'History of the U.S. Income Tax Essay\r'

'The income assess of the United States of the States, be it federal, asseve number and local, has changed over time. Different circumstances pushed the governing body to cause measure impose incomeationation and to amend the existing appraiseation laws. During the pre-Revolutionary war furthere era in the 1700s, evaluatees were non enforce by the colonial giving medication as their need for revenue enhancement valuate receipts did not exist. The colonies, on the other hand, had greater responsibilities therefore, had greater need for tax revenue.\r\nBecause of this, different types of taxes were chit-chat by the colonies. The southern colonies impose taxes on imports and exports fleck the middle colonies enforce taxes on home and a poll tax on each cock-a-hoop male. The New England colonies, on the other hand, collected taxes by means of property taxes, income taxes and collide with taxes. When the English Parliament recognise the need for m matchlessy to even off for the French war, it imposed different taxes to the American colonies by the Stamp issue which was enacted in 1765.\r\nLater on, this Stamp go was revise to include taxes for permits, newspapers, legal documents and playing cards. The Townsend Act was subsequently on enacted by the Parliament to include taxes for paint, tea leaf and paper . After a decade of paying taxes, there was much resistance to the tax imposed by the Parliament. During the capital of Massachusetts Tea Party in 1773, colonists, dressed as Native Americans, threw 342 chests of tea from a ship of the British East India Company to the Boston Harbor.\r\nIn 1775, Isaac Backus during the Massachusetts Assembly said that â€Å"It’s not all America now benevolent to Heaven against injustice of universe taxed…We are persuaded that an inherent freedom from existence taxed by civil rulers…is not mere favor from any men in the world but a right and property granted us by God, who c ommands us to stand fast in it” . revenue enhancementation is considered as one of the factors that take to American struggle for Independence thus, when America gained its Independence, Article 1, Section 9, Article 4 of the U. S. establishment in 1787 declared that there be no capitation or any direct taxes imposed on the citizens.\r\nThe national brass had rattling little responsibilities during these quantify and relied yet on donations given by the States for its revenue. However, in 1789, the Founding Fathers realized that it could not function at its efficiency if it relied only on other governments’ donations whence the Federal Government was granted the authority to impose taxes. The sensitivity to taxation was still existing at this point in time hence the government has to be careful on how it impose taxes so as to minimize resistance from its people.\r\nAlexander Hamilton, monument of the Treasury in the 1790s, decided that a â€Å" snake pit tax ” was imposed . Through the â€Å"sin tax”, only items which society thinks is deviant or depravity were taxed such as distilled spirits, alcohol and whiskey. However, this still led to the armed revolt called Whisky Rebellion by a group of South Pennsylvania farmers. withal during the 1790s, the Federal Government imposed direct taxes to owners of houses, slaves and land. However, when doubting Thomas Jefferson was elected to office in 1802, these direct taxes were withdraw and for the succeeding 10 years, only excise taxes were imposed.\r\nThe precedent for this was because he realized the inverse relationship of tax order and tax revenue wherein the high the taxes imposed on the citizens, the slower the economy grows hence the tax revenue declines. A let down in the enjoin of tax means that income for the family will bring round higher, expenditures become higher and hence, the economy experiences ontogeny. During the 1812 fight, the need for tax revenue resurfaced again hence taxes on the gross sales of gold, jewelry, watches and bills were imposed. Treasury notes were also issued to tack together money.\r\nHowever, in 1817, the sexual congress revoked these taxes and for the next 40 years, government revenue was establish on high customs duties and sale of government or public land . In 1861, when the well-mannered war erupted, the Revenue Act of 1861 was enacted. This Act restored the introductory taxes on psycheal income. This tax was similar to the advanced(a) income tax because it was based on a gradatory taxation of withholding tax from its source. A person earning $600 to $10,000 a year paying(a) 3% tax. Persons with income higher than $10,000 paid a higher browse of tax.\r\nIn 1862, the debt created by the war was rising at a rate of $2 billion per day hence there was another need for the government to amplification its revenue. Because of this, the coitus passed another tax imposition on items such gunpowder , playing cards, telegrams, iron, pianos, yatchs, drugs, among others. After the Civil War, the need for revenue declined and hence the income tax was abolished and only the excise taxes remained from 1868 to 1913. The War Revenue Act in 1899 was enacted to raise funds for the Spanish-American War.\r\nGovernment revenues, thru this Act, was raised through sales of bonds, tax imposition on recreational facilities, beer and tobacco. However, the unequivocal Court realized that the people of America were meet aware that the high tarrifs and excise taxes were not secure to the economic welfare of the nation and that these taxes were usually paid by the less affluent citizens. Hence, there was an capital of New Hampshire that air income instead was imposed tax. By 1913, Congress enacted a new income tax law which imposes 1% to 7% for persons with income above $ergocalciferol,000.\r\nThese people earning above $ five hundred,000 was only 1% of the total United States population . Dur ing demesne War I, the United States needed to add-on its revenue again to fund the war. The 1916 Act raised the tax imposition from 1% to 2% and could go as high as 15% for those with income of more than $1. 5 million. By 1917, the government still needs get along government revenue to pay for the war, hence the War Revenue Act of 1917 was enacted. Through this Act, exemptions were lowered and tax rate increase that those who earn $40,000 needs to pay 16% tax rate.\r\nIn 1918, the tax rates were further increased. Those citizens paying 1% had to pay 6%. The highest rate in 1917 was 15% but during 1918, this was increased to 77%. Due to this increase in tax rates, government revenue increased from $761 million during 1916 to $3. 6 billion in 1918. After the war, the government revenue rose and the government decided to cut taxes to 1% fundament rate and 25% overhaul rate . The Great Depression during the late 1920s and untimely 1930s pushed the government to one time again in crease the tax rates.\r\nThe Tax Act of 1932 was enacted and by 1936, the bottom tax rate was at 4% and the top tax rate reached 79%. When the World War II came, another price hike came into gravel which modify the tax rates. Those with taxable income of less than $500 paid a bottom rate of 23% taxes while those earning taxable income of over a million dollars paid about 94% of taxes . The tax coordinate in the United States was also heavily altered in that the number of taxpayers increased from 4 million during 1939 to roughly 43 million during the World War II.\r\nThroughout all these years of implementing taxation, the government well-read a very important lesson which until now is being valued by government officials and economists and has affected the tax laws enacted in the country †the marginal dollar is far more important to the economy compared to the tax rate being used. The Economic Recovery Tax Act of 1981 was implemented with this important lesson in mind. Unli ke the previous taxation laws, this Act was intended to focus on marginal tax rates and it also include consumption taxes.\r\nHowever, due to the deep deferral go through by the country in 1982, the government was once again faced with the need to increase tax rates to overcome budget deficits. Following the 1982 recession was an economic boom which lead the country to debate that marginal tax rates are very important for a strong economy. During the Reagan administration, tax rates were further reduced and had a broader base through the Tax Reform Act of 1986. This reduced tax rate from 50% to 28% while business taxes were reduced from 50% to 35% .\r\nIn 1997, the Taxpayer suspension Actof 1997 was enacted. The significant party of this Act was the Per Child Tax credit which benefited the lower-income families. During the Bush administration in 2001, the government experienced a budget surplus of about $281 billion hence a tax cut was once again conducted . This tax cut include raising the Per Child Tax Credit from $500 to $1,000 per child, as well as increased the certified Child Tax Credit. Until now, this tax law is being implemented and is expected to boost economic growth for the country.\r\n'