Taxation with representation ain't so hot either.
Article submitted by a long-time Smithsonian member, volunteer, and Civil War Studies contributor.
Say "1040" and most adults will conjure up an image of the (in)famous Individual Income Tax Return. But, if not for the element of chance, we might be filling out 1039s or 1050s. The fact is, the number 1040 was simply the next number up in the system of sequential numbering of forms developed by the Bureau of Internal Revenue.
So it was that on January 5, 1914, The Department of the Treasury unveiled the new Form 1040 to awaiting taxpayers. The deadline for filing the form with the local tax collector's office was less than two months away, March 1, 1914. With just over 350,000 1040s filed in the first year, the Bureau of Internal Revenue audited 100 percent of the returns. But how did income tax in this country begin?
In addition to an income tax to support the Civil War, the wartime Congress passed dozens of tariffs and excise taxes on a variety of goods and services. You may have seen the postage-type stamps on the backs of cartes de visite, for example or other Civil War era items like playing cards. These revenue stamps verified that the required taxes had been collected and paid by the customer. The income tax was eliminated after the Civil War, and it was even declared unconstitutional. But it was another war, World War I, which prompted the overhaul of Mr. Lincoln's tax system.
In order to make the income tax constitutional, it was added as an amendment to the Constitution. At just 30 words, the Sixteenth Amendment is the briefest Constitutional Amendment with the exception of the Bill of Rights. It states, "The Congress shall have power to lay and collect taxes on incomes, from whatever source derived, without apportionment among the several States, and without regard to any census or enumeration."
Eight months after it was ratified, on October 13, 1913, President Woodrow Wilson signed the Underwood-Simmons tariff bill, enacting the first income tax law under the new authority of the Sixteenth Amendment. The bill eliminated many of these from the Civil War era, and even reduced the original income tax rate. The income tax, with a rate of one percent on incomes between $3,000 and $20,000, less deductions and exemptions, and graduated surtaxes up to six percent on higher incomes, applied to barely one percent of the population. Those who had to file cheerfully lined-up at their local revenue office, publicly flaunting their wealth, and proudly paying their income taxes.
These days, not so much. No one lines up, since over 70% of returns are filed electronically. And rather than just one percent of the population, almost everyone files who has qualifying income, whether they are babies or centenarians. Today do we file because we are proud to pay taxes? Maybe. Are we flaunting our wealth? Not likely. Are we cheerful? Only if we're getting a refund.
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