I said in the email that the IRS was rumoring that people would be able to take a deduction for contributions to Haiti on this year’s (2009) tax return – instead of having to wait until you do your 2010 tax return. Certainly this could be quite an incentive for people who desired to donate money to the people of Haiti to assist them in getting back on their feet! Are you feeling the pressure of today’s taxes? Right now you can get $100 off your tax return for Cary NC Tax Preparation needs!
As it turns out, the suggestions I was hearing and that you could have heard are TRUE! On January 22nd, the IRS created a certain tax relief provision that allows contributions for the Haiti disaster made after January 11, 2010 and prior to March 1, 2010, will be deducted on your 2009 tax return. Or, you could choose to put the deduction to your 2010 tax return instead, on the chance that in case you did not want to take advantage of this great incentive to assist those in need.
The inhabitants of Haiti are hurting quite a bit. Earthquake disasters cannot be avoided, and are well, disastrous. Earthquakes and other types of environmental disaster cause vast levels of destruction and widespread loss of homes. Entire families do not have access to food or clean water. In many cases these families don’t even have any sort of stable living environment without the help of other countries’ efforts (funded by donators like you!). Do your part right now and donate whatever you can to help the people of Haiti. I would greatly appreciate the extended effort, and I am sure all of the struggling people in Haiti would appreciate it to!
Stay tuned for more articles and information regarding tax season, taxes, and Haiti!
W. Marc Gilfillan, CPA, NC, individual and business CPA and Tax expert, shares about the history of taxes…
So the question remains, what went wrong with the tax system in the US?
US tax makers have been collecting what they have sown for quite a while. The honor system has been replaced by a system in which all taxpayers are under watch due to the heavy inclination of evading their taxes. In other words, consent has been replaced with compulsion. Honor has been replaced with spying on citizens. If you’re feeling the pressure with today’s taxes, call a Cary NC CPA for all your tax-related needs!
In the mid-20th century, there was not a bank in the US that told the IRS about the affairs of citizens who went to that bank, interest rates went unreported, withdrawals of cash were not reported, and not a thing that went through accounts were photographed. In addition to this, real estate transactions were not reported, stock transactions weren’t reported, dividends weren’t reported, income from other sources (Form 1099) wasn’t reported, and US Customs did not require a declaration of the amount of money carried. Go here if you want help from a modern-day Tax Preparation in Cary, NC.
It was an honor system, and it functioned quite well. The erosion that occurred over the previous 50 years to the present is that anything of any fiscal significance is now reported.
Adam Smith said that taxes will be evaded and tax laws shown no respect when there is a general suspicion of much meaningless expense and a lot of misapplication of the public revenue. In other words, $500 toliet seats, huge grants to study the sex lives of ants, etc.
For the sake of catching a few tax resisters and evaders in the 1950s Congress created a tax abomination of the US tax system that more and more taxpayers attempt to bypass. As a general rule, mass tax evasion is a clear signal that a government’s tax system isn’t working. Citizens will pay taxes, even income taxes, if the rates are reasonable.
W. Marc Gilfillan, CPA, NC, individual and business CPA and Tax expert, shares about the history of taxes…
1861 – After Lincoln was put in office, southerners walk out on Congress and form the Confederate States of America with a new constitution to keep the new country’s power to tax in check.
1862 – The first US income taxes is instituted to assist the financing of the rising massive costs of the Civil War. If you are feeling the pressure with today’s taxes, call a CPA for Tax Preparation in Raleigh, NC for all your tax-related needs!
1872 – The income tax is abolished.
1894 – Congress passes an income tax as a result of complaints that large reliance on tariffs skyrockets the costs of imported goods for farmers and consumers. Go here if you want help from a modern-day CPA firm in Raleigh, NC.
1895 – The US Supreme Court holds the idea that the 1894 income tax law conflicts with the US Constitution’s bars on levying direct tax.
1913 – The sixteenth Amendment is passed and takes that bar away and Congress creates an income tax system.
1917 – World War I revenue requirements bump up taxes, with the largest rate reaching 77% in 1918.
1924 – Publication of the names of taxpayers and how much they owe fails to complete the goal of forcing paying the taxes and the practice is given up.
1942 – Prior to World War II, the income threshold for paying income tax left most working people out. But the war’s cost bumped the threshold down the income ladder and put the top rate to 94% prior to the war being over.
1943 – To force compliance from the hugely increased number of taxpayers, Congress institutes tax withholding from wages, effectively turning employers into tax collectors.
In the 1940s Justice Jackson of the Supreme Court, former chief counsel to the IRS, boasted about how honest Americans were in turning in their income taxes. The system was based on the user’s honesty – there were very few informational returns. Tax resisters were few and the underground economy was relatively small.
1962 – IRS Commissioner Caplin stated “no other nation in the world has ever equaled this record of voluntary compliance. It is a tribute to our people, their tradition of honesty, and their high sense of responsibility in supporting our government.”
1982 – Chief Justice Neely said – “cheating on federal and state income tax is all pervasive in all classes of society; except among the compulsively honest, cheating usually occurs in direct proportion to opportunity.”
Stay tuned for Part 3 of the Timeline of US Tax Policy!
W. Marc Gilfillan, CPA, NC, individual and business CPA and Tax expert, shares about the history of taxes…
Ah…. finally an event in history obviously concerning abusive taxation. Was the Boston Tea Party a protest concerning the British taxation on tea, as we were all taught? No, not one bit. The colonies had continuously been boycotting English tea for five years prior to the Boston Tea Party! They had instead smuggled in Dutch tea and were quite prosperous. There was tea for all and no British tea tax paid. Obviously, the British did not like the boycott. So, the British forgot the duties back home. The Parliament allowed British tea sellers to disregard the import tax of getting the tea to England and then transfer the savings along to the colonies when they shipped the tea over and thereby sold British tea at a price that was lower than the smuggled Dutch tea. If you are feeling the pressure with today’s taxes, call a CPA for Tax Preparation in Raleigh, NC for all your tax-related needs!
But what people would sell this British tea?
They did it through loyal British merchants in the colonies. But will the colonists take the cheaper British tea even though it included a tax? Yes. They bought so much that the result was loyal British merchants got all the business and a tax was still be paid to England. Obviously the colonists didn’t care about the tax very much; they still were receiving cheaper tea. However, the non-British MERCHANTS did not like the process. The British merchants, with the help from England, had essentially established a monopoly on tea sales. The native merchants thought it was only a matter of time before additional monopolies would be created with the same mechanism and they would be forced out of business. Go here if you want help with a modern-day Tax Return in Raleigh, NC.
So, a group of MERCHANTS dressed up as Natives, walked on a vessel containing British tea and dumped it into the harbor. Was this a shining moment in American tax protest? Not at all. The Boston Tea Party was viewed as the meaningless desecration of private property at a time when private property was viewed as very important. The event was very grave and didn’t sit well with the colonists. Ben Franklin was shocked and demanded that complete repayment would be paid at once to the owners of the tea. Anyway, it turned into war.
However, the colonies would soon find that fleets of war vessels, legions of redcoats, and cannons were a lot more terrifying than a few tax collectors. The ironic part is, America didn’t lose the war, primarily because England found it too expensive to fund war so far from home. BUT after the war, America faced astounding debts and taxes, and even with representation they were going to be huge.
Keep an eye out for W. Marc Gilfillan’s next chapter in his History of Taxes series: Taxes and Slavery and the Civil War.
W. Marc Gilfillan, CPA, NC, individual and business CPA and Tax expert, shares about the history of taxes…
From 1868 until 1913, about ninety percent of the federal government’s income was derived from taxes on alcohol and tobacco. During the Civil War there was a short income tax, but it was not until 1913 that the 16th Amendment permitted Congress to tax incomes “from whatever sources attained.” The first 1040’s were due on March 1, 1914. There was not any money taken from paychecks and no money was sent away with the return. Each taxpayer’s taxes were calculated by IRS field agents and a bill sent to the taxpayer on June 1st.
1766 – Leaders of the colonies got together to protest British taxes in place by the Stamp Act. This Stamp Act Congress, as it was named, was the beginning of the American independence movement and the birth of the modern U.S.
1782 – The first Congress under the Articles of Confederation met. This Congress did not have any ability to tax the people.
1789 – Americans gave a new Congress taxing powers. Without taxing powers, the initial Congress of the United States barely survived 7 years before being dubbed a failed attempt; the second Congress, with taxing powers, is currently functioning after more than two hundred years. If you are feeling the pressure with today’s taxes, call a CPA for Tax Preparation in Raleigh, NC for all your tax-related needs!
1792 – Alexander Hamilton coerces Congress to pass an excise tax on whiskey to raise revenue and steady the increase in alcohol consumption. In the western frontier whiskey was the traditional mode of exchange, and the 25% tax was harsh. By 1794 the region was openly in rebellion. The forerunner of the Internal Revenue Service was created to give the tax enforcement. Go here if you want help from a modern-day CPA firm in Raleigh, NC.
1832 – The national debt that remained from the Revolutionary War and the War of 1812 is finally accounted for and paid. The South sees no reason to continue high import taxes that raise the price on goods for Southern consumers and increase the number of industrial monopolies in the North.
1850 – John C. Calhoun of South Carolina tells Congress that the South could leave the Union due to the fact that the overly oppressive taxing in the South increased funds that were spent in the North, causing a great shift in wealth from the South to the North.
Stay tuned for Parts 2 and 3 of the Timeline of US Tax Policy!
W. Marc Gilfillan, CPA, NC, individual and business CPA and Tax expert, shares about the history of taxes…
“Slavery – the one cause of the Civil War.” – John Stuart Mill, 1862
Can there be a doubt about this topic? Certainly the American Civil War was about the slavery issue… was it not? Well actually, one of the most hoaxes in our history is that the Civil War was started over the slavery issue and that Lincoln, the Great Emancipator, used a terrible war to sever the chains of bonding that shackled over three million black Americans. Right before the war, the South had everything its way.
In 1860, Southerners controlled the Supreme Court and Lincoln and Congress were approving a constitutional amendment to protect slavery forever! What happened?
Let’s move the time back to the year 1832. By 1832 the national debt from the War of 1812 had been extinguished and the South saw no need to keep up the high import taxes which appeared to only raise price tags for Southern consumers. Either the South had to pay high import taxes on imported goods or it purchased Northern manufactured goods at terribly overpriced prices. Either way, the South’s money ended up in the North. To say the least, the South was not happy with this arrangement. If you are feeling the pressure with today’s taxes, call a CPA for Tax Preparation in Raleigh, NC for all your tax-related needs!
So, in 1832 a convention was held in South Carolina to get rid of these federal import taxes. The convention decided the tax was unconstitutional and authorized the governor to defy the enforcing of these taxes instituted by the national government. It looked like a civil war was in the making. Cool heads won over, however, and the Great Compromise of 1833 reduced import taxes over the subsequent several years to an area the South could tolerate. Go here if you want help with a modern-day Tax Return in Raleigh, NC.
Over the next few years, however, Northern corporate and manufacturing interests bullied into Congress new taxes that once again stressed Southern planters and allowed Northern Manufacturers to become rich once again. In 1850, John C. Calhoun, the South’s greatest outstanding spokesperson, delivered a speech to Congress. His speech listed three wrongs done to the South that could cause secession from the Union and war. The first two involved fears about the gradual decline of power of the South in general and the states in particular.
The third, and only concrete complaint, concerned taxation. In Calhoun’s eyes, national import taxes was a class legislation against the South. Heavy taxation on the South created money that was used in the North. The center of economic strength in the country was steadily changing strongly to the North. Calhoun spoke of secession if the taxes weren’t reduced. But what of the slaves? Well, during his campaign for the presidency in 1860, Lincoln steadily repeated he wouldn’t do anything about slavery in the South. Truly, most Northerners didn’t really care about enslaved blacks, just as little as how much they worried about the Native-American in the West or poor illiterate workers in factories. By and large many black slaves received substantially better quality treatment and better compassion than their working-class counterparts in the North. Lincoln, actually, promised Southern plantation-owners that fugitive slaves would be caught. The Congress and then the Supreme Court (Dred Scott decision) further affirmed that slavery was here to stay.
However, as soon as Lincoln was placed in office and Congress came together in 1861, they created new high import tariffs. Slavery was not an issue – higher import taxes were. In his inaugural address Lincoln said he would collect the customs in the South even if there happened to be a secession!
Fort Sumter, at the entrance of the Charleston Harbor, started to fill with Union soldiers to enforce the collection of the new taxes. The Civil War started in 1861 when South Carolinians shot at the federal garrison at Fort Sumter. The inevitable had been stewing for years – but it wasn’t about slavery. It was about tax policy.
Two years later, Lincoln put into action the Emancipation Proclamation, and then only after repeated military defeats, as a last resort to rally the North to a worthwhile cause. With respect to the slave issue – most Northerners cared little concerning black people in bondage, no more than they cared about Indians in the west or poor illiterate peasants in the factories. Ironically, most black slaves received better treatment and more compassion than their impoverished counterparts in the North.
W. Marc Gilfillan, CPA, NC, individual and business CPA and Tax expert, shares about the history of taxes…
Ancient Egypt was not a land of terrible oppressors and oppressed slavery – that is simply the stigma we get from the story of Moses, which formed at a time of turmoil in Egypt. Actual translations of hieroglyphics tell a tale of life in ancient Egypt was usually pleasant and peaceful. The land was rich, women and men had roughly equal rights and life was enjoyed. But, there were tax collectors, as many as “the sands of the seas”. The order of Egyptian life was maintained by these “scribes” who were charged with enforcing the pharaoh’s tax mandates. Most everything was taxed – sales, slaves, foreigners, imports, exports, and businesses. Crops were taxed at an astounding 20%. There was also a tax on cooking oil and scribes would make continuous visits to kitchens to make sure that free drippings were not being wasted as opposed to the taxed oil.
The idea of “freedom” ironically in ancient Egypt did not refer to someone’s political or social liberty but to a person’s tax status. If you were “free,” it meant that you paid no taxes. Ironically, the word cannot be found anywhere in the Egyptian language. Good thing we live in this time eh? Go here if you want help with modern-day Tax Preparation, bookkeeping, and payroll in Cary NC.
However, the scribes were never inconsiderate (at least in theory). They were told to be kind to the poor and defenseless. One ancient translation instructs: “if a poor farmer is in arrears with his taxes, remit 2/3 of them.”
Another text instructs scribes to “lighten up everyone and to place them into a good mood.”
And, if someone is struggling under pressures of their taxes, or is at the end of his means to pay them, you must let the case go unchecked.” If you’re feeling the pressure with today’s taxes, call a Raleigh NC Accountant for all your tax-related needs!
This lenient policy was coined “philanthropa”. From this word we get the word philandthropy.
Over the 3000 years of the Egyptian empire, there were many periods of humane and decent tax administration.
Keep an eye out for W. Marc Gilfillan’s next chapter in his History of Taxes series: Taxes and the Greeks. http://www.marccpa.com/
W. Marc Gilfillan, CPA, NC, individual and business CPA and Tax expert, shares about the history of taxes…
Mithridates the Great was the leader of a small country near what is currently known as Turkey. He had the extraordinary power to create rebellion among unhappy taxpayers. In 88 BC he led a civil war against Roman rule. By promising five years of tax exemption to each city that joined his army, he mustered substantial support.
The Roman Senate sprang into action and told General Sulla to muster an army and re-establish Roman authority in the east. Sulla was victorious in squelching the rebellion after a 4-year war. When the rebellion was crushed, Sulla told the leading citizens of the revolting cities to meet him at Ephesus. At that place the citizens were to remit 5 years of back taxes and pay Sulla for the cost of the war.
To enforce this tax, Sulla created “special agents.” These special agents were given the power to scourge and behead, which was enough to make any taxpayer cooperative. Up until this period there were self-assessment tax collections, private tax collection, army tax collectors and the traditional government tax men. But these new “special agents” were highly skilled specialized men with the ignorance of bureaucrats and the power of military executioners. Taxpayers lost any hope to evade. If you are feeling the pressure with today’s taxes, call a Tax Preparer in Raleigh, NC for all your tax-related needs!
Special Agents have emerged several times in the past, persisting into modern times as “fiscal police” or just “special agents”, given the title initially instituted by Sulla over 2000 years past. As the practice of Sulla’s special agents was instituted in other provinces, the army came to realize that the rich spoils of war came from their commander, not the Roman Senate. Roman generals returned to Rome with the blind loyalty of their soldiers. Great civil wars broke out as rivalling legions fought. With these moderately private armies, establishment of a military dictator was inescapable. Thus, the Roman Republic dissolved. Royalty, dictators, and military strategists would now run the Roman Empire for the next two thousand years. Democracies and republics wouldn’t see a large role in civilization again until the 1800s. Go here if you want help with modern-day Tax Preparation in Cary, NC.
Keep an eye out for W. Marc Gilfillan’s next chapter in his History of Taxes series: Taxes and the American Revolution.
