The Act of 1862 established the office of the
Commissioner of Internal Revenue. The Commissioner was given the power to
assess taxes, to enforce the tax laws through seizure of property and income
and prosecution and to levy and collect taxes.
Many individuals have tried to
influence these new tax laws. Many times the tax laws were changed and
amendments issued to make the tax laws a permanent component of our daily
life. Taxes are here to stay and will be raised as the need arises for more
money.
The fact remains that the powers and authority of
the office of Commissioner of Internal Revenue remain very much the same
today.
However, today the taxpayer seems to have more
power due to social media and the knowledge and advice inseminated by others
through the internet. Those books with titles such as "How To Beat the IRS"
are real and they offer much advice on how to win your case against the IRS. Some
people call these dirty attorney tricks. Regardless of what they are called
they still provide guidance and information on Internal Revenue loopholes.
In 1913, the 16th Amendment to the Constitution
made the income tax permanent as we have it today. This amendment gave
Congress legal authority to tax income of both individuals and corporations.
Amendments like the one in 1913
are brought about through the needs of additional funds of government. Also,
many tax changes are incepted due to economy changes such as more employment
available to taxpayers or vise versa, if there is high unemployment, then
tax laws will take that into consideration too. This is done so and mostly
seen by the tax credits or special tax deductions offered though the tax
system.
For example on October 22, 1986, President Reagan
signed into law the Tax Reform Act of 1986. The act called for an decrease
in individual taxation over a five-year period.
Over the years, the tax laws
got so complicated that there was a need to simplify the tax code. The tax
code and the paperwork to file a tax return was a difficult bureaucratic
effort. Additionally, President Reagan wanted to up the economy with his tax
law reform. We are living this tax reform presently.
With this October 22, 1986 law
that President Reagan signed into law the Tax Reform Act of 1986, the top
rate on individual income was lowered from 50% to 28%.
In an effort to reduce the federal budget
deficit, the Revenue Reconciliation Act of 1990 was signed into law on
November 5, 1990. The emphasis of the 1990 act was increased taxes on the
wealthy.
It came to everyone's
realization that the wealthy were paying less than the fair share. With this
new act came higher taxes and a limitation on itemized deductions. Almost
every presidential candidate promises not to raise taxes. President Bush
promised not to raise taxes to get elected and then signed the Revenue
Reconciliation Act of 1990 in law which did the contrary. It raised taxes
and lowered deductions. This was the act that started our "pay as you go
system". In this system taxpayers pay their tax in installments as they earn
the money. This is usually done weekly or biweekly every time the
