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April 15th is a gloomy day for many Americans. It is Tax Day, the day Americans file state and federal income tax forms and submit payments. This year, 2013, marks the 100th anniversary of the federal income tax. In 1913, America ratified the 16th Amendment, which allows the federal government to levy a federal income tax. Originally, March 1st was Tax Day. In 1918, it was moved to March 15th, and in 1954, Tax Day shifted to April 15th.
This week, commiserate with taxpayers nationwide by learning more about America’s history of taxation, and the hows and whys of the federal income tax.
Taxation in America—
Since America’s colonial days, taxation has been a contentious topic. Colonists rebelled against the Townsend Act (1767) and the Stamp Act (1765) which levied taxes on stamps, and tea. These Acts eventually led to rebellion against the Crown during the Boston Tea Party (1773), and ultimately, to the Revolutionary War (1775). Today, taxes are still highly contentious. Every election season, politicians debate taxes and offer new plans and promises. Taxes—tax rates, exemptions, and tax cuts—were key issues of discord during January’s fiscal cliff.
Visit TaxHistory’s Tax Museum for a look at the history of taxation in America. Review the role of taxes in America’s birth. As a new form of government took shape, the Founders debated taxes. Scroll down and read the Anti-Federalist and Federalist perspectives. From the beginning, there have been partisan and geographic disagreements about taxes. Read the entries for 1816 through 1824. The North and South each levied taxes to pay for their Civil War efforts. Discover how the first federal income tax came to be; read the entries for 1909-1915. The resulting Amendment, the 16th Amendment, is brief and laser-focused. (Scroll down to read Amendment XVI.)
Today, the federal income tax is a fixture of politics, economics, and daily life. The 1040 is the name of the form most Americans use to file federal income taxes. Jump over to taxhistory.org to view the first 1040. Compare it to a more recent version. Watch a centennial celebration and examination of the highlights of taxes in America.
What are Federal Income Taxes? Who Collects them and Why?—
Taxes by definition seem simple: an amount of money that must be paid to the government to support the services it provides. In order to collect taxes from millions of citizens, a system is needed. HowThingsWork unwraps the tax process. Comedian Tim Slagle uses humor and Halloween candy to unwrap how taxes work.
The Internal Revenue Service is the much mocked and maligned agency responsible for collecting taxes and pursuing cases of fraud and evasion. View historical highlights of the IRS. The IRS website helps us understand the whos, hows, and whys of the federal income tax. To understand why, begin by examining a list of government agencies. Brainstorm a list of services provided by federal, state, or local government. Income, in the form of taxes, pays for these services.
Politicians often discuss the fairness of taxes. Several measures aim to make taxes fair. Taxes do not just appear out of thin air. There is a process by which new taxes must be approved. Specific taxes are often collected to pay for a related expense. The hope is that those paying the tax will benefit from it. Of course, fairness is subjective: discuss whether you think these taxes are fair or unfair. Taxes can be structured in several ways. Taxes can be regressive, progressive, or proportional. Which type does the federal government use when taxing income? Which tax system is most fair?
All American taxpayers have rights. What do these rights mean? Part of the protection for taxpayers is the right to dispute IRS claims of deficiency before a tax court. Follow a flow-chart to view what happens to tax forms once they are filed. Of course, along with tax payer rights come tax payer responsibilities. The most basic responsibility is pay your taxes, not to avoid or evade payment.
Everyone does not pay the same amount of income tax in the United States. Some people do not pay any income tax. Why would this be? The Washington Post clarifies who does not pay and why using eight charts. Create an original, one sentence caption that explains each chart.
Which is worse: paying taxes or taking quizzes? What about a quiz about taxes? Check your understanding of federal taxes with these short interactive quizzes about tax court, the filing process, and creating new taxes. Familiarize yourself with the forms taxpayers use to find information and file taxes, and simultaneously see how much money you may soon be paying in federal income tax. Adopt the persona and complete the simulation for Lawrence Red Owl and then for Cicely King. Identify the simulation that is most similar to your family (you may click on an icon to read more about each) and complete it.
How long does it take each year to earn the money you will pay in taxes? A week? A month? This date is called Tax Freedom Day. It essentially means that you are not taking home any money until that date. It is easy to grumble about paying taxes, and it is entirely understandable. Who wants to work for no take-home pay? Yet, many of the services provided by taxes are essential. No one wants garbage to pile up on the streets, and we all want fire fighters, policemen, and EMTs available should we need them. Identify Tax Freedom Day for your state. (Did you expect it to be later or earlier?) When that day arrives, celebrate by opening a bank account so you can protect and save your earnings.