LINCOLN’S LAW THE REVENUE ACT AND THE HISTORY OF THE FEDERAL INCOME TAX
federal income tax dollars are spent in myriad ways today, defense remains a major category. About 16% of taxes collected for the 2019 tax year were spent on U.S. military and defense. CHANGES OVER TIME About a decade after the Revenue Act was passed, it was repealed. While it was possible to coax income taxes out of Americans during wartime, there was significant opposition to taxation following the end of the Civil War. It wasn’t until the 16th Amendment was ratified in 1913 that the federal government once again got the power to tax individuals on their income and to spend the money how government
officials saw fit, rather than in proportion to state populations.
Even with the extended May deadline, we’re well past tax season, so why talk tax history now? As it turns out, it was in August way back in 1861 that the Revenue Act was passed, which imposed the first federal income tax. If you’re trying to recall your American history lessons, you may have already figured out that it was President Abraham Lincoln who signed this bill into law. A LOOK AT THE FIRST TAX The Revenue Act called for a 3% income tax on Americans making over $800 a year. That’s almost $26,000 in today’s dollars. The tax was levied primarily to fund the Civil War. While
Since then, taxes have been used in three main ways: mandatory spending on programs like Social Security, Medicare, and veterans’ benefits; discretionary spending on defense, education, transportation, and health; and finally, interest on the national debt. As the old saying goes, two things are certain: death and taxes. However begrudging Americans are about paying taxes these days, income tax has become a given.
WARNING: NEW TAX SCAMS ARE HERE!
Don’t Fall for These Natural Disaster-Related Bluffs
As soon as record heat and wildfires hit the West this summer, new IRS scammers came out of the woodwork. These scammers try to take advantage of generous people like you who want to help victims of fires, heat waves, and hurricanes in other parts of the country. According to the IRS, they do this in different ways. 1. Impersonating charities. Take my word for it — the American Red Cross will not email you from the address email@example.com. Just because someone claims to be from a charity doesn’t mean that they really are, or that the charity itself even exists! If a charity reaches out to you via email or social media message, never donate through the link or web address they provide . Instead, do some research. Go to the real website of the American Red Cross, for example, and donate there just to be safe. The IRS also has a tool that will help you figure out whether a charity is real and eligible for tax-deductible contributions. Check it out at Apps.IRS.gov/app/eos. 2. Setting up copycat websites. Sometimes scammers will go deeper than fake emails. They might also make a fake website that looks a lot like the real one. To catch them, look closely at the details. Is the charity’s name missing an apostrophe? Is the web address something other than .com or .org? Can you find the real website with a quick Google search? Check before you donate.
3. Pretending to be IRS agents. These scammers pretend they’re helping natural disaster victims file casualty loss claims to get tax refunds. They might reach out to you by phone, over email, or even through social media messages. Don’t fall for any of these tricks! Remember, 99% of the time, the IRS will only contact you by snail mail. If you get a weird phone call and the person on the other end can't verify they’re an IRS employee, report it at Treasury.gov/tigta/Contact_Report_Scam.shtml. If someone contacts you, or someone you love, pretending to be the IRS and you’re not sure whether they’re legitimate, you can always ask me. Thanks to my job, I can always tell what's real from a fake.
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