An Overview of The Federal Income Tax and State Taxes

The Federal Income Tax Evolution: How Did We Get Here Today from Yesterday's Origins.

1861:Abraham Lincoln signs into law the Revenue Act of 1861. This Act included a tax on personal income to help pay for Civil War expenses.
Prior to this time, the nation relied on sources of income that ranged from tariffs on imported goods to internal taxes
on distilled spirits, refined sugar, gold, jewelry, and more.

1872: The income tax is repealed as Congress turns to tobacco and distilled spirits as its primary sources of tax revenue for the United states.

1894:The Wilson Tariff Act brings back the income tax, only to have the Supreme Court rule it unconstitutional in the following year.

1913:Ratification of the 16th Amendment to the Constitution makes the income tax a permanent fixture in the U.S.
This allowied the Federal government to tax Individuals and Corporations.
Note: March 1st was the original Tax Day as specified by Congress after the 16th Amendment was passed in 1913. It was moved to March 15,1918.
It was changed to April 15 – The Present Date – in Yr 1954.

1943:Introduction of the Withholding tax on wages. This increases the number of taxpayers to 60 million and boosts tax collections to $43 billion by 1945.
Note: The U.S. was deep into WW11 with the production of military hardware to support the war in the European and Pacific Theaters.
A lot of civilans( Men & Women) were employed in this type of production. There was Money to be Made but rationing made goods scarce.

1952:President Truman proposes the first of several tax reorganization plans designed to restore public confidence in the IRS.

1986:President Reagan signs the Tax Reform Act, a significant piece of legislation with 300 provisions containing decisions to lower
the top tax rate on individual income from 50% to 28%, increase business taxation by $120 billion and decrease individual taxation over a five-year period.

1997:President Clinton cuts taxes by $152 billion, while adding tax credits and incentives for children and education.

1998:The IRS Restructuring and Reform Act establishes a Taxpayer Advocate Service and four operating divisions to serve taxpayer needs and preserve taxpayer rights.

2001:President George W. Bush enacts a series of substantial tax cuts designed to save taxpayers $1.3 trillion over ten years.
Included in the cuts were a new 10% rate and a reduction of the top four tax rates (28% to 25%; 31% to 28%; 36% to 33%; and 39.6% to 35%).

2010:The Tax Relief, Unemployment Insurance Reauthorization, and Job Creation Act calls for an extension of the Bush-era tax cuts and other provisions aimed at
helping ease the tax burden for many Americans facing challenging economic times.

The Sources for the above are:

(1) H& R Block Newsletter, dated 02/08/11
(2) ‘History of Income tax in the United States’ Website:


The following Website list Individual State Income Tax Rates.

State Indv.Income Rates

There are seven (7) states that do not have an Individual Income Tax. They are:

AK, FL, NV, SD, TX, WA & WY.

Most States do have a Sales Tax.

The following Website list individual State Sales Tax Rates.

Sale Taxes In the U.S.

This Website has a Side Bar containing Links to Federal and State Taxation that the Viewer may wish to Pursue.

Sales Taxes are assessed by every state except AK, DE, MT, NH & OR. In some cases, sales taxes are also assessed at the county or municipal level.

The Viewer might to want to review this recent article by Kiplinger, dated 11/18/10: The Best,Worst States for Retiree Taxes

Bst,Wrt Retr Tax

A Note on Fed/State Income tax Filing.

All 2010 PA, NJ and NY tax returns and payments that are normally due on April 15, 2011, will correspond with the Federal income tax due date of April 18, 2011.
For All Other 2010 States Tax Return Filing Dates, Go to their Taxation or Revenue Website.

The 2011 Federal Tax filing deadline is Monday, April 18. This is not the traditional April 15 date.
You can thank Washington D.C.’s Emancipation Day Holiday which is observed on Friday April 15.