Taxes, Income, and More, Oh My!
The story of American income taxes begins 1812.
The 1st attempt to inflict an income tax on Americana occurred as a result of the War of 1812. At the end of two years of war, the federal government owed an unbelievable $100 million of debt (in inflationary terms, it probably had the same impact on the treasury as $100 billion debt would today). To pay for this, the government doubled the rates of its major source of revenue, customs duties on imports. This measure obstructed trade so severely that the government ended up bringing in less revenue than it had received from the lower rates. It's ironic that the American Revolution was began because of Tea Taxes in Boston.
Also, excise taxes were imposed on goods, and commodities such as housing, slaves and land were taxed pay for the war. After the war ended in 1816, these taxes were repealed and instead high customs duties were passed to retire the accumulated war debt.
What is Taxable Income?
The amount of income utilized to arrive at your income tax. Taxable income is your gross income minus all your adjustments, deductions, and exemptions.
A few specific taxes:
Estate Taxes:
One of the oldest and widely-used forms of taxation is the taxation of property held by an individual at the time of demise.
The US currently has Estate Taxes, although there are proposals to do away with them.
Such a tax can take two forms of implemantation. A direct estate tax can be levied on the estate prior to any transfer to heirs. An estate tax is a charge upon the deceased's entire estate, regardless of how it's disbursed. Another option form of death tax is an inheritance tax (a tax levied on beneficiaries getting property from the estate). Taxes imposed upon demise provide incentive to transfer assets prior to demise.
Canada no longer has Estate Taxes.
Virtually all European countries have Estate Taxes. The prime illustration is Great Britain, where high estate taxes have effectively ruined the financial well-being of virtually all of Britain's Nobility, who have been forced to sell vast real estate holdings or place them in historical trusts.
Capital Gains Taxes
Capital Gains are the increases in value of anything (including investments or even real estate) that makes it worth more than the price for which it was bought. The gains are likely not to be realized or even taxed until the asset is sold.
Capital gains are ordinarily taxed at a lower rate than regular income to promote business development or entrepreneurship during all economic phases. This is thought to help companies invest in technology and expand to create more employment.
Taxes, Income, and More, Oh My!
By: Jon Simms
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