NationMaster - Encyclopedia: Taxation history of the United States

The history of taxation in the United States began when it was composed of colonies ruled by the British Empire, French Empire, and Spanish Empire. After independence from Europe the United States collected poll taxes, tariffs, and excise taxes. The United States imposed income taxes intermittently because the constitutionality of an income tax at the time was questionable. The advent of the 16th Amendment to the United States Constitution settled the matter in 1913 and since then the income tax has become the primary means of funding the Federal Government. Taxation in the United States is a complex system which may involve payment to at least four different levels of government. ... Seal of the Internal Revenue Service Tax rates around the world Tax revenue as % of GDP Part of the Taxation series IRS redirects here. ... Seal of the United States Tax Court. ... Seal of the Internal Revenue Service Tax forms in the United States are used by taxpayers and tax-exempt organizations to report financial information to the Internal Revenue Service (IRS). ... The Internal Revenue Code (or IRC) (more formally, the Internal Revenue Code of 1986, as amended) is the main body of domestic statutory tax law of the United States organized topically, including laws covering the income tax (see Income tax in the United States), payroll taxes, gift taxes, estate taxes... Tax rates around the world Tax revenue as % of GDP Part of the Taxation series The federal government of the United States imposes a progressive tax on the taxable income of individuals, corporations, trusts, decedents estates, and certain bankruptcy estates. ... The Federal Insurance Contributions Act (FICA) tax, a kind of payroll tax, is a United States employment tax imposed in an equal amount on employees and employers to fund federal programs for retirees, the disabled, and children of deceased workers. ... Alternative Minimum Tax (AMT) is a tax system that is part of the federal income tax system in the United States. ... This article is about Estate tax in the United States. ... Look up Excise tax in the United States in Wiktionary, the free dictionary. ... Inheritance tax, also known in some countries outside the United States as a death duty and referred to as an estate tax within the U.S, is a form of tax levied upon the bequest that a person may make in their will to a living person or organisation. ... Corporate tax in the United States is a tax on the taxable income of a C corporation or an entity taxed as a C corporation. ... Tax rates around the world Tax revenue as % of GDP Part of the Taxation series In the United States, individuals and corporations pay income tax on the net total of all their capital gains just as they do on other sorts of income, but the tax rate for individuals is... Taxation in the United States is a complex system which may involve payment to at least four different levels of government. ... States with no state income tax are in red, states taxing only dividend and interest income are in yellow Tax rates around the world Tax revenue as % of GDP Part of the Taxation series State income tax is an income tax in the United States that is levied by each... Tax rates around the world Tax revenue as % of GDP Part of the Taxation series A sales tax is a tax on consumption and is normally a certain percentage that is added onto the price of goods or services that are purchased. ... Tax rates around the world Tax revenue as % of GDP Part of the Taxation series A use tax is a type of excise tax levied in the United States. ... Property tax, millage tax is an ad valorem tax that an owner of real estate or other property pays on the value of the property being taxed. ... Tax rates around the world Tax revenue as % of GDP Part of the Taxation series State tax levels indicate both the tax burden and the services a state can afford to provide residents. ... Tax reform is the process of changing the way taxes are collected or managed by the government. ... Throughout this article, the unqualified term dollar and the $ symbol refer to the United States dollar. ... A flat tax, also called a proportional tax, is a system that taxes all entities in a class (typically either citizens or corporations) at the same rate (as a proportion on income), as opposed to a graduated, or progressive, scheme. ... Tax protester arguments are a number of theories that deny that a person has a legal obligation to pay a tax for which the government has determined that person is liable. ... Tax protesters in the United States make a number of statutory arguments that the assessment of the income tax in the United States violates the statutes enacted by the United States Congress and signed into law by the President. ... Tax protester conspiracy arguments are arguments raised by tax protesters that assert that the imposition of the income tax in the United States is the result of some kind of illicit conspiracy. ... Image File history File links This is a lossless scalable vector image. ... Image File history File links Flag_of_the_British_Virgin_Islands. ... Image File history File links This is a lossless scalable vector image. ... Image File history File links This is a lossless scalable vector image. ... Image File history File links Flag_of_Germany. ... Image File history File links Flag_of_Hong_Kong. ... Image File history File links Flag_of_India. ... Image File history File links Flag_of_Indonesia. ... Image File history File links Flag_of_the_Netherlands. ... Image File history File links Flag_of_New_Zealand. ... Image File history File links Flag_of_Peru. ... Image File history File links Flag_of_Ireland. ... Image File history File links Flag_of_Russia. ... Image File history File links Flag_of_Singapore. ... Image File history File links Flag_of_Tanzania. ... Image File history File links Flag_of_the_United_Kingdom. ... Image File history File links This is a lossless scalable vector image. ... Image File history File links This is a lossless scalable vector image. ... Comparison of tax rates around the world is a difficult and somewhat subjective enterprise. ... This table lists OECD countries by total tax revenue as percentage of GDP (as of 2005). ... Territories in the Americas colonized or claimed by a European great power in 1750. ... The British Empire in 1897, marked in pink, the traditional colour for Imperial British dominions on maps. ... The term French Empire can refer to: The First French Empire of Napoleon Bonaparte (1804 - 1814 or 1815) The Second French Empire of Napoleon III (1852 - 1870) The Second French Colonial Empire (1830 - 1960) This is a disambiguation page — a navigational aid which lists other pages that might otherwise... An anachronous map of the overseas Spanish Empire (1492-1898) in red, and the Spanish Habsburg realms in Europe (1516-1714) in orange. ... John Trumbulls Declaration of Independence, showing the five-man committee in charge of drafting the Declaration in 1776 as it presents its work to the Second Continental Congress in Philadelphia The American Revolution refers to the period during the last half of the 18th century in which the Thirteen... A poll tax, head tax, or capitation is a tax of a uniform, fixed amount per individual (as opposed to a percentage of income). ... It has been suggested that Tariff in American history be merged into this article or section. ... Look up Excise tax in the United States in Wiktionary, the free dictionary. ... Tax rates around the world Tax revenue as % of GDP Part of the Taxation series The federal government of the United States imposes a progressive tax on the taxable income of individuals, corporations, trusts, decedents estates, and certain bankruptcy estates. ... Constitutionality is the status of a law, a procedure, or an acts accordance with the laws or guidelines set forth in the applicable constitution. ... Amendment XVI in the National Archives Amendment XVI (the Sixteenth Amendment) of the United States Constitution was ratified on February 3, 1913. ... Wikisource has original text related to this article: The United States Constitution The United States Constitution is the supreme law of the United States of America. ... This article describes the government of the United States. ...

Colonial taxation

England

Sugar Act

The Sugar Act (citation 4 Geo. III c. 15), passed on April 5, 1764, was a revenue-raising Act passed by the Parliament of Great Britain. It revised the earlier Sugar and Molasses Act, which had imposed a tax of six cents per gallon upon imported molasses in order to make English products cheaper than those from the French West Indies. The Sugar Act (citation 4 Geo. ... The British monarch or Sovereign is the monarch and head of state of the United Kingdom and its overseas territories, and is the source of all executive, judicial and (as the Queen-in-Parliament) legislative power. ... is the 95th day of the year (96th in leap years) in the Gregorian calendar. ... 1764 was a leap year starting on Sunday (see link for calendar). ... The Revenue Act was passed in 1764 by British Prime Minister, George Grenville to enforce the provisions of the Sugar Act (or Molasses Act) of 1733. ... The Parliament of the United Kingdom of Great Britain and Northern Ireland is the supreme legislative institution in the United Kingdom and British overseas territories (it alone has parliamentary sovereignty). ... Sugar and Molasses Act of 1733 was an Act of the Parliament of Great Britain (citation 6 Geo II. c. ... The term French West Indies (see also Antilles franÃ§aises) refers to the two French overseas departments of Guadeloupe and Martinique. ...

Stamp Act

The Stamp Act of 1765 was the fourth Stamp Act to be passed by the Parliament of Great Britain and required all legal documents, permits, commercial contracts, newspapers, wills, pamphlets, and playing cards in the American colonies to carry a tax stamp. The Act was enacted in order to defray the cost of maintaining the military presence protecting the colonies. The Stamp Act of 1765 (short title Duties in American Colonies Act 1765; 5 George III, c. ...

Townshend Revenue Act

The Townshend Revenue Act refers to two Acts of the Parliament of Great Britain passed in 1767, which were proposed by Charles Townshend, Chancellor of the Exchequer, just before his death. These laws placed a tax on common products imported into the American Colonies, such as lead, paper, paint, glass, and tea (though they did not place a tax on silk). In contrast to the Stamp Act of 1765, the laws were not a direct tax, but a tax on imports. The Townshend Acts also created three new admiralty courts to try Americans who ignored the laws. The Townshend Acts were passed in 1767 by the British Parliament, having been proposed by Charles Townshend as Chancellor of the Exchequer just before his death. ... In Westminster System parliaments, an Act of Parliament is a part of the law passed by the Parliament. ... The Parliament of the United Kingdom of Great Britain and Northern Ireland is the supreme legislative institution in the United Kingdom and British overseas territories (it alone has parliamentary sovereignty). ... This page is on the former Chancellor of the Exchequer. ... The Chancellor of the Exchequer is the title held by the British Cabinet minister responsible for all economic and financial matters. ... For other uses, see Law (disambiguation). ... â€œTaxesâ€ redirects here. ... This article is about the colonial history of the United States. ... For other uses of this word, see Silk (disambiguation). ... The Stamp Act of 1765 (short title Duties in American Colonies Act 1765; 5 George III, c. ... Admiralty courts, also known as maritime courts, are courts exercising jurisdiction over all maritime contracts, torts, injuries and offences. ...

Boston Tea Party

The Boston Tea Party was an act of protest by the American colonists against Great Britain for the Tea Act in which they destroyed many crates of tea bricks on ships in Boston Harbor. The incident, which took place on Thursday, December 16, 1773, has been seen as helping to spark the American Revolution. Image source : http://teachpol. ... Image source : http://teachpol. ... This article is about a 1773 American protest. ... Demonstrators march in the street while protesting the World Bank and International Monetary Fund on April 16, 2005. ... For colonies not part of the 13 colonies see European colonization of the Americas or British colonization of the Americas. ... The Tea Act was an Act of the Parliament of Great Britain (13 Geo III c. ... Look up crate in Wiktionary, the free dictionary. ... A compressed brick of pu-erh tea . ... Categories: Stub | Massachusetts geography | Boston ... is the 350th day of the year (351st in leap years) in the Gregorian calendar. ... Year 1773 (MDCCLXXIII) was a common year starting on Friday (link will display the full calendar) of the Gregorian calendar (or a common year starting on Tuesday of the 11-day slower Julian calendar). ... John Trumbulls Declaration of Independence, showing the five-man committee in charge of drafting the Declaration in 1776 as it presents its work to the Second Continental Congress in Philadelphia The American Revolution refers to the period during the last half of the 18th century in which the Thirteen...

Spain

France

Capitation tax

A poll tax, head tax, or capitation is a tax of a uniform, fixed amount per individual (as opposed to a percentage of income). ... Shays rebellion was an armed uprising in Western Massachusetts from 1786 to 1787. ...

Tariff

It has been suggested that Tariff in American history be merged into this article or section. ...

Income for federal government

Tariffs have played different roles in trade policy and the economic history of the United States. Tariffs were the largest source of federal revenue from the 1790s to the eve of World War I, until it was surpassed by income taxes. Since the revenue from the tariff was considered essential and easy to collect at the major ports, it was agreed that the nation should have a tariff for revenue purposes.^[1] United States trade policy has varied widely through various American historical and industrial periods. ... The economic history of the United States has its roots in European settlements in the 16th, 17th, and 18th centuries. ... â€œThe Great War â€ redirects here. ... For other uses, see Port (disambiguation). ...

Protectionism

Another role the teriff played was in the protection of local industry; it was the political dimension of the tariff. From the 1790s to the 2000s, the tariff (and closely related issues such as import quotas and trade treaties) generated enormous political stresses whether during the 19th century with the Nullification crisis or the WTO. Protectionism is the economic policy of restraining trade between nations, through methods such as high tariffs on imported goods, restrictive quotas, a variety of restrictive government regulations designed to discourage imports, and anti-dumping laws in an attempt to protect domestic industries in a particular nation from foreign take-over... It has been suggested that Commerce be merged into this article or section. ... The Nullification Crisis was a sectional crisis during the presidency of Andrew Jackson that arose when the state of South Carolina attempted to nullify a federal law passed by the United States Congress. ... For other uses of the initials WTO, see WTO (disambiguation). ...

Origins of protectionism

When Alexander Hamilton was the Secretary of the Treasury he issued the Report on Manufactures, which reasoned that applying tariffs in moderation would, in addition to raising revenue to fund the federal government, would also encourage domestic manufacturing and growth of the economy by applying the funds raised in part towards subsidies (called bounties in his time) to manufacturers. The main purposes sought by Hamilton through the tariff were to: (1) protect American infant industry for a short term until it could compete; (2) raise revenue to pay the expenses of government; (3) raise revenue to directly support manufacturing through bounties (subsidies).^[2] This resulted in the passage of three tariffs by Congress, the Tariff of 1789, the Tariff of 1790, and the Tariff of 1792 which progressively increased tariffs. Alexander Hamilton (January 11, 1755 or 1757[1]â€”July 12, 1804) was an Army officer, lawyer, Founding Father, American politician, leading statesman, financier and political theorist. ... The United States Secretary of the Treasury is the finance minister of the Federal Government of the United States. ... A portrait of Alexander Hamilton by John Trumbull, 1792. ... The Hamilton Tariff of 1789 (ch. ... This article or section does not cite its references or sources. ...

Sectionalism

Tariffs contributed to sectionalism between the North and the South. The Tariff of 1824 increased tariffs in order to protect American industry in the face of cheaper imported commodities such as iron products, wool and cotton textiles, and agricultural goods from England. This tariff was the first in which the sectional interests of the North and the South truly came into conflict because the South advocated lower tariffs in order to take advantage of tariff reciprocity from England and other countries that purchased raw agricultural materials from the South.^[3] The Tariff of 1824, also known as the Sectional Tariff of 1824, was a protective tariff in the United States designed to foster Americas burgeoning industry in the face of cheaper British commodities, especially iron products, wool and cotton textiles, and agricultural goods. ...

The Tariff of 1828, also known as the Tariff of Abominations, and the Tariff of 1832 accelerated sectionalism between the North and the South. For a brief moment in 1832, South Carolina made vague threats to leave the Union over the tariff issue.^[4] In 1833, to ease North-South relations, Congress lowered the tariffs.^[5] In the 1850s, the South gained greater influence over tariff policy and made subsequent reductions.^[6] The Tariff of 1828 (also known as the Tariff of Abominations, ch. ... The Tariff of 1832 was a protectionist tariff in the United States. ...

In 1861, just prior to the Civil War, Congress enacted the Morrill Tariff, which applied high rates and inaugurated a period of relatively continuous trade protection in the United States that lasted until the Underwood Tariff of 1913. The schedule of the Morrill Tariff and its two successor bills were retained long after the end of the Civil War.^[7] The Morrill Tariff of 1861 was a protective tariff bill passed by the U.S. Congress in early 1861. ... The Underwood Tariff, or the Tariff Act of 1913 reduced the basic United States tariff rates from 41% to 27%, well below the Payne-Aldrich Tariff Act of 1909. ...

Early 20th century protectionism

In 1921, Congress sought to protect local agriculture as opposed to industry by passing the Emergency Tariff, which increased rates on wheat, sugar, meat, wool and other agricultural products brought into the United States from foreign nations, which provided protection for domestic producers of those items. The Emergency Tariff of 1921 (ch. ... Species T. aestivum T. boeoticum T. dicoccoides T. dicoccon T. durum T. monococcum T. spelta T. sphaerococcum T. timopheevii References: ITIS 42236 2002-09-22 Wheat Wheat For the indie rock group, see Wheat (band). ... This article is about sugar as food and as an important and widely traded commodity. ... This article is about the food. ... For other uses, see Wool (disambiguation). ...

However, one year later Congress passed another tariff, the Fordney-McCumber Tariff, whch applied the scientific tariff and the American Selling Price. The purpose of the scientific tariff was to equalize production costs among countries so that no country could undercut the prices charged by American companies.^[8] The difference of production costs was calculated by the Tariff Commission. A second novelty was the American Selling Price. This allowed the president to calculate the duty based on the price of the American price of a good, not the imported good.^[9] The Fordney-McCumber tariff of 1922 was a law in the United States that created a Tariff Commission to raise or lower rates by 50%. This was a post-World War I Republican defense against expected Europeans exports. ...

During the outbreak of the Great Depression in 1930, Congress raised tariffs on over 20,000 imported goods to record levels, and, in the opinion of most economists, worsened the Great Depression by causing other countries to reciprocate thereby plunging American imports and exports by more than half.^[10]

Era of GATT and WTO

In 1948, the US signed the GATT agreement, which reduced tariff barriers and other quantitative restrictions and subsidies on trade through a series of agreements. General Agreement on Tariffs and Trade (usually abbreviated GATT) functions as the foundation of the WTO trading system, and remains in force, although the 1995 Agreement contains an updated version of it to replace the original 1947 one. ...

In 1993 the GATT was updated (GATT 1994) to include new obligations upon its signatories. One of the most significant changes was the creation of the World Trade Organization (WTO). Whereas GATT was a set of rules agreed upon by nations, the WTO is an institutional body. The WTO expanded its scope from traded goods to trade within the service sector and intellectual property rights. Although it was designed to serve multilateral agreements, during several rounds of GATT negotiations (particularly the Tokyo Round) plurilateral agreements created selective trading and caused fragmentation among members. WTO arrangements are generally a multilateral agreement settlement mechanism of GATT.^[11] Year 1993 (MCMXCIII) was a common year starting on Friday (link will display full 1993 Gregorian calendar). ... â€œWTOâ€ redirects here. ... Good. ... The tertiary sector of industry, also called the service sector or the service industry, is one of the three main industrial categories of a developed economy, the others being the secondary industry (manufacturing and primary goods production such as agriculture), and primary industry (extraction such as mining and fishing). ... In law, particularly in common law jurisdictions, intellectual property is a form of legal entitlement which allows its holder to control the use of certain intangible ideas and expressions. ... For other uses, see Tokyo (disambiguation). ...

Excise tax

Federal excise taxes are applied to specific items such as motor fuels, tires, telephone usage, tobacco products, and alcoholic beverages. Excise taxes are often, but not always, allocated to special funds related to the object or activity taxed. Look up Excise tax in the United States in Wiktionary, the free dictionary. ... Washington leads his troops to western Pennsylvania (Metropolitan Museum of Art) The Whiskey Rebellion, less commonly known as the Whiskey Insurrection, was a popular uprising that had its beginnings in 1791 and culminated in an insurrection in 1794 in the locality of Washington, Pennsylvania, in the Monongahela Valley. ... An excise is an indirect tax or duty levied on items within a country. ...

Income tax

The history of income taxation in the United States began in the 19th century with the imposition of income taxes to fund war efforts. However, the constitutionality of income taxation was widely held in doubt until 1913 with the ratification of the 16th Amendment. Amendment XVI (the Sixteenth Amendment) of the United States Constitution, authorizing income taxes in their present form, was ratified on February 3, 1913. ...

Legal foundations

Article I, Section 8, Clause 1 of the United States Constitution (the "General Welfare Clause"), assigns Congress the power to impose "Taxes, Duties, Imposts and Excises," but Article I, Section 9 requires that, "Duties, Imposts and Excises shall be uniform throughout the United States." Article I, Section 8, Clause 1 of the United States Constitution, is known as the General Welfare Clause, the Uniformity Clause, the Welfare Clause, and the Taxing and Spending Clause. ... Type Bicameral Houses Senate House of Representatives President of the Senate President pro tempore Dick Cheney, (R) since January 20, 2001 Robert C. Byrd, (D) since January 4, 2007 Speaker of the House Nancy Pelosi, (D) since January 4, 2007 Members 535 plus 4 Delegates and 1 Resident Commissioner Political...

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." The Canadian Head Tax was a fee charged for each Chinese person entering Canada. ... Property tax, millage tax is an ad valorem tax that an owner of real estate or other property pays on the value of the property being taxed. ...

Taxation was also the subject of Federalist No. 33 penned secretly by the Federalist Alexander Hamilton under the pseudonym Publius. 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. Alexander Hamilton, author of Federalist No. ... Alexander Hamilton (January 11, 1755 or 1757[1]â€”July 12, 1804) was an Army officer, lawyer, Founding Father, American politician, leading statesman, financier and political theorist. ... A pseudonym (Greek: , pseudo + -onym: false name) is an artificial, fictitious name, also known as an alias, used by an individual as an alternative to a persons legal name. ... Title page of an early Federalist compilation. ...

The courts have generally held that direct taxes are limited to taxes on people (variously called "capitation", "poll tax" or "head tax") and property^[12]. All other taxes are commonly referred to as "indirect taxes," because they tax an event, rather than a person or property per se.^[13] 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.

Pre-16th Amendment

In order to help pay for its war effort in the American Civil War, the United States government imposed its first personal income tax, on August 5, 1861, as part of the Revenue Act of 1861 (3% of all incomes over US $800; rescinded in 1872). Other income taxes followed, although an 1895 United States Supreme Court ruling, Pollock v. Farmers' Loan & Trust Co., held that taxes on rents from real estate, on interest income from personal property and other income from personal property (which includes dividend income) were direct taxes on property, and therefore had to be apportioned. Since apportionment of income taxes is impractical, this 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). Combatants United States of America (Union) Confederate States of America (Confederacy) Commanders Abraham Lincoln, Ulysses S. Grant Jefferson Davis, Robert E. Lee Strength 2,200,000 1,064,000 Casualties 110,000 killed in action, 360,000 total dead, 275,200 wounded 93,000 killed in action, 258,000 total... The government of the United States, established by the United States Constitution, is a federal republic of 50 states, a few territories and some protectorates. ... is the 217th day of the year (218th in leap years) in the Gregorian calendar. ... Year 1861 (MDCCCLXI) was a common year starting on Tuesday (link will display the full calendar) of the Gregorian calendar (or a common year starting on Sunday of the 12-day slower Julian calendar). ... The Revenue Act of 1861 proposed that there shall be levied, collected, and paid, upon annual income of every person residing in the U.S. whether derived from any kind of property, or from any professional trade, employment, or vocation carried on in the United States or elsewhere, or from... The Supreme Court Building, Washington, D.C. The Supreme Court Building, Washington, D.C., (large image) The Supreme Court of the United States, located in Washington, D.C., is the highest court (see supreme court) in the United States; that is, it has ultimate judicial authority within the United States... Holding --- Court membership Case opinions Laws applied --- Pollock v. ... This article does not cite any references or sources. ... For other senses of this word, see interest (disambiguation). ... It has been suggested that ex-dividend date be merged into this article or section. ...

The first federal statute imposing the legal obligation to pay a federal income tax was adopted by Congress in 1862, to pay for the Civil War. The 1862 law levied a 3% tax on incomes above $600, rising to 5% for incomes above $10,000. Rates were raised in 1864. This income tax was repealed in 1872, but a new income tax statute was enacted as part of the 1894 Tariff Act.^[14] However, in 1895 the Supreme Court struck down a portion of the statute as unconstitutional — specifically, the tax on income from property — as an unapportioned direct tax. Tax rates around the world Tax revenue as % of GDP Economic policy Monetary policy Central bank Money supply Fiscal policy Spending Deficit Debt Trade policy Tariff Trade agreement Finance Financial market Financial market participants Corporate Personal Public Banking Regulation An income tax is a tax levied on the financial income...

At that time, the United States Constitution specified that Congress could impose a "direct" tax only if the law apportioned that tax among the states according to each state's census population.^[15] In its 1895 decision the Supreme Court held that a tax on income from property was a direct tax under the Constitution, and so had to be apportioned. The apportionment requirement made income taxes on property practically impossible, and Congress did not want to limit the income tax solely to a tax on wages. This led to the Sixteenth Amendment to the US Constitution. Wikisource has original text related to this article: The United States Constitution The United States Constitution is the supreme law of the United States of America. ... The United States Census is a decennial census mandated by the United States Constitution. ... Amendment XVI in the National Archives Amendment XVI (the Sixteenth Amendment) of the United States Constitution was ratified on February 3, 1913. ...

16th Amendment

In response to the Supreme Court, Congress proposed the Sixteenth Amendment (ratified by the requisite number of states in 1913), which states: Amendment XVI in the National Archives Amendment XVI (the Sixteenth Amendment) of the United States Constitution was ratified on February 3, 1913. ... Amendment XVI in the National Archives Amendment XVI (the Sixteenth Amendment) of the United States Constitution was ratified on February 3, 1913. ...

The Supreme Court in Brushaber v. Union Pacific Railroad, 240 U.S. 1 (1916), indicated that the amendment did not expand the federal government's existing power to tax income (meaning profit or gain from any source) but rather removed the possibility of classifying an income tax as a direct tax on the basis of the source of the income. The Amendment removed the need for the income tax to be apportioned among the states on the basis of population. Income taxes are required, however, to abide by the law of geographical uniformity. Federal courts Supreme Court Circuit Courts of Appeal District Courts Elections Presidential elections Midterm elections Political Parties Democratic Republican Third parties State & Local government Governors Legislatures (List) State Courts Local Government Other countries Atlas US Government Portal The Supreme Court of the United States (sometimes colloquially referred to by the... Holding It is erroneous to assume that the 16th Amendment provides for a hitherto unknown power of taxation; that is, a power to levy an income tax which, although direct, should not be subject to the regulation of apportionment applicable to all other direct taxes. ...

Congress re-adopted the previously unconstitutional income tax that same year, levying a 1% tax on net personal incomes above $3,000, with a 6% surtax on incomes above $500,000. References in the Internal Revenue Code to corporate earnings and profit before and after February 1913 for characterization as dividend for shareholders are there to provide a belts and suspenders protection for the validity of the tax on shareholders. By 1918, the top rate of the income tax was increased to 77% (on income over $1,000,000) to finance World War I. The top marginal tax rate was reduced to 58% in 1922, to 25% in 1925, and finally to 24% in 1929. In 1932 the top marginal tax rate was increased to 63% during the Great Depression and steadily increased, reaching 94% (on all income over $200,000) in 1945. Top marginal tax rates stayed near or above 90% until 1964 when the top marginal tax rate was lowered to 70%. The top marginal tax rate was lowered to 50% in 1982 and eventually to 28% in 1988. During World War II, Congress introduced payroll withholding and quarterly tax payments. â€œThe Great War â€ redirects here. ... For other uses, see The Great Depression (disambiguation). ...

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 ⅔ of the population [3]. The lowest earning workers, especially those with dependents, pay no income taxes as a group and actually get a small subsidy from the federal government because of child credits and the Earned Income Tax Credit. Congress in Joint Session. ... The United States federal Earned Income Tax Credit (EITC) is a refundable tax credit that reduces or eliminates the taxes that low-income married or single working people pay (such as payroll taxes) and also frequently operates as a wage subsidy for low-income workers. ...

Some lower income individuals pay a proportionately higher share of payroll taxes for Social Security and Medicare than do some higher income individuals in terms of the effective tax rate. All income earned up to a point, adjusted annually for inflation ($94,200 for the year 2006 and $97,500 for the year 2007) is taxed at 7.65% (consisting of the 6.2% Social Security tax and the 1.45% Medicare tax) on the employee with an addition 7.65% in tax incurred by the employer. The annual limitation amount is sometimes called the "Social Security tax wage base amount" or "Contribution and Benefit Base." Above the annual limit amount, only the 1.45% Medicare tax is imposed. In terms of the effective rate, this means that a worker earning $20,000 for 2006 pays at a 7.65% effective rate ($1,530) while a worker earning $200,000 pays at an effective rate of about 4.37% ($8,740). Social Security, in the United States, currently refers to the Federal Old-Age, Survivors, and Disability Insurance (OASDI) program. ... President Johnson signing the Medicare amendment. ...

Self employed people pay the entire 15.3%, although they are allowed to deduct one-half of this amount from their total income when they file income taxes.^[16] Above these payroll taxes presumably pay into the Social Security Trust Fund and Medicare Trust Funds that they will then draw on when the worker grows older. The Social Security Trust Fund is the United States federal governments means of accounting for workers paid-in contributions that are in excess of current payments. ...

The federal government is now financed primarily by personal and corporate income taxes. While it was originally funded via tariffs upon imported goods, tariffs now represent only a minor portion of federal revenues. There are also non-tax fees 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. Tax rates around the world Tax revenue as % of GDP Economic policy Monetary policy Central bank Money supply Fiscal policy Spending Deficit Debt Trade policy Tariff Trade agreement Finance Financial market Financial market participants Corporate Personal Public Banking Regulation An income tax is a tax levied on the financial income... Tax rates around the world Tax revenue as % of GDP Economic policy Monetary policy Central bank Money supply Fiscal policy Spending Deficit Debt Trade policy Tariff Trade agreement Finance Financial market Financial market participants Corporate Personal Public Banking Regulation For other uses of this word, see tariff (disambiguation). ... In common law legal systems, a trust is a relationship in which a person or entity (the trustee) has legal control over certain property (the trust property or trust corpus), but is bound by a fiduciary duty to exercise that legal control for the benefit of someone else (the beneficiary... It has been suggested that this article or section be merged into Ticket (admission). ... For the Canadian musical group, see Air Traffic Control (band). ... Look up IOU in Wiktionary, the free dictionary. ... It has been suggested that Accounting scholarship be merged into this article or section. ...

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. Net long-term capital gains as well as certain types of qualified dividend income are taxed preferentially. Social Security, in the United States, currently refers to the Federal Old-Age, Survivors, and Disability Insurance (OASDI) program. ... President Johnson signing the Medicare amendment. ... In finance, a capital gain is profit that results from the appreciation of a capital asset over its purchase price. ... It has been suggested that ex-dividend date be merged into this article or section. ...

Modern interpretations

The modern interpretation of the Sixteenth Amendment taxation power can be found in Commissioner v. Glenshaw Glass Co. 348 U.S. 426 (1955). In that case, a taxpayer had received an award of punitive damages from a competitor, and sought to avoid paying taxes on that award. The Court observed that Congress, in imposing the income tax, had defined income to include: Holding --- Court membership Case opinions Laws applied --- Commissioner v. ...

The Court held that "this language was used by Congress to exert in this field the full measure of its taxing power", id., and that "the Court has given a liberal construction to this broad phraseology in recognition of the intention of Congress to tax all gains except those specifically exempted."^[18]

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." Id. at 431. The defendant in that case suggested that a 1954 rewording of the tax code had limited the income that could be taxed, a position which the Court rejected, stating:

Tax statutes passed after the ratification of the Sixteenth Amendment in 1913 are sometimes referred to as the "modern" tax statutes. Hundreds of Congressional acts have been passed since 1913, as well as several codifications (i.e., topical reorganizations) of the statutes (see Codification). In law, codification is the process of collecting and restating the law of a jurisdiction in certain areas, usually by subject, forming the legal code. ...

Central Illinois Public Service Co. v. United States, 435 U.S. 21 (1978), confirmed that wages and income are not identical as far as taxes on income are concerned, because income includes not only wages, but any other gains as well. The Court in that case noted that in enacting taxation legislation, Congress "chose not to return to the inclusive language of the Tariff Act of 1913, but, specifically, 'in the interest of simplicity and ease of administration,' confined the obligation to withhold [income taxes] to 'salaries, wages, and other forms of compensation for personal services'" and that "committee reports ... stated consistently that 'wages' meant remuneration 'if paid for services performed by an employee for his employer'".^[20]

Other courts have noted this distinction in upholding the taxation not only of wages, but also of personal gain derived from other sources - but there are limitations to the reach of income taxation. For example, in Conner v. United States, 303 F. Supp. 1187 (S.D. Tex. 1969), aff’d in part and rev’d in part, 439 F.2d 974 (5th Cir. 1971), 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. The 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".

Estate & Gift Tax

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. This article is about Estate tax in the United States. ... Tax rates around the world Tax revenue as % of GDP Part of the Taxation series A gift tax is a transfer tax imposed on certain transfers of a gratuitous nature where there is no consideration or the transfer is for less than market value. ... In the United States, the Progressive Era was a period of reform which lasted from the 1890s through the 1920s. ...

In the 1880s and 1890s many states passed inheritance taxes, which taxed the donees on the receipt of their inheritance. While many objected to the application of an inheritance tax, some including Andrew Carnegie and John D. Rockefeller supported increases in the taxation of inheritance.^[21] Andrew Carnegie (last name pronounced IPA: )[1] (November 25, 1835 â€“ August 11, 1919) was a Scottish industrialist, businessman, a major philanthropist, and the founder of Pittsburghs Carnegie Steel Company which later became U.S. Steel. ... John Davison Rockefeller, Sr. ...

At the beginning of the 20th century President Theodore Roosevelt advocated the application of a progressive inheritance tax on the federal level.^[22] Theodore Roosevelt, Jr. ...

In 1916, Congress adopted the present federal estate tax, which instead of taxing the wealth that a donee inherited as occurred in the state inheritance taxes it taxed the wealth of a donor's estate upon transfer.

Later, Congress passed the Revenue Act of 1924, which imposed the gift tax, a tax on gifts given by the donor. The United States Revenue Act of 1924 cut federal tax rates and established the U.S. Board of Tax Appeals, which was later renamed the Tax Court of the United States in 1942. ...

In 1948 Congress allowed marital deductions for the estate and the gift tax. Congress later expanded this deduction in 1981 to an unlimited amount for gifts between spouses.

Today, the estate tax is a tax imposed on the transfer of the "taxable estate" of a deceased person, whether such property is transferred via a will or according to the state laws of intestacy. The estate tax is one part of the Unified Gift and Estate Tax system in the United States. The other part of the system, the gift tax, imposes a tax on transfers of property during a person's life; the gift tax prevents avoidance of the estate tax should a person want to give away his/her estate just before dying. Estate is a term used in the common law. ... In the common law, a will or testament is a document by which a person (the testator) regulates the rights of others over his property or family after death. ... Intestacy is the condition of the estate of a person who dies owning property greater than the sum of his or her enforceable debts and funeral expenses without having made a valid will or other binding declaration; alternatively where such a will or declaration has been made, but only applies...

In addition to the federal government, many states also impose an estate tax, with the state version called either an estate tax or an inheritance tax. Since the 1990s, the term "death tax" has been widely used by those who want to eliminate the estate tax, because the terminology used in discussing a political issue affects popular opinion.^[23] The examples and perspective in this article or section may not represent a worldwide view. ... Estate tax is a form of tax imposed in the United States upon the transfer of the property of the estate of a deceased person that is left to a living person or organization. ...

If an asset is left to a spouse or a charitable organization, the tax usually does not apply. The tax is imposed on other transfers of property made as an incident of the death of the owner, such as a transfer of property from an intestate estate or trust, or the payment of certain life insurance benefits or financial account sums to beneficiaries. Intestacy refers to the body of common law that determines who is entitled to the property of a dead person in the absence of a last will and testament or other binding declaration. ... Life insurance or life assurance is a contract between the policy owner and the insurer, where the insurer agrees to pay a sum of money upon the occurrence of the policy owners death. ...

Payroll tax

Prior to the Great Depression, the following economic problems were considered great hazards to working-class Americans: For other uses, see FICA (disambiguation). ... For other uses, see The Great Depression (disambiguation). ...

This page is a candidate for speedy deletion. ... This page is a candidate for speedy deletion. ... Mental retardation is a term for a pattern of persistently slow learning of basic motor and language skills (milestones) during childhood, and a significantly below-normal global intellectual capacity as an adult. ...

Creation

In the 1930s, the New Deal introduced Social Security to rectify the first three problems (retirement, injury-induced disability, or congenital disability). It introduced the FICA tax as the means to pay for Social Security. The New Deal was the title President Franklin D. Roosevelt gave to the series of programs he initiated between 1933 and 1938 with the goal of providing relief, recovery, and reform (3 Rs) to the people and economy of the United States during the Great Depression. ... Social Security, in the United States, currently refers to the Federal Old-Age, Survivors, and Disability Insurance (OASDI) program. ...

In the 1960s, Medicare was introduced to rectify the fourth problem (health care for the elderly). The FICA tax was increased in order to pay for this expense. President Johnson signing the Medicare amendment. ...

Development

Franklin Roosevelt introduced the Social Security (FICA) Program. FICA began with voluntary participation, participants would have to pay 1% of the first $1,400 of their annual incomes into the Program, the money the participants elected to put into the Program would be deductible from their income for tax purposes each year, the money the participants put into the independent "Trust Fund" rather than into the General operating fund, and therefore, would only be used to fund the Social Security Retirement Program, and no other Government program, and, the annuity payments to the retirees would never be taxed as income.^{[citation needed]}

During the Lyndon Johnson adminisitration Social Security moved from the trust fund to the general fund.^{[citation needed]} Participants may not have an income tax deduction for Social Security withholding.^{[citation needed]} Immigrants became eligible for Social Security benefits during the Carter administration.^{[citation needed]} During the Clinton administration Social Security annuities became taxable.^{[citation needed]}

Alternative minimum tax

The alternative minimum tax was introduced by the Tax Reform Act of 1969,^[24] and became operative in 1970. It was intended to target 155 high-income households that had been eligible for so many tax benefits that they owed little or no income tax under the tax code of the time.^[25] Alternative Minimum Tax (AMT) is a tax system that is part of the federal income tax system in the United States. ... The United States Tax Reform Act of 1969 established individual and corporate minimum taxes, established a new tax schedule for single taxpayers, and lowered the maximum rate on earned income from 70 percent to 50 percent. ...

In recent years, the AMT has been under increased attention. Because the AMT is not indexed to inflation and recent tax cuts,^[26]^[27] an increasing number of middle-income taxpayers have been finding themselves subject to this tax.

In 2006, the IRS's National Taxpayer Advocate's report highlighted the AMT as the single most serious problem with the tax code. The advocate noted that the AMT punishes taxpayers for having children or living in a high-tax state, and that the complexity of the AMT leads to most taxpayers who owe AMT not realizing it until preparing their returns or being notified by the IRS. [4]

Capital gains tax

The origins of the income tax on gains from capital assets did not distinguish capital gains from ordinary income. From 1913 to 1921, income from capital gains were taxed at ordinary rates, initially up to a maximum rate of 7 percent.^[28] Tax rates around the world Tax revenue as % of GDP Part of the Taxation series In the United States, individuals and corporations pay income tax on the net total of all their capital gains just as they do on other sorts of income, but the tax rate for individuals is...

Congress began to distinguish the taxation of capital gains from the taxation of ordinary income according to the holding period of the asset with the Revenue Act of 1921, allowed a tax rate of 12.5 percent gain for assets held at least two years.^[28] The United States Revenue Act of 1921 was the first Republican stab at tax reduction following their landslide victory in the 1920 federal elections. ...

In addition to different tax rates depending on holding period, Congress began excluding certain percentages of capital gains depending on holding period. From 1934 to 1941, taxpayers could exclude percentages of gains that varied with the holding period: 20, 40, 60, and 70 percent of gains were excluded on assets held 1, 2, 5, and 10 years, respectively.^[28] Beginning in 1942, taxpayers could exclude 50 percent of capital gains from income on assets held at least six months or elect a 25 percent alternative tax rate if their ordinary tax rate exceeded 50 percent.^[28]

Capital gains tax rates were significantly increased in the 1969 and 1976 Tax Reform Acts.^[28] The United States Tax Reform Act of 1969 established individual and corporate minimum taxes, established a new tax schedule for single taxpayers, and lowered the maximum rate on earned income from 70 percent to 50 percent. ... The Tax Reform Act of 1976 was passed by the United States Congress in September of 1976, and signed into law by President Gerald Ford on October 4, 1976, becoming public law 94-455. ...

The 1970s and 80s saw a period of oscillating capital gains tax rates. In 1978, Congress reduced capital gains tax rates by eliminating the minimum tax on excluded gains and increasing the exclusion to 60 percent, thereby reducing the maximum rate to 28 percent.^[28] The 1981 tax rate reductions further reduced capital gains rates to a maximum of 20 percent.

Later in the 1980s Congress began increasing the capital gains tax rate and repealing the exclusion of capital gains. The Tax Reform Act of 1986 repealed the exclusion from income that provided for tax-exemption of long term capital gains, raising the maximum rate to 28 percent (33 percent for taxpayers subject to phaseouts).^[28] When the top ordinary tax rates were increased by the 1990 and 1993 budget acts, an alternative tax rate of 28 percent was provided.^[28] Effective tax rates exceeded 28 percent for many high-income taxpayers, however, because of interactions with other tax provisions.^[28] President Ronald Reagan signs the Tax Reform Act of 1986 on the South Lawn. ...

The end of the 1990s and the beginning of the present century heralded major reductions in taxing the income from gains on capital assets. Lower rates for 18-month and five-year assets were adopted in 1997 with the Taxpayer Relief Act of 1997.^[28] In 2001, President George W. Bush signed the Economic Growth and Tax Relief Reconciliation Act of 2001, into law as part of a $1.35 trillion tax cut program. The Taxpayer Relief Act of 1997 reduced several federal taxes in the United States. ... George Walker Bush (born July 6, 1946) is the forty-third and current President of the United States of America, originally inaugurated on January 20, 2001. ... The Economic Growth and Tax Relief Reconciliation Act of 2001 was a sweeping piece of tax legislation in the United States. ...

Corporate tax

Contents