America has always had an uneasy history with taxes. Our revolution from the British Empire was inspired in part by the “No Taxation Without Representation” ethos, and citizens have always tried to keep their taxes as low as possible. However, the success of the government and its services depends on taxes, making them a necessity that people still grumble about. Abraham Lincoln created the first federal income tax law and the Internal Revenue Service in 1862 to help fund the Civil War. The federal income tax was repealed in 1872, only to be brought back in 1894…only to be repealed a year later. Finally, in 1913, the 16th Amendment to the Constitution was ratified, legalizing the federal income tax. In that year, the common income tax rate was 1% on net income above $3,000, with an additional 6% surtax on incomes above $500,000. With tax rates that low, it would have seemed that people would not have had much to complain about!
Americans also had to file their taxes before March 15th during the WWI era. After the passage of the 16th Amendment, the date for filing was originally March 1st. Following tax reform laws in 1954, the date was pushed back to April 15th, where it remains to this day. This was to allow government workers to collect, sort, and tabulate taxes all by hand—a necessity in the era before Turbotax and other computerized tax filing systems.
Admittedly, I am not an expert on tax laws or the ins and outs of finance. However, it is important to know the history behind how tax laws are formulated and passed, as they affect everyone in America. And it goes without saying, be sure to work on your taxes if you haven’t started them yet!