I said in the email that there were rumors that said people are able to take a deduction for donations to Haiti on this year’s (2009) tax return – instead of having to wait until you file your 2010 tax return. Obviously this would be quite an reason to donate for people who desired to donate a part of their wealth to the victims of disaster in Haiti to assist them in getting back on their feet! Are you feeling the pressure of today’s taxes? Right now you can get $100 off your tax return for Cary NC Tax Preparation needs!
Well, the rumors I heard and that you could have heard are TRUE! On January 22nd, the IRS created a special tax relief provision that allows contributions for the Haiti relief made after January 11, 2010 and before March 1, 2010, will be taken from your 2009 tax return. Or, you could choose to take the deduction to your 2010 tax return instead, just in case you didn’t desire to take advantage of the great incentive to assist those in need.
The inhabitants of Haiti are hurting very badly. Earthquake disasters cannot be avoided, and are well, devastating. Earthquakes and other types of environmental disaster create huge levels of destruction and homelessness. Entire families are without food or clean water. In many cases these families do not even have the capability to acquire any level of stable living environment without the assistance of other countries’ efforts (funded by donators like you!). Do your part today and donate whatever you can to assist the people of Haiti. I would greatly appreciate the extended effort, and I’m sure every one of the struggling people in Haiti would appreciate it to!
Stay tuned for more articles and information regarding tax season, taxes, and Haiti!
W. Marc Gilfillan, CPA, NC, individual and business CPA and Tax expert, shares about the history of taxes…
1861 – After Lincoln was elected, the South walks out of Congress and form the Confederacy with a rewritten constitution to check the power of their newly formed country to tax.
1862 – The first US income tax is instituted to help finance the sudden and massive debts of the Civil War. If you’re feeling the pressure with today’s taxes, call a CPA for Tax Preparation in Raleigh, NC for all your tax-related needs!
1872 – The income tax is abolished.
1894 – Congress passes an income tax as a result of southerners complaining that large reliance on tariffs pushes up the price of imports for farmers and consumers. Go here if you want help from a modern-day CPA firm in Raleigh, NC.
1895 – The US Supreme Court holds the idea that the 1894 income tax law conflicts with the US Constitution’s bars on insituting direct taxes.
1913 – The 16th Amendment is passed and removes that bar and Congress establishes an income tax system.
1917 – World War I financial needs push up tax rates, with the largest rate reaching seventy-seven percent in 1918.
1924 – Publication of the names of taxpayers and the amount of taxes they owe fails to achieve the goal of forcing payments and the practice ends.
1942 – Prior to World War II, the lowest income level for filing income tax excluded most wage earners. However, the war’s cost pushed the threshold down the income ladder and sent the top rate to 94% prior to the war being over.
1943 – In order to enforce compliance from the hugely increased amount of taxpayers, Congress creates tax withholding from wages, effectively turning employers into tax collectors.
In the 1940s Justice Jackson of the Supreme Court, former chief counsel of IRS, boasted about how honest Americans were in reporting their income taxes. It was an honor system – there were only a few informative returns. Open resistors to the taxes were few and the underground economy was relatively small.
1962 – IRS Commissioner Caplin stated “no other nation in the world has ever equaled this record of voluntary compliance. It is a tribute to our people, their tradition of honesty, and their high sense of responsibility in supporting our government.”
1982 – Chief Justice Neely said – “cheating on federal and state income tax is all pervasive in all classes of society; except among the compulsively honest, cheating usually occurs in direct proportion to opportunity.”
Stay tuned for Part 3 of the Timeline of US Tax Policy!
W. Marc Gilfillan, CPA, NC, individual and business CPA and Tax expert, shares about the history of taxes…
Between 1868 to 1913, about ninety percent of the national government’s revenue was derived from tax on whiskey and tobacco. While the Civil War was occurring the government instituted a short income tax, but it wasn’t until 1913 that the sixteenth Amendment was passed and enabled Congress to tax incomes “from whatever sources derived.” The initial 1040’s were due on March 1, 1914. There wasn’t any money withheld from paychecks and no money was sent in with the return. Each taxpayer’s computations were checked by IRS field agents and a bill mailed to the taxpayer on June 1st.
1766 – Leaders of the colonies got together to protest British taxes under the Stamp Act. This Stamp Act Congress, as it was called, marked the start of the American independence movement and the beginning of the modern U.S.
1782 – The first Congress under the Articles of Confederation met. This Congress did not have any powers of taxation.
1789 – America gave a new Congress taxing powers. Without taxing powers, the first Congress of the United States scantly lasted 7 years prior to being declared a failed attempt; the 2nd Congress, granted taxing powers, is currently functioning after almost 300 years. If you’re feeling the pressure with today’s taxes, call a CPA for Tax Preparation in Raleigh, NC for all your tax-related needs!
1792 – Alexander Hamilton coerces Congress to pass an excise tax on whiskey to raise revenue and steady the increase in alcohol consumption. In the western frontier whiskey was the traditional mode of exchange, and the 25% tax was harsh. By 1794 the region was openly in rebellion. The father of the Internal Revenue Service was created to give the tax enforcement. Go here if you want help from a modern-day CPA firm in Raleigh, NC.
1832 – The national debt that remained after the Revolutionary War and the War of 1812 is finally accounted for and paid. The South sees no reason to continue high import taxes that raise the price on goods for Southern consumers and increase the number of industrial monopolies in the North.
1850 – John C. Calhoun of South Carolina tells Congress that the South might secede from the Union due to the fact that the overly oppressive taxing of the South raised funds that were spent in the North, causing a great change in money from the South to the North.
Stay tuned for Parts 2 and 3 of the Timeline of US Tax Policy!
W. Marc Gilfillan, CPA, NC, individual and business CPA and Tax expert, shares about the history of taxes…
“Slavery – the one cause of the Civil War.” – John Stuart Mill, 1862
Could there be any doubtful thoughts about it? Certainly the American Civil War was about slavery… wasn’t it? Well actually, one of the greatest popular myths in our history is that the Civil War began over the slavery issue and that Lincoln, the Great Emancipator, used a terrible struggle to break the claims of bonding that enslaved over 3 million black Americans. Right before the war, the South had all it could have wanted.
In 1860, Southerners controlled the Supreme Court and Lincoln and Congress were beginning the process of passing a constitutional amendment to protect slavery for all time! What happened?
Let’s rewind the time back to the year 1832. By 1832 the national debt left from the War of 1812 had been re-paid and Southerners didn’t see a need to continue the exorbitant import taxes that seemed to only raise price tags for the South’s consumers. Either the South had to pay high import taxes on imported goods or it purchased Northern manufactured goods at terribly overpriced prices. In either case, Southern money ended up in the North. To say the least, the South was not happy with this arrangement. If you’re feeling the pressure with today’s taxes, call a CPA for Tax Preparation in Raleigh, NC for all your tax-related needs!
Consequently, in 1832 a convention was held in South Carolina to nullify these federal import taxes. The convention declared the tax was unconstitutional and gave the governor the power to to resist the enforcing of these taxes instituted by the federal government. It looked like a civil war was in the making. Cool heads won over, however, and the Great Compromise of 1833 reduced import taxes over the next few years to an area the South could tolerate. Go here if you want help with a modern-day Tax Return in Raleigh, NC.
Over the ensuing years, however, Northern commercial and manufacturer interests forced through Congress new taxes that again stressed Southern planters and made Northern manufacturers become rich. In 1850, John C. Calhoun, the South’s greatest outstanding spokesperson, gave a speech to Congress. It spoke of three grievances of the South that may cause secession from the Union and war. The first two involved fears about the erosion of power of the South in general and the the power of state government as well.
The third, and only solid complaint, was about tax policy. In Calhoun’s eyes, federal import taxes was a class legislation against the South. Huge amounts of taxation on the South raised funds that were spent in the North. The focus of economic life in the country was steadily changing heavily to the North. Calhoun threatened secession if the taxes were not lowered. But what of the slavery issue? Well, during his run for the presidency in 1860, Lincoln repeatedly said he would not interfere with slavery in the South. Truly, the vast majority of Northerners didn’t really care about black men in bondage, any more than they cared about the Indian in the West or poor uneducated workers in factories. By and large many black slaves got better treatment and more compassion than their working-class counterparts in the North. Lincoln, actually, promised Southern plantation-owners that run-away slaves would be returned. The Congress and then the Supreme Court (Dred Scott decision) continually affirmed that slavery was here to stay.
But, as soon as Lincoln was placed in office and Congress came together in 1861, they enacted new high import tariffs. Slavery wasn’t an issue – higher import taxes were. In his inaugural address Lincoln said he would go get the customs in the South even if there happened to be a secession!
Fort Sumter, near the entrance of the Charleston Harbor, started to fill with Union soldiers to enforce the collection of the new taxes. The Civil War began in 1861 when South Carolinians fired on the federal garrison at Fort Sumter. The conflict had been brewing for decades – but it wasn’t over the slaves. It was over taxes.
Two years after that, Lincoln issued the Emancipation Proclamation, and then only after several military defeats, as the last resort to rally the North to a noble cause. With respect to the slave issue – most the North did not care much about black people in bondage, no more than they cared about Indians to the west and the impoverished uneducated peasants in the factories. By and large, many black slaves received better treatment and greater compassion than their impoverished counterparts in the North.
W. Marc Gilfillan, CPA, NC, individual and business CPA and Tax expert, shares about the history of taxes…
So, what happened with taxes in the United States?
US tax makers have been collecting what they have sown for a long time. Our honor system has been replaced by a monster in which all taxpayers are under watch because of the heavy threat of evading their taxes. Basically, compulsion has replaced consent. Honor has been replaced with espionage. If you’re feeling the pressure with today’s taxes, call a Cary NC CPA for all your tax-related needs!
In the 1950s, there was not a bank in the US that informed the IRS about the affairs of citizens who went to that bank, interest rates went unreported, withdrawals of cash weren’t reported, and nothing that went through any account was photographed. In addition to this, real estate transactions weren’t reported, stock transactions were not reported, dividends were not reported, income from other sources (Form 1099) was not reported, and US Customs didn’t require a declaration of cash carried. Go here if you want help from a modern-day Tax Preparation in Cary, NC.
Before it was espionage, it was an honor system, and it functioned quite well. The erosion that occurred over the last fifty years to the present is that anything of any fiscal significance is now reported.
Adam Smith said that people will evade taxes and tax laws shown little respect when there is a general suspicion of a lot of unnecessary expense and great misspending of the public revenue. In other words, $500 toliet seats, huge grants to study the sex lives of ants, etc.
For the sake of catching a handful of tax resisters and evaders in the 1950s Congress spawned a tax monster of the US tax system that more and more taxpayers try to bypass. As a general rule, mass tax evasion is a clear signal that a government’s tax system isn’t working. Citizens will pay taxes, even income taxes, if the rates are reasonable.
W. Marc Gilfillan, CPA, NC, individual and business CPA and Tax expert, shares about the history of taxes…
Mithridates the Great was the leader of a tiny nation near what is now Turkey. He had an amazing power to create discontent with disgruntled taxpayers. In 88 BC he organized a rebellion against the Romans. By promising 5 years of tax exemption to every city that joined his army, he gathered considerable support.
The Roman Senate quickly took swift action and told General Sulla to muster an army and restore Roman authority in the rebellious area. Sulla was victorious in suppressing the rebellion after a four year struggle. When the revolt was squashed, Sulla told the leaders of the disgruntled cities to come to Ephesus. At that place the citizens were to remit five years of back taxes and pay the general for the cost of the war.
To enforce this tax, Sulla created “special agents.” These special agents had the power to scourge and kill, which was plenty to cause most taxpayers cooperative. Up until this time there had been self-assessment tax collections, private tax collecting, military tax collection and the traditional government tax collectors. However, these new “special agents” were highly skillful specialized men with the ignorance of bureaucrats and the power of military executioners. Taxpayers lost any inclination to evade. If you’re feeling the pressure with today’s taxes, call a Tax Preparer in Raleigh, NC for all your tax-related needs!
Special Agents have been instituted several times in the past, surviving in the modern age as “fiscal police” or simply “special agents”, given the name initially instituted by Sulla over two thousand years past. As the use of the general’s special agents was put in to place in other provinces, soldiers came to realize that the rich spoils of war came from their commander, not the Roman Senate. Roman generals returned to Rome with the blind loyalty of their soldiers. Huge civil wars started as rivalling armies fought. With these semiprivate armies, establishment of a military dictator was inescapable. So, the Roman Republic dissolved. Royalty, dictators, and generals would now rule for the next 2000 years. Democracies and republics would not play a dominant role in civilization again until the 1800s. Go here if you want help with modern-day Tax Preparation in Cary, NC.
Keep an eye out for W. Marc Gilfillan’s next chapter in his History of Taxes series: Taxes and the American Revolution.
