The government doesn’t tend to let citizens skimp on paying taxes owed. However, that doesn’t mean that they are using your money in an entirely productive manner. Let’s take a look at tax history and how the U.S. government tends to misuse its self-proclaimed share of citizens’ tax dollars.
The American government began collecting tax money relatively early in its career, placing internal taxes on distilled spirits, refined sugar, tobacco, carriages, property sold at auction, slaves, and corporate bonds between the years 1791 and 1802. In 1812, the government began taxing gold, jewelry, silverware, and watches in order to finance the War of 1812. One year later, all internal taxes were abolished and the government functioned by creating tariffs on imported items.
Income tax was born in 1862 in an effort to fund the Civil War; Congress enacted laws that took 3 percent of all incomes up to $10,000, an inheritance tax, and additional sales and excise taxes. They also appointed a commissioner of internal revenue. Four years later, internal revenue collections amounted to a tidy sum of about $310 million – a revenue peak that the government wouldn’t see the likes of again until 1911.
Income tax was revived once again in 1894, but the Supreme Court ruled this government usurpation of citizen money unconstitutional in 1895. In 1913, however, the 16th Amendment gave Congress the renewed right to tax U.S. nationals. Now they had the power to take 1 percent of incomes over $3,000 and 6 percent of incomes over $500,000. It was in 1913 that the infamous 1040 tax form was born.
Perhaps unsurprisingly, taxes went up to 77 percent in 1918, during World War I, in an effort to finance the national effort overseas. Taxes went back down again during the 1920s, but rose once more during the Great Depression of the 1930s.
In the 1950s the IRS was reorganized to replace the old patronage system with professional employees. It was around this time that many of the most famous U.S. tax blunders took place.
In 1951, for example, 66 IRS employees were fired for extortion and taking bribes. In 1964, an effort by the FBI to discredit the United Klans of America was effectively thwarted when the group was forced to disclose its tax information. Under the Obama administration, the IRS is actively and openly searching for ways in which to discredit the Tea Party and other conservative groups.