Why do we have to pay income taxes?
Why do we pay income taxes? I suppose there are altruists among us, those who, with a song in their in their hearts and a smile on their lips, happily pay taxes to support the common weal. There are pragmatists among us too, those who glumly dole out to the tax man because hey, if no one does, how will all those government balls and services stay in the air? And roads and bridges beneath my feet?But fear has got to be a part of it. If you dont pay your taxes, sooner or later, the tax bogeyman will come a-knockin on your door. And, at the least, youll likely owe some penalties and fines. At most, you find yourself cozying up to some folks youd likely rather not cozy up to behind the stiff walls of a federal clink. Fear, as the saying goes, is a wonderful motivator.Thomas Jefferson was the first Secretary of State. When he took office, the entire State Department consisted of fewer than 10 people. How things have changed. In Jeffersons day, the federal bureaucracy was a slender waif of a thing and it could churn along on relative chump change.Taxes and tariffsIn the first dozen years of its history, the United States government was kept financially afloat by internal taxes on spirituous liquors, carriages, refined sugar, snuff and tobacco, corporate bonds, property sold at auction and, sadly, slaves. To support the War of 1812, sales taxes were introduced on certain luxury goods, such as gold and jewelry, but then in 1817, Congress did away entirely with internal taxes and relied, instead, solely on tariffs on imported goods. And so it remained for the next two generations of Americans. To support the Civil War, however, in 1862, Congress enacted the first income tax law. Like modern income tax law, the Civil War measure was based on the principles of graduated or progressive taxation and of withholding income in order to feed the federal tax kitty. In that same year, Congress established the Office of Commissioner of Internal Revenue, whose powers have since then essentially stayed the same. Half a decade after the war, the income tax was again eliminated but was revived between 1894 and 1895. In the latter year, in the case of Pollack vs. Farmers Loan & Trust Co., the United States Supreme Court decided that the income tax was unconstitutional.The 16th Amendment to the U.S. Constitution was ratified in 1913, making the income tax permanent. The amendment provides that The Congress shall have power to lay and collect taxes on incomes, from whatever source derived, without apportionment among the several States, and without regard to any census or enumeration. The amendment gave Congress legal authority to tax the income of both individuals and corporations. The halcyon days were over. The evolving tax codeSince then, the tax laws have been buffeted by various tweaks, reforms and restructuring. Among the panoply of revisions and modifications, the Tax Reform Act of 1986 stands out as one of the most far-reaching. Pre-eminent among its provisions was lowering the top tax rate on individuals from 50 percent to 28 percent, the lowest it had been since 1916. To make up most of the revenue, tax preferences were largely eliminated and business taxes were adjusted upward.When the Revenue Reconciliation Act of 1990 was signed into law, its emphasis was to increase taxes on the wealthy. The Revenue Reconciliation Act of 1993 stated purpose was to reduce the federal deficit.President George W. Bush championed a series of tax cuts, chief among them the Economic Growth and Tax Relief Reconciliation Act of 2001, which amounted to the third largest tax cut since World War II. Tax laws were tweaked again with the Jobs and Growth Tax Relief and Reconciliation Act of 2003, which accelerated the tax rate cuts established in 2001. Again in 2005 and 2006 the tax laws were revised. We are now poised on the precipice of what President-elect Obama will do to right the financial ship of state. Suffice it to say, there will yet again be changes.Having come full circle, the question remains, Why do we pay income taxes? The simple answer is, Because we must. Because it is the law. Like them or not, agree with the current tax policies or not, as embodied in the Constitution, income tax is part of the fundament of who and what we are as a nation.The days of Jeffersonian simplicity are past. No longer can you fit the State Department in your pocket.Why do we pay taxes, happily or not? Well at least, in part, honesty compels, to enjoy our freedoms from the free side of federal penitentiary walls.Rohn K. Robbins is an attorney licensed before the Bars of Colorado and California who practices in the Vail Valley. He is a member of the Colorado State Bar Association Legal Ethics Committee and is a former adjunct professor of law. He may be heard on Wednesday nights at 7 p.m. on KZYR radio (97.7 FM) as host of Community Focus. Robbins may be reached at 970-926-4461 or at his e-mail address: email@example.com.