Our agency is now working with one of the U.S. major tax preparation companies so I’ve been reading up on the category in general. I knew that personal income taxes began sometime in the early 20th century but you (as I was), might be interested or even surprised to learn is that exactly one hundred years ago this October, the United States under President Woodrow Wilson introduced Personal Income Tax in the U.S… I never liked the name Woodrow very much and now I like it even less. But the history of income taxes is – to me – interesting.
From About.com; ‘At first, income taxes were considered a temporary tax to help raise money for war. The first time an income tax was enacted was in 1799 in Great Britain to help the British pay for troops and supplies to defeat the French forces led by Napoleon.
In the War of 1812, the U.S. first considered enacting an income tax, but the war ended before the tax was officially created. Yet, during the American Civil War, the first U.S. income tax was created, but this one was meant only as a temporary measure to help pay for the war. It was repealed in 1872.
By the 1890s, the U.S. government was hoping to find a way to more evenly distribute the federal tax burden and thus looked at creating a permanent income tax.’
In 1894 Congress enacted a flat rate Federal income tax, which was ruled unconstitutional the following year by the U.S. Supreme Court because it was a direct tax not apportioned according to the population of each state. Until the 16th Amendment to the Constitution was ratified in 1913, the federal government was forced to collect taxes based on state population. Once the 16th Amendment was passed, the U.S. government passed its first, permanent income tax law in October 1913.
According to the CCH Standard Federal Tax Reporter, as of 2013, it now takes 73,954 regular 8-1/2″ x 11″ sheets of paper to explain the complexity of the U.S. federal tax code
Believe it or not, that represents an improvement from the trend that has existed since the end of World War 2, where the tool we developed to project the number of pages needed to explain the U.S. income tax code had anticipated that 77,030 pages would be needed in 2013.
Nobody enjoys paying taxes. But like it or not, most people are aware of why governments levy taxes. So now are we going to help market a service that is at best a necessary evil? It’s sort of like trying to get people to go to the dentist. I think it’s also interesting that both we and the client discuss the impact of social media as it relates to listening to what customers are saying since there are likely only to be negative comments. Simplification of the U.S. tax code seems to be a popular meme but also seems like it will never happen. You can guess the reasons for that (hint: think whose jobs are at stake)
I’m not ready to wish the tax man a happy 100th are you?