Money raised through federal income tax is used to pay a variety of programs such as benefits and services provided by the US government for the good and needs of the people. Other important services such as national defense, and federal benefit programs, including Social Security and Medicare, could not continue without the money raised by the federal income tax. While the federal income tax was not established until 1913, taxes in some form have been a part of American history since the beginning.
During the years of 1791 throughout 1802, the US government was supported by internal taxes on tobacco, refined sugar, carriages, and even property was sold at auctions. The increased cost of living that took place after the War of 1812 brought about the nation’s first sales taxes on luxury items, such as silverware, gold, and jewelry. In the year 1862 Congress enforced the nation’s first income tax law. It was a precursor to today’s income tax laws in that it was based on the ideas of progressive taxation and of withholding income at the source. At wartime, a person who made from $600 to $10,000 a year paid tax at the rate of 3%. Those who were lucky Download Latest Whatsapp Statusenough to make more than $10,000 paid an increased precentage in taxes. During 1913, the 16th Amendment to the Constitution made the income tax permanent in the U.S. tax system. The amendment gave Congress a legal right to tax income, which resulted in a revenue law that taxed incomes of both individuals and businesses.
So how is income tax determined? The income tax is ascertained by applying a tax rate, which may increase as a person earns more income. Taxable income is total income minus deductions. Many business expenses are deductible. Individuals may deduct contributions to charity, home mortgage interest, and state taxes. Taxpayers generally must file tax returns. Due dates and other procedures vary by area. Tax rates are the same for everyone; there is no distinction between single or married taxpayers. Unfortunately, tax rates sometimes change or we are faced with a new tax. By 2009, tax rates had increased considerably which means it can happen again.
According to the United States Treasury Department, the goal of Congress in setting tax-related legislation is to balance the need to raise money, the desire to be fair and equal to taxpayers, and the hope to influence the way we save and spend our money.
For assistance with estimating or calculating Federal tax liability, one should seek out the help of an accounting professional or certified public accountant (CPA).