It's a new year and hopefully it will be a better year than last. For our family, the beginning of the year always means the beginning of another tax season. My wife has been preparing for this for several months, teaching a tax class, taking online courses herself, and taking on any new rules that were introduced during that traumatic year.
We assume that this tax season will be a little different than in previous years. In my opinion, social distancing, disinfection and the wearing of masks mean that more and more customers hand in their papers at the tax office and only come to the signature.
The submission must of course still be made; It is a feature of modern life and we cannot escape it. But have you ever wondered who first introduced a general income tax to raise money to fund our government? Sorry to have to say this, but you can blame the British for this.
Governments have needed funding since the inception of the concept of government, but various funds had to be raised before a system was put in place where money was paid in exchange for work done, proper accounting was kept, and profits could be quantified.
The rich and powerful were taxed on what property they owned and what they produced, while the common folk paid over tithing, such as a percentage of what they grew and first fruits, etc.
The oldest records of any form of tax come from ancient Egypt and date back almost 5,000 years. You can find a similar record in your Bible, the book of Genesis, chapter 47, verse 24, which states that the Egyptian pharaoh consumed one-fifth of all the grain produced. After the Egyptians, the Greeks spread their influence in large parts of Europe, North Africa and the Middle East as far as India. They produced the Ptolemaic dynasty in Egypt, and we know they introduced tax laws because the translation of the Rosetta Stone found it to be a series of tax laws dating back to 196 B.C.
In China, Emperor Wang Mang needed money for his Xin dynasty and introduced a form of taxation in 10 AD. The tax was 10% and was applied to all profits made by professionals and artisans. It was just one of many ways he tried to raise funds and 13 years later he was deposed and his head was cut off.
The Romans imposed taxes on their citizens, later also the Chinese dynasties. In England, King Henry II introduced a so-called "Saladin tax" in 1188. This tax stated that any lay person with income or personal property had to pay 10% to the Crown to fund the Third Crusade to the Holy Land.
So that was the situation until the Middle Ages. People paid taxes, but they were not universal and based more on what they had than what they earned and were usually at a set rate.
This is where the British come in.
In 1798, Britain had been at war with revolutionary France for five years and the country was in dire need of money to continue the fighting. It was then that a man named Henry Beeke proposed a progressive tax. He was a clergyman but published a pamphlet entitled "Observations on Income Tax Income and Their Relation to Total Income in Great Britain". Prime Minister William Pitt liked it and presented it to Parliament in a budget this December.
Adjusted for today's prices, the proposal was that anyone earning the equivalent of $ 8,500 a year would pay $ 71 in taxes. There was then a season of up to $ 225 for those who got $ 27,000 or more per year. The tax was revoked four years later, but a precedent was set and it was soon reintroduced, revoked and then reintroduced despite strong objections, this time permanently in 1841.
When did the idea of a universal, progressive income tax cross the Atlantic to these shores? The reason for its introduction was again the war. On August 5, 1861, the federal government introduced America's first income tax, paid on the Union cause during the Civil War. It was introduced at a rate of 3% on all incomes over $ 800 – approximately $ 23,000 at today's rate – per year. In 1862 this was repealed and another tax law was introduced.
This lasted about 10 years but was canceled even then. In 1894, the government cut tariffs on imported goods and introduced the Revenue Act to generate income, which provided an income tax of 2% on all incomes over $ 4,000 per year. This wasn't bad news for the common worker. $ 4,000 is about $ 120,000 today, and only a tenth of the population would have to pay the tax.
Even so, there was opposition to the law and the Supreme Court ruled that it was against the 10th Amendment, and it wasn't until 1913 that the 16th Amendment gave the government the right to impose personal income tax on the people. The tax has been with us ever since, and less than five years after its inception, the IRS recorded income tax revenues of over $ 1 billion. it has risen since then.
There you have a brief story about why most of us need to file a tax return. I'm sure Mr. Beeke and William Pitt didn't know exactly what they started in the late 18th century. Income tax is paid almost everywhere now, but if you really don't like it Bermuda, Monaco, the Bahamas, Andorra, and the United Arab Emirates don't have personal income tax. The thing, however, is that if you want to move there, you will have to give up your American citizenship. Happy New Year everyone.
Derek Coleman is a part-time writer originally from England and now living in Hurricane, W.Va. He can be reached at [email protected].