History of Federal Taxation in the United States

History of Federal Taxation in the coupled StatesThe existing tax income policies in the U.S. have been characterized by a myriad of changes over the decades as a result of variations in the governments roles as well as the changing circumstances. The U.S. plane section of Treasury asserted that the kinds of taxes imposed, their percentages as well as the size of the collections differ from what they were 100 years ago due to various historical events, including the war, the 16th essential Amendment, changes in the society, economy, and the changes in the governments roles and responsibilities.During the colonial times and the post-revolutionary era, which spanned from 1791 to 1802, the U.S. had no income tax law. Therefore, to finance its roles and responsibilities, it relied on the contributions made by the states and internal taxes on whiskey and other distilled spirits, baccy and snuff, refined sugar, carriages, properties sold at auction, slaves, and the corporate bonds (Sa ndbox Networks, Inc.). When President Jefferson was elected in 1802, he abolished these direct taxes, leaving the federal government, for the next decade, with only the internal gross taxes. However, in 1812, more funds were needed to finance the war and Congress imposed extra excise taxes, issued Treasury notes, and raised certain customs duties (U.S. department of the Treasury). In 1817, all these taxes were cancelled and for the following 44 years, the country relied on the customs duties and the public land sales for its revenues.Upon the eruption of the Civil War, Congress enacted the tax revenue Act of 1861, reintroducing the former excise taxes and imposing taxes on personal earnings at a rate of 3% on all incomes above $800 a year (U.S. Department of the Treasury). However, due to some noted inadequacies, the personal income taxes became effective only in 1862. The increased cost of the war made Congress drop dead a new excise tax law in 1862 focusing on items like the pi anos, gunpowder, feathers, playing cards, leather, iron, drugs, patent medicines, telegrams, billiard tables, whisky, legal documents, and license fees. In 1872, the income tax was abolished, but it was again revived in 1894 and 1895 before being deemed unconstitutional (Sandbox Networks, Inc.).The 16th Amendment of 1913 reintroduced the income tax and made it a permanent item in the U.S. tax system. Through this law, Congress imposed taxes on incomes of both individuals and corporations. The U.S. entry into World War I saw Congress pass in 1916 and 1918 revenue enhancement Acts, all increasing the tax rates. In 1943, there was an introduction of the withholding taxes on wages. The need for more far-reaching reforms in the U.S. tax system led to the depicting of the Tax Reform Act of 1986, which lowered the individual income tax rate from 50% to 28%. Other notable changes to the U.S. tax system were made with the 1993 Revenue Reconciliation Act and the 2001 Economic Growth and Ta x Relief Reconciliation Act of 2001 under the Clinton and George Bush administrations, respectively.Taxation is an important fiscal polity item in every economy. The view of this paper in regard to the contribution of the taxation on the economic growth depends on its policy, the purpose for which it is store and the administration. Lower tax rates for the lower-income groups have been linked with improvements in the economy, especially through the creation of jobs (Worstall). This idea of spurring the economic growth by cut down the tax rate was advocated for by President Reagan in 1986 due to the effects on the economic incentives experienced by businesses and individuals. Therefore, the government should reduce the marginal tax rates with a view to significantly expand the tax base. Also, a tax imposed to collect revenues to finance war activities may not tether to improvement in economy unlike the one used to finance various economic activities.Works CitedSandbox Networks, I nc. History of the Income Tax in the United States. 2017, http//www.infoplease.com/ipa/A0005921.html. Accessed 17 Jan. 2017US Department of the Treasury. History of the US Tax System. Aug. 2003, http//www.policyalmanac.org/economic/archive/tax_history.shtml. Accessed 17 Jan. 2017Worstall, Tim. Tax Cuts Do Increase Employment, Do Create Jobs, the wisdom Is In. Forbes, 22 Apr. 2015, http//www.forbes.com/sites/timworstall/2015/04/22/tax-cuts-do-increase-employment-do-create-jobs-the-science-is-in/28d752437382. Accessed 17 Jan. 2017