bryanleu2002
04-19-2008, 02:00 AM
How Much Do You Know About The History Of The U.S. Tax System?
Source-http://www.foxbusiness.com/markets/industries/media/article/know-history-tax_568508_15.html
LOS ANGELES -- This week, the television show "Jeopardy!" featured a category titled "April 15th," filled with fun facts about the dire day. Let's see how much you know about U.S. tax history.
What was the first tax imposed upon the American Colonies? How did the U.S. pay the debts generated by the American Revolution?
a) Property taxes, based on acreage and improvements;
b) excise taxes on liquor, tobacco, sugar, auctions;
c) head taxes, levied on each person in household and servants and slaves; d) travel taxes, fees to enter and exit the country;
e) All of the above.
Why was the first personal income tax assessed in the U.S.? Which amendment to the Constitution made income taxes permanent? What was the range of the first tax rates or brackets? When was a Social Security tax first imposed? What problem was it intended to solve? When did income tax withholding become a permanent part of our lives? Why is illegal income taxed, right along with legal income? When was the Internal Revenue Service formed?
What is the Internal Revenue Service's mission statement?
The answers
1. What was the first tax imposed upon the American Colonies?
Answer, according to the Treasury Department: "The Stamp Act in 1765. England's need for revenues to pay for its wars against France led it to impose a series of taxes on the American colonies. In 1765, the English Parliament passed the Stamp Act, which was the first tax imposed directly on the American colonies, and then Parliament imposed a tax on tea."
2. How did the U.S. pay the debts generated by the American Revolution?
Answer, according to the Treasury Department: "To pay the debts of the Revolutionary War, Congress levied excise taxes on distilled spirits, tobacco and snuff, refined sugar, carriages, property sold at auctions, and various legal documents. Even in the early days of the Republic, however, social purposes influenced what was taxed.
"For example, Pennsylvania imposed an excise tax on liquor sales partly 'to restrain persons in low circumstances from an immoderate use thereof.' Additional support for such a targeted tax came from property owners, who hoped to keep their property tax rates low, providing an early example of the political tensions often underlying tax policy decisions."
3. Why was the first personal income tax assessed in the U.S.? The answer, according to the Treasury Department: "When the Civil War erupted, the Congress passed the Revenue Act of 1861, which restored earlier excises taxes and imposed a tax on personal incomes. The income tax was levied at 3% on all incomes higher than $800 a year.
"This tax on personal income was a new direction for a federal tax system based mainly on excise taxes and customs duties. Certain inadequacies of the income tax were quickly acknowledged by Congress and thus none was collected until the following year ... the income tax was abolished in 1872."
4. What amendment to the Constitution made income taxes permanent?
Answer, according to the Treasury Department: The 16th Amendment.
5. What was the range of the first tax rates or brackets? Answer, according to the Treasury Department: "Rates beginning at 1% and rising to 7% for taxpayers with income in excess of $500,000. Less than 1% of the population paid income tax at the time. Form 1040 was introduced as the standard tax reporting form and, though changed in many ways over the years, remains in use today."
6. When was a Social Security tax first imposed?
Answer, according to the Treasury Department: "The state of the economy during the Great Depression led to passage of the Social Security Act in 1935. This law provided payments known as 'unemployment compensation' to workers who lost their jobs. Other sections of the law gave public aid to the aged, the needy, the handicapped, and to certain minors.
"These programs were financed by a 2% tax, one half of which was subtracted directly from an employee's paycheck and one half collected from employers on the employee's behalf. The tax was levied on the first $3,000 of the employee's salary or wage."
7. When did income tax withholding become a permanent part of our lives?
Answer,
according to the Treasury Department: "Because of World War II, an important feature of the income tax that changed was the return to income tax withholding as had been done during the Civil War. This greatly eased the collection of the tax for both the taxpayer and the Bureau of Internal Revenue. However, it also greatly reduced the taxpayer's awareness of the amount of tax being collected, i.e. it reduced the transparency of the tax, which made it easier to raise taxes in the future."
8. Why is illegal income taxed, right along with legal income?
Answer, according to the Treasury Department: "One of the problems with the new income tax law was how to define 'lawful' income. Congress addressed this problem by amending the law in 1916 by deleting the word 'lawful' from the definition of income. As a result, all income became subject to tax, even if it was earned by illegal means. Several years later, the Supreme Court declared the Fifth Amendment could not be used by bootleggers and others who earned income through illegal activities to avoid paying taxes."
9. When was the Internal Revenue Service formed?
Answer, according to the Treasury Department: "In 1953, the Bureau of Internal Revenue was renamed the Internal Revenue Service (IRS (javascript:stockSearch('IRS');): 13.50, -0.01, -0.07%), following a reorganization of its function. The new name was chosen to stress the service aspect of its work. By 1959, the IRS had become the world's largest accounting, collection, and forms-processing organization."
10. What is the Internal Revenue Service's mission statement?
Answer, according to IRS.gov: "Provide America's taxpayers top quality service by helping them understand and meet their tax responsibilities and by applying the tax law with integrity and fairness to all."
How did you do?
If you got nine to 10 answers correct, you're a Tax Genius. Heck, you're probably an avowed Tax Nerd!
Six to eight correct: You are Tax Smart. You're better informed than the average American.
Four to five correct: Tax Norm. You're alive and breathing and know a bit about your taxes and rights.
Zero to three correct: Tax Twit. You're probably a victim of the tax system - and it's likely you're paying too much.
Useful resources
U.S. Treasury Department's history of the tax system. (http://www.treasury.gov/education/fact-sheets/taxes/ustax.shtml)
All about the Internal Revenue Service, by the IRS. (http://www.irs.gov/irs/article/0,,id=98141,00.html)
Tax Policy Center's tax facts page. (http://www.taxpolicycenter.org/taxfacts/)
Tax Analysts' tax history project. (http://www.taxhistory.org/)
http://www.foxbusiness.com/markets/industries/media/article/know-history-tax_568508_15.html
Source-http://www.foxbusiness.com/markets/industries/media/article/know-history-tax_568508_15.html
LOS ANGELES -- This week, the television show "Jeopardy!" featured a category titled "April 15th," filled with fun facts about the dire day. Let's see how much you know about U.S. tax history.
What was the first tax imposed upon the American Colonies? How did the U.S. pay the debts generated by the American Revolution?
a) Property taxes, based on acreage and improvements;
b) excise taxes on liquor, tobacco, sugar, auctions;
c) head taxes, levied on each person in household and servants and slaves; d) travel taxes, fees to enter and exit the country;
e) All of the above.
Why was the first personal income tax assessed in the U.S.? Which amendment to the Constitution made income taxes permanent? What was the range of the first tax rates or brackets? When was a Social Security tax first imposed? What problem was it intended to solve? When did income tax withholding become a permanent part of our lives? Why is illegal income taxed, right along with legal income? When was the Internal Revenue Service formed?
What is the Internal Revenue Service's mission statement?
The answers
1. What was the first tax imposed upon the American Colonies?
Answer, according to the Treasury Department: "The Stamp Act in 1765. England's need for revenues to pay for its wars against France led it to impose a series of taxes on the American colonies. In 1765, the English Parliament passed the Stamp Act, which was the first tax imposed directly on the American colonies, and then Parliament imposed a tax on tea."
2. How did the U.S. pay the debts generated by the American Revolution?
Answer, according to the Treasury Department: "To pay the debts of the Revolutionary War, Congress levied excise taxes on distilled spirits, tobacco and snuff, refined sugar, carriages, property sold at auctions, and various legal documents. Even in the early days of the Republic, however, social purposes influenced what was taxed.
"For example, Pennsylvania imposed an excise tax on liquor sales partly 'to restrain persons in low circumstances from an immoderate use thereof.' Additional support for such a targeted tax came from property owners, who hoped to keep their property tax rates low, providing an early example of the political tensions often underlying tax policy decisions."
3. Why was the first personal income tax assessed in the U.S.? The answer, according to the Treasury Department: "When the Civil War erupted, the Congress passed the Revenue Act of 1861, which restored earlier excises taxes and imposed a tax on personal incomes. The income tax was levied at 3% on all incomes higher than $800 a year.
"This tax on personal income was a new direction for a federal tax system based mainly on excise taxes and customs duties. Certain inadequacies of the income tax were quickly acknowledged by Congress and thus none was collected until the following year ... the income tax was abolished in 1872."
4. What amendment to the Constitution made income taxes permanent?
Answer, according to the Treasury Department: The 16th Amendment.
5. What was the range of the first tax rates or brackets? Answer, according to the Treasury Department: "Rates beginning at 1% and rising to 7% for taxpayers with income in excess of $500,000. Less than 1% of the population paid income tax at the time. Form 1040 was introduced as the standard tax reporting form and, though changed in many ways over the years, remains in use today."
6. When was a Social Security tax first imposed?
Answer, according to the Treasury Department: "The state of the economy during the Great Depression led to passage of the Social Security Act in 1935. This law provided payments known as 'unemployment compensation' to workers who lost their jobs. Other sections of the law gave public aid to the aged, the needy, the handicapped, and to certain minors.
"These programs were financed by a 2% tax, one half of which was subtracted directly from an employee's paycheck and one half collected from employers on the employee's behalf. The tax was levied on the first $3,000 of the employee's salary or wage."
7. When did income tax withholding become a permanent part of our lives?
Answer,
according to the Treasury Department: "Because of World War II, an important feature of the income tax that changed was the return to income tax withholding as had been done during the Civil War. This greatly eased the collection of the tax for both the taxpayer and the Bureau of Internal Revenue. However, it also greatly reduced the taxpayer's awareness of the amount of tax being collected, i.e. it reduced the transparency of the tax, which made it easier to raise taxes in the future."
8. Why is illegal income taxed, right along with legal income?
Answer, according to the Treasury Department: "One of the problems with the new income tax law was how to define 'lawful' income. Congress addressed this problem by amending the law in 1916 by deleting the word 'lawful' from the definition of income. As a result, all income became subject to tax, even if it was earned by illegal means. Several years later, the Supreme Court declared the Fifth Amendment could not be used by bootleggers and others who earned income through illegal activities to avoid paying taxes."
9. When was the Internal Revenue Service formed?
Answer, according to the Treasury Department: "In 1953, the Bureau of Internal Revenue was renamed the Internal Revenue Service (IRS (javascript:stockSearch('IRS');): 13.50, -0.01, -0.07%), following a reorganization of its function. The new name was chosen to stress the service aspect of its work. By 1959, the IRS had become the world's largest accounting, collection, and forms-processing organization."
10. What is the Internal Revenue Service's mission statement?
Answer, according to IRS.gov: "Provide America's taxpayers top quality service by helping them understand and meet their tax responsibilities and by applying the tax law with integrity and fairness to all."
How did you do?
If you got nine to 10 answers correct, you're a Tax Genius. Heck, you're probably an avowed Tax Nerd!
Six to eight correct: You are Tax Smart. You're better informed than the average American.
Four to five correct: Tax Norm. You're alive and breathing and know a bit about your taxes and rights.
Zero to three correct: Tax Twit. You're probably a victim of the tax system - and it's likely you're paying too much.
Useful resources
U.S. Treasury Department's history of the tax system. (http://www.treasury.gov/education/fact-sheets/taxes/ustax.shtml)
All about the Internal Revenue Service, by the IRS. (http://www.irs.gov/irs/article/0,,id=98141,00.html)
Tax Policy Center's tax facts page. (http://www.taxpolicycenter.org/taxfacts/)
Tax Analysts' tax history project. (http://www.taxhistory.org/)
http://www.foxbusiness.com/markets/industries/media/article/know-history-tax_568508_15.html