Wolters Kluwer Tax & Accounting takes a look at a timeline of the evolution of taxation in the United States

June 28, 2021– (COMMERCIAL THREAD) – Taxation and accounting of Wolters Kluwer:

What: Taxes have played a major role in the history of the United States. The American Revolution was largely the result of Britain’s imposition of colonial taxes without the colonies having representation in Parliament. The Constitution arose in large part because of the failure of the Articles of Confederation to give the federal government the power to tax. Federal income tax required a further constitutional amendment to become the law of the land.

WhyMost of the new presidents in recent history have campaigned, proposed and frequently passed major changes to income tax law during their first two years in office. With the 4e the July holidays approaching, a look back at the important tax developments over the course of history:

  • At the start of the colonial period, colonial assemblies and royal governors addressed tax matters for each colony with little involvement from Britain

  • From 1756 to 1776, the French and Indian War caused great debts for Great Britain. Since the war helped ensure colonial security, Britain tried to get the colonies to pay these debts through sugar taxes, stamps for printed matter, and duties on glass, paint, etc. lead, paper and tea. After growing colonial opposition to “taxation without representation,” many of these taxes were repealed, with the exception of the tea tax. The Boston Tea Party in 1773 resulted in new British punitive legislation that led the colonies to unify in the race for independence

  • From 1776 to 1787, under the Articles of Confederation, the federal government had no taxing power and looked to loans or financial support from the new states.

  • In 1787, the Constitution was adopted and granted the national legislature the exclusive power to impose tariffs, as well as the flexibility to levy excise duties and levy taxes on individual citizens.

  • From 1787 to 1862, the federal government relied primarily on tariffs to finance spending

  • In 1862 an income tax was enacted as an emergency measure to help finance the Civil War, which ended in 1872

  • In 1894, a federal income tax of two percent was enacted, but was ruled unconstitutional by the Supreme Court in Pollack v. Farmer’s Loan and Trust in 1895

  • In 1913, the 16e The constitutional amendment was ratified allowing an income tax, and the Income Act of 1913 was enacted, imposing an income tax of one percent on one in 271 citizens and drastically reducing tariffs.

  • In 1939, tax laws were codified in the Internal Revenue Code and one in 32 citizens paid 4% income tax.

  • In 1943, the payroll deduction was introduced to help pay for World War II, with one in three citizens owing income tax.

  • In 1954, the Internal Revenue Code of 1954 was enacted, overhauling the income tax system with 3,000 tax rule changes

  • The 1986 Tax Reform Act was the first major effort to simplify the Tax Code

  • From 1986 to the present, nearly all new administrations have proposed and were able to enact significant tax legislation during their first two years in office, resulting in steady changes in U.S. income tax and increasing tax complexity.

  • Federal government still imposes tariffs on imported tea

who: Tax Expert Mark Luscombe, JD, LL.M, CPA, Senior Federal Tax Analyst at Wolters Kluwer Taxation and Accounting, can help discuss the history of US taxation.

PLEASE NOTE: The content of this article is designed to provide accurate and authoritative information as it relates to the topic being discussed. The information is provided with the understanding that Wolters Kluwer Tax & Accounting is not engaged in the provision of legal, accounting or other professional services.

Contact: To arrange an interview with Mark Luscombe or other federal and state tax experts at Wolters Kluwer Tax & Accounting on this or any other tax topic, please contact Bart Lipinski.

See the source version on businesswire.com: https://www.businesswire.com/news/home/20210628005633/en/


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