History Of Income Taxes During 19th Century

1862 - President Lincoln signed into law a revenue-raising measure to help pay for Civil War expenses. The measure created a Commissioner of Internal Revenue and the nation 's first income tax (Internal Revenue Service, 2013).

First, when the political parties emerged in the 1790’s it was evident that their ideologies were vastly different. The Republican Party wanted a representative form of government that functioned “in the interest of the people.” This party, led by Thomas Jefferson, supported a limited central government, with individual states retaining a majority of the control. Jefferson’s vision was for a nation of farmers, and farmers do not need big government to survive. They feared a large central government would take away the rights of the people. On the other hand, the Federalist Party, led by Alexander Hamilton, supported a strong central government that would pursue policies in support of economic growth, which in turn would provide the freedom the people wanted. Hamilton’s followers also supported a diverse economy.1 It is important to note here however, that both parties knew they would have to become national parties in order to win any elections and both parties had followers in the north and in the south. There was no sectional divide in the parties.

The Populists took major issues with the capitalists and monopolies of the era. In their party’s platform (Document A), the Populists say that the land is “concentrated in the hands of the capitalists.” This prevented the small farmer from living the American Dream of building a successful life for himself and his family. A common view for farmers was expressed by James B. Weaver in 1892 (Document F), who believed that the monopolies of the era were “organized to destroy competition and restrain trade.” These large scale farms caused overproduction, causing an “alarming fall in the price of wheat (Document E).” This price fall caused a chain reaction of events that all had the same effect, small farmers being crippled by loss of income.

In the late 1800’s, America’s farmers faced deep financial insecurity with the fall of agricultural prices that kept them in poverty. Many farmers borrowed money from merchants and banks, and when it came time to repay their loans, they found themselves in the face of losing their land. Their financial troubles mainly attributed to the high freight rates that railroads charged the farmers in order to transport their crops, as well as high interest rates charged by loaners. This financial turmoil lead to the development of the Farmers’ Alliance, which advocated for lower interest rate loans by the Federal Government itself, so that way the farmers didn’t have to depend on independent banks and merchants for financial assistance. The Farmers’ Alliance eventually gained traction in politics and eventually formed itself into the People’s Party, or otherwise known as the Populist Party.

In the early 19th century, farmers saw the need to cooperate with government regulation. They started to believe the government could solve their economic problems if they cooperated as part of the system. When once they were known as the epitome of the American dream, independent, and self-sufficient, they now submitted to government regulation. This decision was made in the 1896 elections. As a result of this transition, many children of farmers left and found work in the city. When generations past would have stayed on the farm their whole lives, a new window of opportunity was opening up as the market expanded.

3. The first income tax on individuals (after the ratification of the Sixteenth Amendment to the Constitution) levied tax rates from a low of 2% to a high of 6%.

The Industrial era, starting after the Civil War and ending at the end of the 19th century, was a significant time in American history. To determine the discontent of farmers, all aspects of the Industrial era must be analyzed. Socially, the farmers represented the widening of the classes taking place at the time. Economically, they were the embodiment of the struggling lower and middle class. Politically, the farmers discontent did not go unnoticed as the two party system was disrupted by a surging new third party, the populists. The farmers discontent affected many parts of the American society at the time, and had a major effect on politics.

The Gilded Age was associated with many difficulties - unprecedented fortunes and poverty, urban squalor, unhygienic food production, and other issues – that many Americans were left to deal with. In the early 1900s, “widespread dissatisfaction with new trends in American society spurred the Progressive Era, named for the various ‘progressive’ movements that attracted various constituencies around various reforms” (Andrew et al. 1). This new era was the age in which people tried to solve problems through individual and group action. The Progressive Movement was dedicated to the advancement of women’s rights and social reform by targeting trusts and protecting wildlife areas; however, despite their reform tendencies, progressives

After the French and Indian War between France and Great Britain, Britain was left in debt. To help pay it off, the British decided to place taxes on the colonies because they felt that it was fair since the British were in debt due to them paying for protection towards the colonies. They created the Stamp Act, which placed taxes on any paper that was printed or stamped. They created other acts called the townshend revenue act, declaratory act, quartering acts, and the intolerable acts. These acts and laws were rejected by the colonists to the extent where it led to multiple rebellions and revolts from the colonies towards the British. Although the British government placed all these acts upon the colonies, they were weakly enforced which gave

Three men, mentioned above, understood and accepted the necessity of Progressive reforms, and new Amendments, although many people saw them as a big boulder blocking their way to Progressive. In fact, they didn’t try to The Sixteenth Amendment had widespread support, and they gave it theirs in part to end the bitter disputes about tariff schedules that had long divided the Republican Party. It is also worth noting that the first income tax passed under the Sixteenth Amendment had a top rate of 7 percent and

Around the start of the 20th century, America partook in a great period of reform known as the Progressive Era. The government’s previous laissez-faire approach in the Gilded Age gave way to massive urbanization and industrialization, and with it came a terrible deterioration of the middle and working classes. Efforts to remedy the different effects of ruthless capitalism collectively formed the Progressive Movement. Led by reform-oriented presidents, the nation aimed at making government more democratic, and managed the effect big business had on the people. Although the economic and social reforms of the Progressive Era successfully addressed the issues of the Gilded Age, as seen by increased regulation of business and the government’s heavy

During the Gilded Age, a new third party, the Populist or People’s Party, was created. This political movement was established to speak for those in the United States who were farmers and agricultural workers or in any classes of production. Farmers were hit with hard times after the economy was influenced by the Industrial Revolution. The crop-lien system put the majority of farmers in a large amount of debt and government-implemented tariffs decreased the value of production for farmers. Due to these hardships, the Farmers Alliance was formed in an effort to stop the sharecropping system that caused the financial trouble. This organization began persuading farmers to support the idea of bimetallism,

It is important to note, from the onset, that income tax remains the government’s largest revenue source – effectively raking in an average of 30 percent of the total tax collected. In essence, every individual has what is referred to as personal allowance on income tax, whereby every tax year, all incomes that do not exceed the set allowance are not taxed. All other income is subject to the various tax rates captured in several bands. In the year 2009 budget, it was announced that beginning April 2010, individuals raking in incomes exceeding £150,000 would be subject to a new 50% tax rate (HM Revenue & Customs, 2014). The previous rate, prior to the introduction of the top rate by the Labor government had been 45p. However, the incoming government reduced the top rate to 45p – a change that took effect from 2013 April. It is important to note that all incomes that do not exceed £32,000 are, at the moment, subject to a basic tax rate of 20%. For those raking in more than £32,011 (with a ceiling of £150,000), a higher rate applies. According to the proposal to restore the 50% additional rate of income tax, 50% of incomes exceeding £150,000 (which are at present taxed at the rate of 45%) ought to be handed over to Her Majesty’s Revenue and Customs (HMRC) as tax. The person fronting the said proposal is Ed Balls, a Labor Party politician.

Then we had the Victory tax, this was a voluntary tax and put into place for the war effort only, along with bonds. When the war ended people could file a return to get their money back without interest. The government asked the people to not ask for the money back so they could rebuild after the war. Most people being patriotic in these days agreed to this voluntary contribution. The victory tax was converted in 1946, people were asked if they could give a portion of there wages. The tax was so small that people said yes. Then the government invented the W4 form, this form turned income taxes into a mandate. Today, we can not prove that taxation is illegal because of the W4 form is a waver by which gives away our rights (Bobby).

Source-source double taxation. This is when both countries consider the source of the income to be within their country. Tax treaties will provide rules for determining the source of income. The source rules not only clarify in which country the income originated and may be tax but also states that the country that does not impose taxes must provide a relief from double taxation.”