Tax Law and Accounting
Sue Abraham
University of Phoenix
Tax Law and Accounting
The word "tax" did not become a household name until the late 1800's when congress created the nation's first income tax law. Prior to this law the government used tariff's and imported goods to help support the economy. However, in order to bring in more revenue to help cover the costs of the civil war the government had to make necessary reforms and re-establish tax law. The Revenue Act of 1862 (July 1, 1862, Ch 119, 12 Stat. 432), signed into law by President Abraham Lincoln, is the stepping stone to the modern income tax statutes of today. It is based on "principles of graduated, or progressive, taxation and of withholding income at the source" (History of the Income Tax in the United States, 2000, ¶2). During this time the government collected over 300 million dollars, the highest in the nation's history.
It was not until 1913 that income tax became a part of the United States Constitution under the 16th Amendment. This statute became known as the Revenue Act of 1913 (October 3, 1916, Ch 16, 38 Stat. 116). Congress was allowed to tax income on individuals and corporations and within ten years the internal revenue collected over $5.4 billion dollars (et al., 2000, ¶5). Since then there have been several tax reform acts implemented to help reduce the tax burden on individuals and reduce the tax rate. President Ronald Reagan imposed one of the largest tax reductions in history with the Tax Reform Act of 1986 (October 22, 1986, Pub.L. 99-514,100 Stat. 2085). This tax reform lowered the income tax from 50% to 28%. The Revenue Reconciliation Act of 1993 (August 10, 1993, Pub.L. 103-66,107 Stat. 312) was signed into law by ...