Although several countries in Europe, including France and Great Britain, had begun a personal income taxation system in the 1700s, the United States did not adopt an income tax until 1862, during the Civil War. A few years later, however, this wartime measure was repealed. In 1894 Congress tried again by initiating a two percent tax on individual and corporate income. But in 1895 the Supreme Cour…
The Internal Revenue Service (IRS) enforces the Internal Revenue Code, which includes federal laws regarding the payment and collection of taxes, such as income, employment, and estate. The individual income tax is determined using a progressive tax rate. This means that tax rates are allocated to income brackets and as income rises, so does the tax rate percentage. In theory, this structure shift…
In 1935, Congress enacted the Social Security Act to provide old-age benefits. The plan created the Old-Age, Survivors, and Disability Insurance (OASDI) to assist workers and their families and Medicare, a health insurance plan for people over 65. These benefits, in addition to other programs to aid those in need, were to be financed through a payroll tax. Employers make automatic deductions, or w…
The federal government also imposes taxes on the manufacture, purchase, sale, or consumption of certain commodities. These levies, called excise taxes, are assessed on items such as alcohol, tobacco, and firearms. There is an excise tax imposed on gasoline and diesel fuel and the revenue derived from this motor-fuel tax is earmarked for highway construction, improvement, and maintenance. There als…
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