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W. Marc Gilfillan, CPA, NC, individual and business CPA and Tax expert, shares about the history of taxes…

From 1868 until 1913, almost 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 when the sixteenth Amendment was passed and enabled Congress to tax incomes “from whatever sources attained.” The first 1040’s were due on March 1, 1914. No money was taken from paychecks and no money was sent in with the return. Every taxpayer’s computations were checked by IRS field agents and a bill mailed to the taxpayer on the first of June.

1766 – Leaders of the colonies got together to protest British taxes under the Stamp Act. This Stamp Act Congress, which it was named, marked the start of the American independence movement and the birthplace of the United States.

1782 – The first Congress under the Articles of Confederation met. This Congress had no ability to tax the people.

1789 – Americans gave a new Congress taxing powers. Without taxing powers, the first Congress of the United States barely survived seven years prior to being dubbed a failure; the 2nd Congress, granted taxation powers, is still going strong 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 into passing an excise tax on whiskey to increase earned income for the government and curb drinking. In the western frontier whiskey was the traditional medium of exchange, and the twenty-five percent tax was a bit difficult to deal with. By 1794 the area was openly in rebellion. The forerunner of the Internal Revenue Service was spawned 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 for continued high import taxes that increase the price on goods for Southern consumers and promote industrial monopolies in the North.

1850 – John C. Calhoun of South Carolina tells Congress that the South might secede from the Union due to the fact that heavy taxing of the South increased funds that ended up in the North, creating a massive change in wealth from the South to the North.

Stay tuned for Parts 2 and 3 of the Timeline of US Tax Policy!

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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 it? Certainly the American Civil War was about slavery… wasn’t it? Well actually, one of the most popular myths in our history is that the Civil War was started over the slavery issue and that Lincoln, the Great Emancipator, fueled a terrible war to break the chains of bonding that shackled over three million black Americans. Just prior to the war, the South had everything its way.

In 1860, the South controlled the Supreme Court and Lincoln and Congress were beginning the process of passing a constitutional amendment to keep slavery forever! So what happened?

Let’s rewind the time back to the year 1832. By that year the national debt from the War of 1812 had been extinguished and the South did not see a 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, Southern funds transferred to the North. To say the South wasn’t content with this arrangement would be an understatement. If you’re feeling the pressure with today’s taxes, call a CPA for Tax Preparation in Raleigh, NC for all your tax-related needs!

Consequently, in 1832 a convention was held in South Carolina to get rid of these federal import taxes. The South decided the tax was unconstitutional and authorized the governor to defy the enforcement of the import taxes instituted by the national government. It looked like a civil war was in the works. Cool heads won over, however, and the Great Compromise of 1833 reduced import taxes over the subsequent few years to an area the South would tolerate. Go here if you want help with a modern-day Tax Return in Raleigh, NC.

Over the next few years, however, Northern commercial and manufacturing interests forced through Congress new taxes that again stressed Southern planters and allowed Northern Manufacturers to become rich once again. In 1850, John C. Calhoun, the South’s greatest exceptional spokesperson, gave a speech to Congress. His speech spoke of 3 wrongs done to the South that may cause secession from the Union and war. The first two involved fears about the erosion of power of the South in general and the states as well.

The third, and really the only solid grievance, was about taxation. In Calhoun’s eyes, national import taxes was a class legislation against the South. Heavy taxes on the South created funds that were spent in the North. The focus of economic strength in the United States was steadily changing strongly to the North. Calhoun threatened secession if the taxes were not reduced. But what about the slavery issue? Well, in his run for the presidency in 1860, Lincoln steadily repeated he would not interfere with slavery in the South. Truly, most Northerners did not really care about enslaved blacks, any more than they worried about the Native-American in the West or impoverished uneducated workers in factories. By and large many black slaves got better treatment and more compassion than their working-class counterparts in the North. Lincoln, in fact, told Southern plantation-owners that run-away slaves would be caught. The Congress and subsequently the Supreme Court (Dred Scott decision) continually affirmed that slavery was here to stay.

But, just as Lincoln was elected and Congress came together in 1861, they created more high import tariffs. Slavery was not the problem – higher import taxes were. In his inaugural address Lincoln stated he would go get the customs in the South even if there happened to be a secession!

Fort Sumter, at the entrance of the Charleston Harbor, began filling with Union troops to support the collection of the new taxes. The Civil War began in 1861 when South Carolinians shot at the federal garrison at Fort Sumter. The conflict had been stewing for decades – but it was not over the slaves. It was over tax policy.

2 years after that, Lincoln put into action the Emancipation Proclamation, and then only following repeated military defeats, as a last resort to rally the North to a noble cause. To address the slave issue – the majority of Northerners cared little concerning black people in bondage, any more than they cared of Native-Americans in the west or impoverished uneducated peasants in the factories. By and large, many black slaves received better treatment and more compassion than their impoverished counterparts in the North.

That’s it for the History of Taxes Series!

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