This post is the first post in a seris of posts on the federal tax system of america. I will be discussing many different areas of the american tax system. I hope this discussion will prove to be informative, useful as a reference tool, and, towards the end, provocative.
Importance of a Tax System
The issue of taxes are filled with econmic, social, and moral implications. Taxes have a large broad based effect on the American society. Every single person in america is affected by taxes, which means the effects will be complex and large in scope. Taxes affect consumer actions, pesonal finance decsions, and corparate strategies. The structure of a tax system helps determine the value of additonial work. The benefit of additional labor helps determine the amount indivudals work on average. The average amount a country works affects the unemployment rate, living standards, and social norms.
To further complicate matters, taxes have been used as a poltical tool to serve different social purposes. Some countires have used taxes to fund large social programs. Taxes have been used as a tool to even out social inequalities, such as wealth. In the past they have been used, injustly at times, to control indivdual's behavior, as in the poll taxes that black southerners paid.
Taxes repersent the taking an indivudals wealth. When the govemerment takes somthing from a person in America, it is generally understood that the govmerment gives what it has taken back. Wherther it be in social services or a strong national defense, people expect to recive somthing from the govmernt. In the wrong hands taxes can be used to limit freedom, in the right hands they can be used to fufill obligations that a goverment has.
Historic View of the Tax System
An excellent start to understanding the entire history of the American tax system can be found at the U.S. Treasury Department's website. I will give a short overview of what they have mentioned, and then provide some additional comments on the tax system.
The U.S. Treasury Deparment divides the history of the US tax system into 9 major parts: Colonial Times, the Post Revolutionary Era, the Civil War, World War I and the 1920's, World War II, developments after World War II, the Reagan Tax Cut, the Tax Reform Act of 1986, and the Bush Tax Cut. The also have short sections on the 16th Amendment and the Social Security Tax in chronicalogical order.
Until 1789 their was not a national tax. Under England the colonial government had limited need for revenue and under the Articles of Confederation the national goverment relied on "on donations from the States for its revenue". Both the indivdual colonies and the states where the ones with the revenue needs and were the ones who did the taxing.
A graphical repersentation of the decreaing progressive tax system can be found here
on page 28
Historic Rates of poverty
historic rates of the standard of living