Taxes

Traffic light incidence has also made me think one more thing - why we are suppose to pay taxes? What gives government right to ask to pay us taxes? And worse, what gives them right to penalize us for not doing it or doing it late? So i did some research...

Research on Tax

Historically record for Taxing the people have been found in various old cultures, like, Egypt, Greece, Roman Empire, Indian Kings, and so and so on...

History of Taxes in United States
In 1794 Settlers west of the Alleghenies, in opposition to Alexander Hamilton's excise tax of 1791, started what is now known as the "Whiskey Rebellion" The excise tax was considered discriminatory and the settlers rioted against the tax collectors . President Washington eventually sent troops to quell the riots. Although two settlers were eventually convicted of treason, the President granted each a pardon.
In 1798 Congress enacted the Federal Property Tax to pay for the expansion of the Army and Navy in the event of possible war with France. In the same year, John Fries began what is referred to as the "Fries Rebellion," in opposition to the new tax. No one was injured or killed in the insurrection and Fries was arrested for treason but eventually pardoned by President Adams in 1800. Surprisingly, Fries was the leader of a militia unit called out to suppress the "Whiskey Rebellion."

The first income tax suggested in the United States was during the War of 1812. The tax was based on the British Tax Act of 1798 and applied progressive rates to income. The rates were .08% on income above £60 and 10 percent on income above £200. The tax was developed in 1814 but was never imposed because the treaty of Ghent was signed in 1815 ending hostilities and the need for additional revenue.

The Tax Act of 1861 proposed that "there shall be levied, collected, and paid, upon annual income of every person residing in the U.S. whether derived from any kind of property, or from any professional trade, employment, or vocation carried on in the United States or elsewhere, or from any source whatever.

The 1861 Tax Act was passed but never put in force. Rates under the Act were 3% on income above $800 and 5% on income of individuals living outside the U.S.

The Tax Act of 1862 was passed and signed by President Lincoln July 1 1862. The rates were 3% on income above $600 and 5% on income above $10,000. The rent or rental value of your home could be deducted from income in determining the tax liability. The Commissioner of Revenue stated "The people of this country have accepted it with cheerfulness, to meet a temporary exigency, and it has excited no serious complaint in its administration." This acceptance was primarily due to the need for revenue to finance the Civil War.
Although the people cheerfully accepted the tax, compliance was not high. Figures released after the Civil War indicated that 276,661 people actually filed tax returns in 1870 (the year of the highest returns filed) when the country's population was approximately 38 million.

The Tax Act of 1864 was passed to raise additional revenue to support the Civil War.
Senator Garret Davis, in discussing the guiding principle of taxation, stated "a recognition of the idea that taxes shall be paid according to the abilities of a person to pay."
Taxes rates for the Tax Act of 1864 were 5% for income between $600 and $5000; 7.5% for income between $5001 and $10,000; 10% on income above $10,000. The deduction for rent or rental value was limited to $200. A deduction for repairs was allowed.
With the end of the Civil War the public's accepted cheerfulness with regard to taxation waned. The Tax Act of 1864 was modified after the war. The rates were changed to a flat 5 percent with the exemption amount raised to $1,000. Several attempts to make the tax permanent were tried but by 1869 " no businessman could pass the day without suffering from those burdens" The Times. From 1870 to 1872 the rate was a flat 2.5 percent and the exemption amount was raised to $2,000.
The tax was repealed in 1872 and in its place was installed significant tariff restrictions that served as the major revenue source for the United States until 1913. In 1913 the 16th Amendment was passed, which allowed Congress authority to tax the citizenry on income from whatever source derived.
It should be noted that the Tax Act of 1864 was challenged several times. The Supreme Court unanimously supported the tax. After the war the tax was declared unconstitutional by the same court because it represented direct taxation on the citizenry which was not allowed under the constitution.

1930's

During the 1930's federal individual income taxes were never more than 1.4 percent of GNP. Corporate taxes were never more than 1.6 percent of GNP. In 1990 those same taxes as a percent of GNP were 8.77 and 1.99 respectively

Here is how i see it:
Tax is invention of governing bodies, could be King, or Modern government, could be Autocrat or democrat. How you think those early Pharaohs could afford the cost of making Piramids, or Taj Mahal by Mugal emperor Shah Jahan... By taxing

It has been so old and people are so used to paying taxes, no one now a days think, why do i have to pay tax...

Every animals who leaves in herd, have herd leader, whether, it's wolves, horses, sheep, goats, cows, yaks, camels, monkeys or humans...

Human leaders over the times are known as different names, tribal leaders, kings, president, prime ministers... but they all have one common job description, lead the group they are accepted as leaders. They had responsibilities towards the group, to defend, to prosper, to mediate, in return, they get respect from group. Group looks up to leader...

And Power Corrupts, over the period, those leaders becomes rulers... they believe ruling is their right... and they have power over the group to make them do what they think right. They made them build big buildings, they push them to wars, they force them to pay for their expensive lifestyles.

At this time i am thinking of two Mughal emperors, father and son... Shah Jahan and Aurangzeb... The one very popular and one very unpopular... Shah Jahan who has built Taj Mahal, the greatest expression of love ever and so and so on... on the other end, Aurangzeb, alleges for initiated laws which interfered with non-Muslim worship and destruction of several Hindu temples... People thinks Shah Jahan was good and Aurangzeb was bad... but the way I see it and what they do not see is this, Shah Jahan has wasted public money to create something of the personal nature, tomb for his wife, while Aurangzeb never drew salary from state treasury but earned his own living by selling caps he sewed and selling copies of the Quran he copied by hand. Ruler does not own state treasury, they are there as administrator of the treasury.

Little side tracked, didn't i?

Anyway, so at some point, those rulers have decided in order to expand their reign, and satisfy their greed of being great ruler, they need army, in older society, every men in group were the soldier, but as time pass and society become more specialized, where some group of men were groomed and specialized in art of war, . In order to pay those men. those leaders now need money. In old days, leader himself used to play the role of judge when needed, but as a ruler he has other priorities, also now the group is bigger, so he need men specialized in art of mediator, and to make sure there is uniformity, they needs written laws, and judiciary system. And now to pay those they need more money. As a leader, he thought, two heads are better than one, he needs group of advisers, and courtiers came, and you need more money...

How to generate revenues? beg, borrow or steal... They are rulers, they have power, obviously they are not going to beg.
For years, those ancient rulers fought wars and collect treasure. Basically, survival of the strongest, they looted...
The oldest record, in Greece, in times of war the Athenians imposed a tax referred to as eisphora. No one was exempt from the tax which was used to pay for special wartime expenditures. The Greeks are one of the few societies that were able to rescind the tax once the emergency was over. When additional resources were gained by the war effort the resources were used to refund the tax. there comes borrow - leaders borrowed money as tax from citizens, and they refund it back when they got from war.
In modern world, when war are considered taboos, the only way to generate revenues, are left to be tax their own citizen. They decided well they are rulers, they have responsibilities towards the group, why not to charge them with taxes in return, almost like the bully in the school, you have to do homework for him, give him food from your lunchbox for the security. And as time passes the greed of the ruler grow more and more just like that bully in school, once he knows he can get his way, he increases his demands...

Do you see the trend now in history of taxes?