The Revenue Act Of 1862

Another idea would be to avoid increasing the tax rates as this will help “minimize economic distortions that shrink the level of production” (Baker III, 2009, p. 1). To promote economic growth, our team recommends that we take the approach of increasing the corporate tax base and decreasing the corporate tax rates. Other suggestion is to reduce the deductibility of state and local taxes. Other reforms that could be looked

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).

Americans that support higher taxes on the one percent believe that this will help contribute large amounts of money to the federal government. According to Patricia Cohen, in a New York Times article, she claims that the top .1 percent of Americans have an average income of about $9.4 million. If the government were to raise taxes to 45 percent on the top .1 percent this would produce about $109 billion in revenue in the first year (Cohen). The federal government could use this money for education, health care programs, and social and income security. Taxing the top .1 percent creates a significant revenue increase, but taxing the top one percent at 45 percent would create about $276 billion in revenue (Cohen). This tax rate will bring in a sizable increase which is why many Americans believe that the top one percent should have a marginal tax rate of 90 percent.

Heated debates over tax cut have always been one of the central economic themes on the American political table. Since taxes relate directly to the quality of lives, it is by no means surprising to find people showing significant concern about policies regarding cutting or raising the amount they have to pay. The idea that lowering tax rate makes room for growth has remained generally popular among the majority, taking a possible decrease in individuals’ tax burden and increase in productivity into account. There is, however, extensive research conducted on the topic that produced controversial results. Despite its appeal to instant benefits for one’s saving account and investment, reducing tax rate has yet to show a definite positive effect

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%.

Congress taxed states based on their population, rather than an individual’s income. Progressives believed people with a higher incomes should pay a higher percent of taxes, so those with lower incomes were able to pay a lower amount of taxes. The Sixteenth Amendment was passed and gave Congress the power to create a personal income tax, based on how much a person makes rather than

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)..

• “The taxes for paying that proportion shall be laid and levied by the authority and direction of the legislatures of the several states within the time agreed upon by the United States in Congress assembled.” Articles of Confederation, Section VIII • Without a way to collect taxes , congress could not pay war debts or make a national budget. • “The Congress shall have power to lay and collect taxes, duties, imposts and excises, to pay the debts and provide for the common defense and general welfare of the United States; but all duties, imposts and excises shall be uniform throughout the United States.” United States Constitution, Article I, Section VIII, Clause I • After levying taxes became a federal power

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)

The origin of the income tax on individuals is generally mentioned as the passage of the 16th amendment, which was passed by congress on July 2,1909. The history of individual income tax in the U.S.A goes back to 1861. During the civil war, congress passed the revenue act of 1861, which included taxing on personal incomes to help pay the expenses of the war. This tax was repealed after the war. In 1894, congress made a flat rate federal income tax, but the U.S Supreme Court ruled it unconstitutional. During the following

The Sixteenth Amendment of the United States Constitution gives the United States government the right to tax income.

Did you know that an astonishing 43.4 percent of the people in America do not pay any income taxes" (McCullagh 1)? This is roughly 65.6 million people that aren't paying taxes and this is putting our economy and country at its breaking point. Our current tax system penalizes those that work and save money. People that pay no taxes still get to enjoy the benefits. The United States needs to look at which tax is fairer to the people and easier to administer by the government. Although some may disagree, the Flat Tax should replace the income tax to simplify and bring fairness to the system, increase income, and create jobs.

Mostly from the spending money of middle-class consumers. And where does the spending money of middle-class consumers come from? From middle-class incomes”(Ettlinger). Tax cuts would raise income levels, if these tax cuts were focused on the middle class, they would have more money available to spend. If the middle class had more money available to spend, it would add money into the economy and create jobs thus expanding the tax base which would bring in more revenue for the government and help citizens. Another simple fix to the federal tax plan would be to slightly raise the corporate tax rate. The corporate tax rate should be kept at a low level, as it gives businesses more money with which to raise their employees’ incomes and to create new jobs. However, raising it slightly would allow the government to bring in more revenue, “And with each percentage point reduction in the corporate rate representing $100 billion in revenue over a decade, a move to a 22.5% rate would generate another $250 billion in revenue while still substantially leveling the global playing field for U.S.

The corporate income tax is one of the most poorly understood methods by which the U.S. government collects money. Corporate profits were first taxed in 1909, when Congress enacted a 1 percent tax on corporation income. The rate rose to 12.5 percent a decade later, and progressive rates that increase with income were added in 1932. Surtaxes on corporate income were added for “excess profits” and “war profits” during both world wars. The highest peacetime rate, 52.8 percent, was reached in the 1960s. The Tax Reform Act of 1986 was designed to increase the share of federal revenues collected via the corporate income tax and to decrease the share from the individual income tax. While the top corporate tax rate, like the individual rate, was cut to 34 percent deductions for capital expenditures were severely curtailed and the investment tax credit was repealed. As a result, the effective tax rate for many corporations rose. Many people see the 1986 Tax Reform Act as a model for comprehensive tax reform. This bipartisan legislation was able to achieve revenue by balancing rate reductions for both individuals and corporations with ending many tax preferences. The result was perceived as a simpler and economically efficient tax code.

Taxes these days are high enough, and raising the taxes even more will not help at all. The more the taxes we have to pay the slower the economy moves and the higher unemployment. Besides, our tax system grows too progressively already! If we raise the taxes even more it COULD cause fights over taxes being too high.Think about the people who barely have enough money to pay for their taxes already. Us raising it would make it worse.It could even effect you!“A democracy is three wolves and one sheep voting on what’s for dinner.” Neil Boor.