Tax Reform Essay

When the Founding Fathers resisted these taxes on principle that Parliament did not have the authority to tax the colonists, Britain attacked and minimized colonial self-rule , declared colonists subject to any act of Parliament , reestablished internal taxes , closed colonial ports, dissolved

During the past couple of decades, the decline in the middle class has been associated to the political agenda of the Republican Party. By ending governmental subsidies and other programs created to build the middle class, has ultimately ceased the growth. However, realizing the importance of the middle class to our fragile economic platform, the Democratic and Independent political parties are desperately trying to create and revamp the middle class

To build an economy the Government would have to implement taxes, however, Americans didn’t want taxes because they had just fought a war against them and they feared the new Government would be like the old British Government. Many people wanted a strong central Government while others argued that it would be to powerful, then abuse that power and do what Britain had just done to them.

In 1763 the British were among the most heavily taxed people in the world, where as the colonies in the Americas were prospering, Greenville, the British finance minister asked, “Why shouldn’t these colonists begin to pay some of the costs of their own government and defense?” The British then passed the sugar and quartering acts as well as the stamp act which all basically were designed to bring in more income from the colonies.

Taxation, a method by which a state, local, or federal government collects money from its citizens in order to fund the operations of the governmental body. When our nation first began, it was built upon the unanimous hope of freedom from Europe shared amongst a group of brave men and women willing to risk their lives to make the journey across the ocean in order to found a nation free from the King. In the late 1700’s, the 13 colonies of America were established; free from the rule of a monarchy, the Americas were an independent nation run under the Articles of Confederation. The Articles of Confederation formed a weak form of government under which the balance of powers between the state and national government were unbalanced. Congress had no power over the states; they could not collect taxes which were vital for the survival of the emerging nation. It was not until approximately ten years later that the United States Constitution was ratified and a democratic government was formed under which a balance of power between state and federal governments was enforced. Under the new system, congress could impose taxes upon citizens for the purpose of paying the country’s debt, security and welfare.

The first proposal to impose an income tax on Americans occurred during the War of 1812. After two years of war, the federal government had accumulated a whopping $100 million of debt. To fund the war against Britain, the government doubled the rates of its major source of revenue, customs duties on imports, which obstructed trade and ended up yielding less revenue than the previous lower rates. At the height of the war, excise taxes were imposed on goods and commodities, housing, slaves and land were taxed. Finally when the war ended in 1816, these taxes were abolished. A high tariff was then passed to retire the accumulated war debt. Thankfully, the notion of an income tax was conquered (Young, 2004). However, the thought of the income tax reappeared as an idea to fund the Union armies in the war to prevent the secession of the Confederacy. The war was expensive, costing on average $1,750,000 a day. Struggling to meet these expenses, the Republican Congress borrowed heavily, doubled tariff rates, sold off public lands, imposed a maze of licensing fees, increased old excise tax rates and created new excise taxes. But none of this was enough to fund the debt (Young, 2004)..

In 1861, Lincoln levied the first federal income tax by signing the Revenue Act. Needing cash with which to fund the Civil War, Abraham Lincoln and the Congress agreed to impose a 3 percent tax on annual incomes over $800.00. The wording of the Revenue Act was broadly written to define income as a monetary gain derived from any kind of property, or from any specialized trade, employment, or vocation carried on in the United States or elsewhere or from any source whatever. (A&E Television Networks, 2014)

Tax reforms started in 1916 when the Wilson administration decided to cooperate with a group of insurgent democrats on war time financing, which was majorly progressive taxation. This was important because it led to attacking the wealthy, special privilege, and public corruption. The administration embraced this taxation as “means to achieve social justice.” Another major element to Wilsons administration was redistributional taxation. This helped drive between socialism and unmediated capitalism. The major debate at the time was over the question, “ What stake does society have in corporate profits?” The debates outcome created “soak-the-rich” income taxation. Wilson signed the Revenue Act of 1916. This was the first tax on personal incomes.

In the State of the Union message of 1864, Abraham Lincoln stated that “The National System, will create a reliable and permanent influence in support of the national credit and protect the people against losses in the use of paper money.” This allowed for the country’s advancement financially. Abraham Lincoln also imposed the first federal income tax. In 1861, Abraham Lincoln signed the Revenue Act. It imposed a 3% tax on incomes that were over $800 annually.

In 1895, the Supreme Court ruled a tax unconstitutional in a case (Pollock v. Farmer’s Loan and Trust Co.). This helped to establish the sixteenth amendment, which gave congress the right to levy

When Calvin Coolidge was president he established the Revenue Acts. There was three stages beginning with the Revenue Act of 1924, then 1926, and 1928. The bill was a tax on wealthy individuals to avoid paying inheritance tax once their loved ones died. A lot of people felt this was unfair so this was revoked in the following year. (Alchin, 2017)

Many debates have been waged over the decades on what will be taxed, on who shall be taxed and how taxes are collected. Since the 16th Amendment was ratified in 1913, the debate has intensified, centering on how high to make the income tax rate. Most Americans were not concerned since the Amendment was sold to them as something that would only affect corporations and the rich. With ever increasing fervor these corporations created lobbyists to convince Congress to exempt them from some or all of the income tax. The big breakthrough in this was taxing the worker directly with payroll taxes during World War II. This method of collecting income tax was sold to Americans as temporary, but Congress has extended it

Both Op-Ed writers talk about the American workers and the struggles between the rich and middle class; I agree that the middle class is suffering while the high class prosper. The state of the American economy is becoming more unequal every day. With the middle class fading and there being only a low class and high class, in my opinion, is obvious. We’ve lost the jobs that created the broadly shared properity that made us the envy of the world (Meyerson 2011, Washington Post). Outsourcing is a huge strategy held by many businesses creates many issues for the United States economy and drives unemployment. One-quarter of American workers make less than $10 per hour, or are living in poverty. Meanwhile, the top 1% of workers earned more in income

The welfare subsidies that are available to the middle class are in the form of economic policy now benefits the middle far more than the bottom. Student loans, farm subsidies and the virtual federal takeover of the home-mortgage industry are all examples of benefits that are provided to the middle class. Even Obamacare gives subsidies to people earning four times the federal poverty line, who are essentially the middle class. There are numerous tax breaks, like in the treatment of home mortgage interest or

"Lower income taxes for all, with the greatest help for those most in need. Everyone who pays income taxes benefits - while the highest percentage tax cuts go to the lowest income Americans. I believe this is a formula for continuing the prosperity we've enjoyed, but also expanding it in ways we have yet to discover. It is an economics of inclusion. It is the agenda of a government that knows its limits and shows its heart." -President George W. Bush1