Expatriate Tax Questions
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HISTORY of U.S. TAXATION
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years ago there was no federal income tax as we know it today. As the nation
developed so did our need to raise money to support our growth.
came the Revenue Act of 1813-Taxes were imposed when and as needed
1862- U.S. government operations funded through collected import duties and
sold public lands
July 1, 1862 Congress formed Office of Commissioner of Internal Revenue
(within the U.S. Treasury) to meet fiscal demands of the Civil War.
the war, tax efforts declined and in 1872 the tax was repeal
n 1894 Congress revived the tax; however the
following year the Supreme Court ruled the tax to be unconstitutional.
In 1913 the 16th
Constitutional Amendment introduced our first Income Tax
giving Congress the authority to enact tax legislation. There exists the
on-going debate as to whether or not the States actually ratified the 16th
Amendment. Pursuant to Article V of the Constitution, an amendment to
the Constitution requires ratification by 75% of the States. The 16th
Amendment was ratified by 40 states, including Ohio, and issued by
proclamation in 1913. Shortly thereafter the amendment was supported by two
additional states. Further the matter concerning constitutionality of
subsequent income tax legislation has been upheld by the Supreme Court in
Brushaber v. Union Pacific R.R.., 240 U.S. 1 (1916) and has since been
consistently upheld by the Courts. For more information concerning why NOT
to EVADE one's tax responsibilities read "Why Pay Tax" (navigation option
fiscal demands and increased tax efforts
causing rates to spike to 77%
1916-1951 new tax legislation was enacted every year
with rates as high
as 77% in 1918 and as low as 24% in 1929, followed by increases to finance
our national deficit during the Great Depression.
The Revenue Act of 1926 created the Joint Committee on
Internal Revenue Taxation following two years of investigations of alleged
inefficiency and waste within the Bureau of Internal Revenue by the Senate
Select Committee following the introduction by Senator James Couzens
(Michigan) of a resolution to create such a committee. At that time one of
the issues being investigated by the Senate Select Committee was the
valuation of oil and gas properties and in 1925 made public charges that
millions of tax dollars were being wasted as a result of the Bureau's
favorable treatment of large corporations, especially those associated with
the Oil & Gas Industry. Shortly thereafter, Senator Couzens was notified by
the Bureau that he owed $10 Million in back taxes. The then Secretary of the
U.S. Treasury Department was Andrew W. Mellon who at the time was the
principal owner of Gulf Oil, which it appears had significantly benefited
from the Bureau rulings that were specifically criticized by Senator
Couzens. This led to further investigation by the Senate Select Committee
into the affairs of Andrew Mellon which lasted until 1935 when he was
exonerated. This information is available on the
website. One of the Joint Committee's primary responsibilities is
to ensure tax simplification. Sure is simple to me!
Tax Laws first codified as an integral part of the
Code-the Internal Revenue Code of 1939 (IRC 1939)
uring WWII tax legislation created the first
payroll withholding tax and estimated tax payment requirements.
tax code was amended and becomes IRC 1954. The IRS was reorganized and the
name changed from the Bureau of Internal Revenue to the Internal Revenue
Service to better reflect the service that it extended to the
completely revamped: becomes IRC 1986 US Code, Title 26, Internal Revenue
Code of 1986
Relief Act of 1997-New beneficial rules to offset education costs.
1998 saw the IRS Restructuring and Reform Act which
revamped the IRS and was responsible for the creation of the Taxpayer
Advocate Services (TAS). When you find yourself pounding your head against
the wall and all else fails with the IRS (assuming that you are in the
right) then contact TAS and they will fix the problem.
Economic Growth and Tax Relief Reconciliation Act of 2001. Phased in changes with sunset provisions causing the
new tax laws to terminate in 2011, leaving the clean up to future sessions
Middle income taxpayers assume burden for repealed estate tax provisions by
now paying capital gains income tax on decedent's built in gain
more drastic changes to our tax system that include a $250 (max) deduction to
Gross Income (AGI adjustment) for educator's (teacher's etc.) expenses,
substantial increases in the Child Credit (up to 15% of the amount of earned
income that exceeds $10,750). new combat zone pay exclusions, earned income
credits and tax payment deferrals. Also beginning in 2004, Congress restored the
old sales tax deduction, but with a new twist. You can now elect EITHER a
deduction for income tax paid, OR a sales tax deduction that is based on general
sales tax rate tables in addition to sales tax paid on motor vehicles and boats.
So if you live in a state like Florida where there is no state income tax, you
now can claim a new tax deduction, but if you live in a high tax state such as
NY or CA, you could see no benefit whatsoever. Is this discriminatory and
therefore unconstitutional? My guess is that someone will challenge this
legislative provision. Oh, and don't forget the $2,000 Clean Fuel Vehicle
Deduction which has been retained through 2005 if you buy one of those hybrid
electric/gasoline cars like the ones made by Toyota and Honda. It needs to be a
pre-certified and qualifying vehicle so check out the rules before you buy.
I want to know why we get a tax deduction to buy from foreign car companies
and why not American car manufacturers.
I guess I need
to research this some more
2008- Economic Bailout Plan Personal Tax
Provisions- Some very important tax changes but in my opinion, too little and
too late for many Americans. Read
your money so don't
forget that the tax laws that determined the amount of tax that you pay are
legislated by your representatives that you elect to Congress. This same
congress determines how your money is to be spent which in turn directly
influences the amount of tax revenue that is needed to finance the budget.
It is your responsibility to learn the issues and get to know your
representatives in Congress.
Democracy is NOT a Spectator Sport
and in today's
information age you have instant access to government websites as well as those
of your representatives on Capitol Hill. So let
your elected representatives in the House of
Representatives and U.S. Senators in Congress know how you feel about
the issues, and to vote for the candidate who will best serve your interests.
This is still a democracy, a government elected by the people, of the people and
for the people of our United States of America. The same is true regarding your
state legislators and representatives. The key word here is elected!
Watch what your elected representatives are doing and let them know
that if they want to keep their jobs by getting re-elected, they had better
represent you. Also, keep a close watch on what is going on at the
U.S. Treasury Department (of which the IRS
is part of)-the guys who spend your money, and of course
The White House. To access many of the
U.S. Government's programs go to FirstGov.gov.
you know that initially,
the methodology used to determine tax liability was very simple. It was almost like a flat tax
for individual taxpayers and based on simple accounting for businesses. The rate
initially was 1% of net personal income over $3,000 plus a 6% surcharge on
income over $500,000. Today
many proponents say they want a flat
tax, but history teaches us that we pay dearly for simplicity. 1981 brought
reduced rates and elimination of deductions, for which we are paying dearly
Besides, income taxation creates jobs for millions of accountants
and IRS employees.
once saw a poster that read:
NEW FLAT TAX FORMULA:
How much did
you make this year?
This is your tax amount-send it in!