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The U.S. Tax Code

I hope all of my followers have had a Happy Passover or are having a Happy Easter, depending on your persuasion.  My day started with church, then I did a “recovery workout” on the bike, after a 3.5 hour “event” yesterday (3.5 hours on a “trainer”, commonly known among cyclists as “riding the road to nowhere”; the trials and tribulations of an endurance cyclist that enjoys and wants to improve at cycling).  Now I thought I’d make my next post to my blog before dinner.

The U.S. Tax Code; a convoluted quagmire of “progressive regulation”.  A little history:

From 1791 to 1802, the U.S. Government was supported by “Internal Taxes” on goods: distilled spirits, carriages, tobacco, etc.  The high cost of the War of 1812 led the nation to its first “Sales Taxes” on gold, silverware and watches.  In 1817; however, Congress did away with all “Internal & Sales Taxes”, relying on tariffs on imported goods to provide sufficient funds for running the government.

In 1862, in order to support the Civil War effort, Congress enacted the nation’s first Income Tax Law, a forerunner of our modern Income Tax in that it was based on the principles of graduated, or progressive taxation and of withholding income at the source.  It began with a tax of 3% on income of $600 to $10,000 per year.  Incomes of $10,00 or more paid more, Sales and Excise taxes were added/reinstated and an inheritance tax (more on this in my next post) made its debut.  The Act of 1862 also established the Office of Commissioner of Internal Revenue, which had the power to assess, levy and collect taxes, and the right to enforce tax laws through seizure of property and income through prosecution.  Between 1868 and 1913, the tax laws fluctuated back to taxing tobacco and distilled spirits, eliminating and reinstating the Income Tax, with 1895 seeing the Supreme Court declaring the Income Tax unconstitutional because it was not apportioned among the states in conformity with the constitution.

In 1913, the 16th Amendment to the Constitution made the Income Tax a permanent fixture in the U.S. Tax system, which gave Congress legal authority to tax income, resulting in a law that taxed incomes of both individuals and corporations.  In fiscal year 1918, annual tax revenue first surpassed the Billion Dollar mark.  With the advent of WWII, employment and tax collections increased to surpass $7.3 Billion.  In 1943, withholding taxes on wages was introduced, which was instrumental in increasing the number of taxpayers to 60 million and collections to $43 Billion by 1945.

As of 2006, the Tax Code had expanded to more than 16,845 pages; it could have been purchased from the U.S. Government Printing Office back then for $1,153, shipping included!  As of 2010, the “Code” had ballooned to 71,684 pages, and that was before the Patient Protection and Affordable Care Act, which has become more commonly known as ObamaCare.

This morass of regulation has birthed two industries; Tax Accountants and Tax Attorneys, which the IRS even refrences as being integral in navigating the Code appropriately.  Let’s face it; taxes are a necessary evil for the government to pay for the services it provides to the public; however, hasn’t this sort of taken on a life of its own?  Is there anyone out there that doesn’t think something needs to be done about this?

My next post on Wednesday will be “snatched from the headlines” refrencing the recent Supreme Court hearings concerning Prop 8 in California and the Defense of Marriage Act, or DOMA.