words found in the essay are:
United Statesthe, World War, Revenue Act, Randolph Paul, Supreme Court, Conference Committee, Abraham Lincoln, William Taft, Democratic Party, David Davies, income tax, dec 1999, percent incomes, supreme court, 14 dec 1999, 14 dec, world war, excise taxes, 1999 14 dec, 1999 14, revenue act, tax percent, dec 1999 14, 13 dec 1999, tax percent income,
Approximate Word count = 2669
Approximate Pages = 11 (250 words per page double spaced)
|
