Internal Revenue Service – the public agency of the Federal Government of the United States, which is engaged in the collection of taxes, and monitors compliance with the taxation legislation.
American historian Elliott Brownlee (Elliot Brownlee), author of the book “Federal Taxes in America. A Brief History », came to the conclusion that there were four turning points in the history of American taxation – Civil War, World War I,” the Great Depression “and “World War II”. In all these cases, the authorities were forced to create a fundamentally new tax regime. Joseph Thorndike, editor of the analytical portal tax Tax Analysts, noted that taxes do not change by themselves – they are the result of society and can only change with it. Changes may occur in other cases – for example, if any taxes for some reason cease to generate income to the state.
After the emergence the new nation – the United States of America – taxes have been relatively few. In the period from 1791 to 1802 the US federal government imposed taxes on alcohol distillation process, to horse-drawn carriages on refined sugar, tobacco, estate sold at auction, corporate securities and slaves.
The situation changed dramatically with the beginning of the war with the British Empire (1812). To patch up the budget, sales taxes were introduced, which were charged with the implementation of the gold, silver, jewelry and watches (a luxury item at that time). However, in 1817 the US Congress canceled the taxes – they started replacing customs duties on imported goods.
Another tax reform started in 1862 – after the start of the Civil War. In order to finance the war, Congress for the first time in US history, has introduced income tax. It was founded on the same principles as the modern – that is, people with lower incomes had to pay less than the better-off. At the same time a centralized tax office was created – before these functions were performed by officers subordinate to state governors. The powers of the then US tax authorities were not much different from today. . During the Civil War, Americans earned from $ 600 to $ 10 thousand a year, pay tax at a rate of 3%, more than the rich – 4-6%. As a result, in 1866 the fiscal services of the USA set a record – they collected $ 310 million of taxes.. This result has been broken only in 1911.
In 1868, an unpopular income tax was briefly canceled. Congress decided to get basic income through taxation of tobacco and alcohol producers. However, income tax returned in 1894, but lasted only a year. It was canceled after the decision of the US Supreme Court, which issued a ruling that the income tax is illegal: first, there is no mention of it in the Constitution, and secondly, not all states agreed to recognize its introduction.
1913 put an end to tax freedom. Then it adopted the 16th Amendment to the Constitution, which made income tax a reality. This amendment gave Congress the power to change tax rates, taxing and individuals, and commercial structures. The tax load even in the First World War. In 1918, the United States for the first time in the history of taxes were collected in excess of $ 1 billion.
Roosevelt came to power promising to create a progressive tax system and transfer the bulk of the tax burden on the shoulders of the wealthiest Americans, more than $ 500 thousand were obliged to pay 75% -s income tax Since 1935, Americans who possessed an annual income. Roosevelt also abolished the famous “dry law” – a total ban on the sale of alcoholic beverages in the United States. As a result, the country’s budget is seriously enlarged taxes, which started paying shops selling alcohol. Earlier, traders alcohol spend these funds to bribe government officials, charges of mafia and smugglers. However, it did not help – in 1937 the US economy has again found itself in a difficult situation, and the budget deficit began to grow again.
At that time, the state budget was considered one of the main criteria by which to assess the situation in the economy. However, in the mid-1930s, Roosevelt became a supporter of the ideas of the British economist John Maynard Keynes (John Maynard Keynes). Keynes, in particular, felt it necessary all-round increase in public spending, which are able to increase their investment in the economy and increase the level of demand. US to realize in practice many of the ideas of Keynes, but in the harsh measures did not go – budget spending did not increase and the tax is not raised.
With the onset of World War II in the United States peaked taxes – some of which reached 96%. However, with the beginning of World War II, the US economy began a rapid ascent: almost disappeared, unemployment, and GDP increased in the following decade, an average of 5.01% per year. This was achieved due to the huge military orders. As a result of the war in administrative measures for public accounting in the United States dramatically increased the number of taxpayers. Working Americans were able to pay the tax is not once a year, but always – appropriate deductions made from their wages and centrally listed tax structures In 1943, a new rule was introduced. It is also possible to dramatically increase the volume of tax revenues. In 1939, income tax was paid 3.9 million people are listed in the federal budget of US $ 2.2 billion, in 1945 – 42.6 million ($ 35.1 billion). Exit out of the shadows of taxpayers also contributed to the rapid growth of the patriotic sentiment in US society.
After the end of World War II in the Senate and the US Congress launched a campaign to reduce taxes, but all of these initiatives have been blocked by President Harry Truman. In 1948 it was increased taxes on corporations and the rich. In 1950, with the beginning of the Korean war, taxes have increased even more.
In 1961, the first post-war tax cuts chaired by President John F. Kennedy. In its tax policy Kennedy followed the ideas of Andrew Mellon (1855-1937). Mellon – rare example of a successful businessman who created his own economic theory and to implement it in practice. For a long time was the US Treasury, including, he headed the agency under President Hoover. Mellon, in particular, introduced the practice of tax rebate to taxpayers. The method, still used in the US, is that by the end of the year, subject to certain conditions, taxpayers can receive from the state of the funds they paid in taxes.
In 1961, Kennedy, on average, cut taxes by 20-30%. The highest personal income tax became a rod bracket of 70% instead of 91%. In 1963, Kennedy was assassinated. Tax cuts was accompanied by the adoption of a package of laws aimed at improving the situation in the social sphere. Presidential economic adviser based on the following logic: social protection of the population will allow Americans to save, that will revive consumer demand. Result: GDP grew by 3.74%, but within a few years the US economy began to slip. Do not forget that at this time the United States waged war in Vietnam.
In 1968, taxes were raised again, however slightly. At this point, the US budget deficit was a record low. Curiously, the tax increase supported by many businesses performing public orders. They were anxiously decrease in the level of government spending. However, raising taxes does not solve the problem – in the United States was too high inflation.
In 1971 and 1975 was carried out moderate tax cuts, parallel cut government spending. Then, the US economy has entered a period of moderate growth. In 1978, the government again decided to help the business – has been reduced some taxes on businesses, in particular, a tax on fixed assets, and tax on investments. Nevertheless, the US economy was in a state of stagnation.
In 1986, the largest tax cut chaired by President Ronald Reagan. In total, the income tax has been reduced by 23%. 15%, 28% and 33% – three permanent income tax rates on individuals have been introduced. In addition, the system was carried out reform of corporate taxes, which limited the number of loopholes, which the company resorted to reduce the tax base. In the Reagan reform was and still is a lot of fans and a lot of enemies. Supporters believe that the tax cuts helped to create more than 40 million jobs in the United States. Opponents believe that this reform has painfully struck on the basis of the foundations of American society – middle class and much worsened the situation of the most disadvantaged sections of the population.
In 1990, President George HW Bush decided to cut government spending and raise taxes a little. With this line in the history of the United States tax has been linked curious story: Bush’s press conference was asked directly if he would raise taxes. Bush said literally the following: “Read my lips – no new taxes.” Just two weeks later the tax rates increased. Their main victims were wealthy Americans.
In 1993, taxes rose again. The initiator of this step was President Bill Clinton intends to reduce the size of the federal deficit. Especially increased income tax, which had to pay the rich Americans. In particular, for US residents with an annual income of $ 115 thousand. Up to $ 250 thousand. Tax increased from 31% to 36%. As you know, Clinton was able for a short time to make a budget in surplus.
In 1999, income taxes on individuals have been reduced. Curiously, it is estimated by the US Department of Finance, in 1999 the richest 20% of US households received 49% of the national income and paid 59% of all taxes paid to the federal budget. The share of 20% of the richest people in the US had 78% of profits from tax cuts.
In 2001, George W. Bush followed in the footsteps of Reagan and seriously reduced taxes (several laws have been adopted). This reform was supposed to save taxpayers $ 1.3 trillion for ten years. In fact, Bush’s reform was the third reduction of taxes in postwar US history. In particular, a new minimum income tax – 10%. Traditional tax net, which paid the Americans with different income levels, has also undergone a change: the rate of 28% was reduced to 25%, 31% – to 28%, 36% to 33% and 39.6% to 35%. In 2003, Bush went even further – he cut the tax on dividends to 15%.
However, in 2004 the US Congress was forced to cancel a number of tax breaks for corporations – have become the cause of the requirements of the World Trade Organization. In 2005 and 2006 years of the Bush secured his tax reform, in particular, innovations are designed to help working Americans to set aside enough funds for retirement.
In general, the US tax system works quite well. The dimensions of the US economy is now estimated at $ 13 trillion., And for the maintenance of all tax structures and to finance the process of collection of taxes, on average, spend no more than $ 10 billion per year.
For information you can go to the Internet site of IRS – www.irs.gov or call IRS phones:
Customer service representatives are available Monday through Friday from 7 am to 7 pm local time, unless otherwise stated. Residents of Alaska and Hawaii follow Pacific Time. Puerto Rico phone lines are open from 8 am to 8 pm local time.
People with hearing impairments:
Exempt organizations, administrators of pension plans and government:
877-829-5500 (Monday to Friday, from 8 am to 5 pm local time)
Estate and gift:
866-699-4083 (Monday to Friday, from 8 am to 4 pm Eastern Time
Excise tax function:
866-699-4096 (Monday to Friday, from 8 am to 6 pm Eastern Time)