Taxation in the United States - History and Reform

By Prof. Dr. George S. Mentz, JD, MBA, CWM

07 January, 2007

Taxation in the United States

History

The U.S. Constitution gave Congress the power to levy federal taxes. Tariffs were the federal government's chief source of revenue until the Civil War, when Congress passed the first federal income tax to help cover war costs. The Office of the Commissioner of Internal Revenue was set up to collect the taxes.
The Civil War income tax ended in 1872. Congress tried to pass a similar income tax but in 1895 the Supreme Court declared it unconstitutional. No more federal income taxes were levied until 1913, when the Sixteenth Amendment passed.

In 1943, the "pay-as-you-go" system of tax withholding began. In 1953, the Treasury Department completed a reorganization of the Bureau of Internal Revenue, reforming it as a service agency under the name Internal Revenue Service (IRS). Throughout the second half of the twentieth century, tax laws were restructured to better serve taxpayers. The Tax Reform Act of 1969 helped to stop corporations and the rich from avoiding taxes. The Tax Reform Act of 1986 reduced the number and level of tax rates. The Taxpayer Relief Act of 1997 made more than 800 changes to the existing tax code.

Today, the IRS checks tax returns, collects tax payments, and issues refunds to taxpayers. Electronic filing, available nationwide in 1990, makes filing taxes faster, easier, and more accurate than ever before.

Generally all US residents and citizens are subject to USA taxation on income or gains that are realized and recognized.

Some basic goals of pending US Tax Reform are:

simplify Federal tax laws to reduce the costs and administrative burdens of compliance with such lawsshare the burdens and benefits of the Federal tax structure in an appropriately progressive manner while recognizing the importance of homeownership and charity in American societyand promote long-run economic growth and job creation, and better encourage work effort, saving, and investment, so as to strengthen the competitiveness of the United States in the global marketplace.

See a tax lawyer before making any important decision.

About the Authors
George Mentz is a licensed attorney and is trained in Internatinal Law and Business. Mentz has an earned MBA from an AACSB Accredited Business School and holds a Doctorate Degree or Juris Doctorate Degree from an ABA Accredited USA Law School. Prof. Mentz has faculty appointments and credentials in Silicon Valley, Miami, Chicago, Denver, Hong Kong, Singapore, and The Bahamas. . Prof. Mentz is a consultant providing expertise to Fortune 100 companies in several countries. The first person in the United States to achieve "Quad Designation" Status as a JD, MBA, licensed financial planner, and Certified Financial Consultant. Prof. Mentz has authored/published over 15 Books and has been featured or quoted in the Wall Street Journal, The Hindu National, El Norte Latin America, the Finanical Times, The China Daily, & The Arab Times. His research, publications, and speeches have been syndicated into over 100 countries. Prof. Mentz has recently been elected to the advisory board of the GFF Global Finance Forum in Switzerland and the World E-Commerce Forum in London, England. He also is on the Advisory Board of The ERISA Fiduciary Guild. Mentz was Editor and Chief for the Original Tax and Estate Planning Law Review at Loyola University (A Loyola University Chartered Organization). One of the First Lawyers in the USA to be credentialed and compliant to teach law in all 50 states in law school, graduate and undergraduate colleges and universities. Holds professor faculty appointment at Graduate LLM Law Program . Prof. Mentz has established Certification and Executive Training Accreditation Programs in over 50 Countries around the world including : UK, China, Mexico, Africa, Singapore, Taiwan, USA, Bahamas, India, Russia, EU, Philippines, Saudi Arabia, Canada, Vietnam, The Bahamas and more. General Counsel and Attorneyand Board of Standards Chair Prof. Mentz has recently been awarded a National Faculty Award, a Distinguished Faculty Award and a Meritorious Service Medal for Charitable Service. Prof Mentz has taught over 150 college and graduate courses in his faculty career.