If there is one thing that has gotten Americans fired up throughout history, it’s taxes! This Fourth of July, our country is once again buzzing about sweeping changes to our tax laws. Indeed, America is no stranger to tax reform. Here’s a quick look at some of the ways taxes have evolved since the birth of our nation:
1620: Compared to Europe, the New World was a relative tax haven! England, Spain, and Holland used incentives like tax exemptions to motivate settlers to cross the sea and build their colonies. Immigrants left their high tax homelands in droves in search of adventure – and lower taxes – overseas.
1765: Attempting to offset some of its own war debt, England imposed a tax on printed-paper items in the colonies. This Stamp Act was not well received by the colonists. They began to revolt, adopting “No taxation without representation!” as their battle cry.
1861: The IRS was founded, and the modern tax system was born!
1913: The 16th Amendment gave Congress the authority to start collecting federal income tax.
1940: Tax rates in America were sky high. The New Deal was extremely costly, a second World War was on the horizon, and the only way to pay for it all was to bring in revenue. Consequently, in 1945, the top bracket – income of $200,00 and above – was taxed at a rate of 94%!
1970: Even with some small repeals to the law, taxes remained painfully high in response to inflation, Social Security, and Medicare.
1986: After decades of heavy taxation, Americans finally got a break. Major tax reforms brought the top tax rate down from 50% to 28%, and corporate tax was lowered from 50% to 35%.
Dec. 22, 2017: President Trump signed the Tax Cuts and Jobs Act into law. It is the first major tax reform since 1986, and it will affect how you file in 2019!
Have a safe and happy Fourth of July, from all of us here at TaxSlayer!