From the World War II period through the s, the highest earners could pay up to a 94 percent tax on part of their income; however this era also introduced deductions and exemptions for various individuals and businesses. With the development and expansion of welfare programs like Social Security, Medicare and Medicaid, the second half of the 20th century saw a tax system that only became more complex and nuanced.
An increasing reliance on revenues from wealth and consumption taxes, in the U. Organized resistance and legal protest against the income tax coalesced in the U. Another common constitutional argument regards the tax return process as a form of mandated self-incrimination and thus a violation of the 5th Amendment. Still others simply object to taxes in general or the income tax specifically on moral, religious or conspiratorial grounds. Taxation, as well as skepticism and resistance to it in some form, has evolved from a practical necessity to a signifier for political and social identity.
Taxation has emerged from a practical financial issue to one with myriad political and social implications. If taxes are here to stay, there is no doubt that debates and discussion on the subject will continue to exist as a focal point of global society. What is The Transition Tax? Exploring the Relationship Between Taxation and Innovation. Tax havens can create considerable problems, particularly for overall economic growth and accounts r Read More about How to Become a Tax Accountant: Education and Other Employment.
Tax havens can create considerable problems, particularly for overall economic growth and accounts r Read More about What Are Tax Havens? Our business school has built and sustained a legacy of excellence for nearly years. We have a strong global network. We attract some of the best and brightest faculty and student talent from all over the globe. In , Western Australia requested fiscal assistance to compensate for the loss of tariffs, which had been its primary revenue source.
In , Tasmania was also a recipient of federal government grants, and South Australia became a recipient in the s. Over time, horizontal fiscal equalisation was formalised with an independent body recommending distribution of federal government grants based on fiscal need.
The ideology of convergence has continued and strengthened over time, so that Australia has a very high level of fiscal equality between the states when compared with other federal systems. By Federation many of the colonies had introduced income taxes, each with their own definition of assessable income and different rates applying to differing categories of income. This situation became problematic following Federation due to increasing population and capital mobility between states.
A federal government income tax was introduced in , in addition to existing state income taxes, to finance involvement in the First World War. The federal government rates were low and cut in at a high income threshold, minimising double taxation. Following the war, the federal government continued to impose income tax, meaning that two tiers of government were sharing, and competing for revenue from, a common taxation base.
The state and federal government taxing systems were kept separate, and administered separately by the different bureaucracies. As a result of the complexity and inconvenience of paying tax on the same base to two levels of government, there were a number of attempts to harmonise federal and state taxation.
In the federal government offered to withdraw from income tax as an alternative to providing grants to the states, but this option was strongly rejected by some states. Harmonisation of state and federal taxation and ensuring equity in the system of federal grants to the states were the focus of academic and political debate in the period between the World Wars.
In , the Ferguson Royal Commission was appointed to suggest ways to harmonise systems. In , similar legislation was enacted in all jurisdictions but over time further changes eroded the uniformity.
The federal government increased its income taxation in the early years of the Second World War to meet the costs of the war effort. Between and , federal government income tax revenue grew from 16percent to 44per cent of total federal revenue. With reliance on income taxation rising at both the federal and state levels, differences in state income taxes led to concern about the inequitable tax burdens between taxpayers in different states. In the federal government introduced legislation that increased the federal government income tax rates to raise more revenue.
The legislation provided for reimbursement grants to the states provided that they ceased to levy their own income taxes. Although a state could legally continue to impose its income tax, doing so would impose an increased burden on its residents and also disqualify that state from receiving federal government grants. In practice, this prevented the states from continuing to levy their own income taxes. The uniform taxation arrangements were initially only meant to apply for the duration of the Second World War and one year thereafter.
At the end of the War, the states sought to regain their income taxing powers but were unsuccessful. The centralisation of income tax was followed by further changes to the state and federal tax bases during the post-war period. Land taxes were first introduced by state administrations in the late nineteenth century after a long period of debate and blocking of such taxes by parliaments dominated by wealthy landowners. Land taxes were also introduced at the federal level in as a form of wealth tax and as a means to break up large tracts of under-utilised land.
In most states land was taxed at progressive rates, based on unimproved value, while the federal land tax was introduced as a flat rate tax. As a form of wealth tax, land taxes became less effective over time as the productivity base of the economy diversified from being mostly agrarian at the beginning of the twentieth century, and wealth was held in more diverse forms.
In addition to having no regard to other forms of wealth, land taxes were applied taking no account of net property wealth, such as the value of mortgage debt.
By the middle of the twentieth century wealthy primary producers and large landholders had also been largely excluded from land tax requirements through exemptions granted to land used for primary production, restricting the application of land tax to urban property.
Land tax revenue became less stable, susceptible to the fluctuations of town property markets. Land taxes were also unpopular as the federal and state taxes were not well integrated with income taxes.
In , land taxes were abolished at the federal level, but still operate at the state and local level, accounting for 24 per cent of state and local government revenue in Australian Bureau of Statistics The federal government introduced payroll tax in to finance a national scheme for child endowment.
The tax applied as a 2. With the federal government assuming control of the income tax base, the states lobbied for access to payroll tax and in the federal government handed over payroll taxes to the states, acknowledging that this tax represented the sole possible growth tax available to the states Mathews and Grewal During the following three years the states uniformly increased the rate from 2.
Over time, the uniformity of state payroll tax rates has been eroded as has the base to which they are applied. State payroll taxes are now levied at rates ranging between 4.
Tax competition between states and lobbying by individual employers and employer groups for exemptions has reduced the payroll tax base to less than half of the comprehensive labour income tax base Freebairn Estate taxes were first introduced in the form of probate duties a tax on property passing by will charged by courts in the early part of the nineteenth century in New South Wales.
By estate taxes had been adopted by all of the colonies. The rates were progressive and based on the value of the estate, with reasonably high exemption thresholds, thus limiting the impact on small estates. The duties were an important source of state revenue from the end of the nineteenth century through the first part of the twentieth century. Gift duties aimed to ensure that estate duties were not circumvented. In , the federal government also introduced a progressive system of estate taxes to help fund wartime expenses.
By the late s and into the early s, state and federal governments were coming under increasing pressure to amend or remove estate duties. Having not been adjusted since the s, individuals with relatively modest levels of wealth were becoming subject to estate duties.
At the same time more wealthy individuals were seen to be avoiding the tax through effective estate planning Groenewegen With the increasing impost on smaller estates, estate duties became more costly to administer. Rural producers and small business owners also objected to the taxes on the basis that they impeded business succession. By the s pressure for estate duty concessions had gradually reduced the tax base.
In the end, state tax competition led to the abrupt demise of estate duties. After Queensland dispensed with its tax in , there was concern in other states about emigration of residents and capital and the potential impact of the tax on electoral outcomes Pedrick The federal government also abolished its estate and gift duties in By all estate duties had been removed, both state and federal. This occurred despite various tax review committees recommending refinements to improve the equity, efficiency and simplicity of the tax.
During the latter part of the twentieth century, the states supplemented their revenues with a range of transaction based taxes. Many of these taxes have since been replaced, or are in the process of being replaced, as part of the reforms to federal financial relations associated with the introduction of the goods and services tax, the revenue from which is paid to the states.
Developments in federal taxation can be broadly classified into two periods. Up until the s, the focus of significant changes to the tax system was on expanding the revenue base to fund expenditure programmes. Since the s, increased attention has been paid to reforming the tax system to improve equity and efficiency and, more recently, to reducing tax system complexity. The catalyst for this reform was a growing concern about the equity of the taxation system, which led to the establishment of the Taxation Review Committee in the early s Asprey et al A key theme of the Asprey Report was the need to broaden the tax base to improve equity and efficiency.
In , the Draft White Paper recommended a broadening of the tax base through the adoption of a broad based consumption tax, the introduction of a capital gains tax and comprehensive taxation of fringe benefits Australian Government The recommendations relating to capital gains and fringe benefits taxation were adopted following the Draft White Paper but there was insufficient support for the implementation of a broad based consumption tax at that time.
In the late s there were also fundamental changes to the taxation of corporate income and the taxation of retirement savings. At its inception, the federal income tax was modelled on the income tax systems applying in the Australian states and the United States example of a global income tax system, applying to all forms of income, rather than the British schedular tax system.
The meaning of these constructs derives largely from English equity. At its inception, income tax was an Australian source-only tax and did not apply to the foreign source income of residents. From its introduction in , the income tax base had been gradually broadened. In the post-war period, income tax base broadening was limited until the implementation of some of the recommendations included in the Draft White Paper Australian Government In a capital gains tax was introduced and in the fringe benefits tax was introduced.
The primary motivation behind these base broadening measures was to address gaps in the income tax base, which had led to growth in tax avoidance and evasion activity. In the removal of accelerated depreciation and a range of other base broadening measures were introduced as part of a broad programme of business tax reform.
Prior to , Australia had no general tax on capital gains, with most capital gains excluded from the income tax base. Of the capital gains taxes that were in operation, the most important was that applying to gains from property held for less than one year, which was introduced in the early s. The Draft White Paper and tax academics also argued for taxing capital gains to improve economic efficiency and reduce tax avoidance.
One thousand dollars of personal property and the products of the soil in the hands of the original producer were exempt in Tennessee. The Michigan provision required that the legislature provide a uniform rule of taxation except for property paying specific taxes.
Except for taxes on slaves. Nevada exempted mining claims. One provision in Idaho requires uniformity as to class, another seems to prescribe uniform taxation. Source: Fisher The political appeal of uniformity was strong, especially in the new states west of the Appalachians. A uniform tax on all wealth, administered by locally elected officials appealed to frontier settlers many of whom strongly supported the Jacksonian ideas of equality, and distrusted both centralized government and professional administrators.
The general property tax applied to all wealth — real and personal, tangible and intangible. It was administrated by elected local officials who were to determine the market value of the property, compute the tax rates necessary to raise the amount levied, compute taxes on each property, collect the tax, and remit the proceeds to the proper government. Because the tax was uniform and levied on all wealth, each taxpayer would pay for the government services he or she enjoyed in exact proportion to his wealth.
The tax and the administrative system were well adapted as a revenue source for the system of local government that grew up in the United States. Typically, the state divided itself into counties, which were given many responsibilities for administering state laws.
Citizens were free to organize municipalities, school districts, and many kinds of special districts to perform additional functions. The result, especially in the states formed after the Revolution, was a large number of overlapping governments. Many were in rural areas with no business establishment. Sales or excise taxes would yield no revenue and income taxes were not feasible.
The property tax, especially the real estate tax, was ideally suited to such a situation. Real estate had a fixed location, it was visible, and its value was generally well known. Revenue could easily be allocated to the governmental unit in which the property was located. By the beginning of the twentieth century, criticism of the uniform, universal general property tax was widespread.
A leading student of taxation called the tax, as administered, one of the worst taxes ever used by a civilized nation Seligman, There are several reasons for the failure of the general property tax. Advocates of uniformity failed to deal with the problems resulting from differences between property as a legal term and wealth as an economic concept.
In a simple rural economy wealth consists largely of real property and tangible personal property — land, buildings, machinery and livestock. In such an economy, wealth and property are the same things and the ownership of property is closely correlated with income or ability to pay taxes.
In a modern commercial economy ownership and control of wealth is conferred by an ownership of rights that may be evidenced by a variety of financial and legal instruments such as stocks, bonds, notes, and mortgages. These rights may confer far less than fee simple absolute ownership and may be owned by millions of individuals residing all over the world. Local property tax administrators lack the legal authority, skills, and resources needed to assess and collect taxes on such complex systems of property ownership.
An assessor who valued property well below its market value and changed values infrequently was much more popular and more apt to be reelected. Finally the increasing number of wage-earners and professional people who had substantial incomes but little property made property ownership a less suitable measure of ability to pay taxes. Reformers, led by The National Tax Association which was founded in , proposed that state income taxes be enacted and that intangible property and some kinds of tangible personal property be eliminated from the property tax base.
They proposed that real property be assessed by professionally trained assessors. Some advocated the classified property tax in which different rates of assessment or taxation was applied to different classes of real property. Despite its faults, however, the tax continued to provide revenue for one of the most elaborate systems of local government in the world.
Local governments included counties, municipalities of several classes, towns or townships, and school districts. Special districts were organized to provide water, irrigation, drainage, roads, parks, libraries, fire protection, health services, gopher control, and scores of other services. In some states, especially in the Midwest and Great Plains, it was not uncommon to find that property was taxed by seven or eight different governments.
Overlapping governments caused little problem for real estate taxation. Each parcel of property was coded by taxing districts and the applicable taxes applied. Efforts to reform the property tax varied from state to state, but usually included centralized assessment of railroad and utility property and exemption or classification of some forms of property.
G76 I77 Joseph Call Number: KF J67 Table of contents. Taxation in the United States Baltimore by Henry C. Adams Call Number: H Internet Resources These freely available online resources provide additional information on the topic. Electronic Resources Online Catalog Library of Congress The subscription resources marked with a padlock are available to researchers on-site at the Library of Congress.
If you are unable to visit the Library, you may be able to access these resources through your local public or academic library. A search for articles in the following business and historical newspaper databases will produce relevant results. Elephind External This sources has 3,, historic Newspapers — 4, Newspaper Titles, from around the world with a large number from the United States.
It mostly begins in though there is one from and one from This site has the data in pdf files including previous editions back to Past s External This is a collection of s beginning with the year from the Tax History Project.
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