By John Copeland
Comedian Paula Poundstone says, “The wages of sin are death, but by the time taxes are taken out, it’s just sort of a tired feeling.”
April 15 is a day we tend to dread because it is the income tax deadline. For the past two years, however, the tax filing deadline has been pushed back several days because April 15 fell on a weekend and the following weekday conflicted with Emancipation Day, a legal holiday in Washington, D.C.
The 2019 tax season is bound to be an interesting one, since it’s the first following the massive overhaul that came into play for 2018. You may have read or heard on the news that this year many folks are being surprised at receiving a smaller tax refund or even owing the IRS money.
But what about taxes themselves? During all the gathering of receipts and filing of tax forms, have you ever paused and wondered what the story is behind income taxes? Just as some of our holidays still resonate with echoes from the Civil War, so does our obligation to pay income taxes.
Early in America’s history our nation had few taxes. In fact, taxes have never been popular in the US. Remember the Boston Tea Party?
For the first 11 years of nationhood, 1791 to 1802, the United States funded the government from taxes on distilled spirits, carriages, refined sugar, tobacco and snuff, property sold at auction, corporate bonds, and slaves. But in the early days of the 1800s, the high cost of the War of 1812 brought about the United States’ first sales taxes. In 1817, Congress did away with all internal taxes and instead relied on tariffs on imported goods to fund the government.
In 1862, Congress was faced with a decision on how to finance the rising costs of fighting the Civil War. The Congressional Act of 1862 established the office of Commissioner of Internal Revenue, and the Internal Revenue was also empowered to enforce the tax laws through seizure of property, income and legal prosecution. The act also enacted the nation’s first income tax legislation and the ancestor of our modern income taxes.
This first income tax law was based on the principle of graduated taxation and withholding income. In the northern states, during the Civil War, a person earning from $600 to $10,000 per year paid taxes at the rate of 3 percent. Those with incomes of more than $10,000 paid taxes at a higher rate. Congress was quick to follow up with additional sales and excise taxes, and the “inheritance” tax also made its debut.
By the end of the War Between the States, IRS collections had reached their highest point in our nation’s 90-year history — more than $310 million, an amount that would not be equaled until 1911.
After the Civil War, in 1872, Congress tried to reform taxation by eliminating the individual income tax and relied once again to taxing tobacco and distilled spirits. But this did not fill the coffers. In 1894, Congress again revived income taxes but faced opposition.
In 1895, a case asserting the unfairness of income taxes was brought before the U.S. Supreme Court. The justices ruled that the income tax was unconstitutional because it was not apportioned among the states in conformity with the Constitution.
But give those crafty politicians in Congress a little time to figure out how to get around a hurdle and they will come up with something.
In 1913, Congress passed the 16th Amendment to the Constitution, making the income tax a permanent fixture in the American tax system. The amendment gave Congress and the IRS the legal authority to tax income and resulted next in the passage of a revenue law that taxed incomes of both individuals and corporations, providing truth to the proverb, “In this world nothing can be said to be certain, except death and taxes.”
Do you know who said that?
It is usually attributed to Benjamin Franklin, who, in 1789, wrote in a letter, “Our new Constitution is now established, and has an appearance that promises permanency; but in this world nothing can be said to be certain, except death and taxes.” However, “The Yale Book of Quotations,” quotes “Tis impossible to be sure of any thing but Death and Taxes,” from Christopher Bullock’s “The Cobler of Preston,” published in 1716. “The Yale Book of Quotations” also records “Death and Taxes, they are certain,” from Edward Ward’s “The Dancing Devils,” published in 1724. It also accredits “Things as certain as death and taxes, can be more firmly believed” to Daniel Defoe in “The Political History of the Devil,” published in 1726.
April 15 also has another historical distinction. It is the day that President Lincoln died after being shot by John Wilkes Booth at Ford’s Theater the previous evening.
