Question

How has tax law developed in the United States? Has there always been a tax on income? What are the reasons that prompt Congress to impose taxes on individuals and businesses?

Answer 1

How has tax law developed in the United States???

The history of taxation in the United States begins with the colonial protest against British taxation policy in the 1760s, leading to the American Revolution. The independent nation collected taxes on imports ("tariffs"), whiskey, and (for a while) on glass windows. States and localities collected poll taxes on voters and property taxes on land and commercial buildings. There are state and federal excise taxes. State and federal inheritance taxes began after 1900, while the states (but not the federal government) began collecting sales taxes in the 1930s.

Has there always been a tax on income?

The origin of the income tax on individuals is generally cited as the passage of the 16th Amendment, passed by Congress on July 2, 1909, and ratified February 3, 1913; however, its history actually goes back even further. During the Civil War Congress passed the Revenue Act of 1861 which included a tax on personal incomes to help pay war expenses. The tax was repealed ten years later. However, in 1894 Congress enacted a flat rate Federal income tax, which was ruled unconstitutional the following year by the U.S. Supreme Court because it was a direct tax not apportioned according to the population of each state. The 16th amendment, ratified in 1913, removed this objection by allowing the Federal government to tax the income of individuals without regard to the population of each State.

What are the reasons that prompt Congress to impose taxes on individuals and businesses?

Income tax is imposed on individuals, corporations, estates, and trusts. The reasons that prompt Congress to impose taxes on individuals and businesses were the following:

1. To make up for revenue that would be lost by tariff reductions
2. To meet the fund reqirements for public welfare
3. For defence and war expenses