Tax

Important Dates In Post-Revolution American Tax History

The Revolutionary War was sparked in part by the British imposing taxes on the American colonists without their permission or consent.

Once the colonists had freed themselves from British rule, it was time to establish a government that could pay the debts it had incurred during the conflict.

Photo by Patrick Fore on Unsplash

Photo by Patrick Fore on Unsplash

1777 – Articles of Confederation

This was the first constitution of the newly formed United State. It favored decentralization of power, which means that Congress was not given the power to tax.

1781  – Report on Public Credit

Robert Morris, Superintendent of finance, wanted the federal government to own the debt it incurred then issue interest-bearing debt certificates while imposing tariffs and internal taxes.

His proposal was shut down by numerous states over the next few years.

1787 – Ratification of the Constitution

The ratification of the Constitution shifted the focus of power to the federal government and away from individual states.

This gave the federal legislature the power to impose tariffs and coin money, along with the flexibility to collect excises and levy taxes directly on individual citizens.

1789 – Tariff of 1789

This tax bill included the original 5% duty on imports, as well as a list of special items that would be taxed at specific amounts.

1790 – Report on Public Credit

This new tax plan worked on two basic principles:

  • Redemption – Congress would redeem at face value all the securities issued by the Confederation government. These old notes would be exchanged for new government securities with interest of about 4%. This plan aimed to intertwine the wealthy Americans who had financed the initial government with the new government.

  • Assumption – The national government would take on outstanding war debts of the states. This would concentrate the nation wealth into the hands of the wealthy merchant class so they would be able to invest in the nation’s economy and other critical innovations.

1791 – Whiskey Excise Tax

This was a tax specifically for spirit distillers and imposed a 7 cents to 18 cent per gallon tax. This was not a popular tax, as spirits were often used as a form of currency out west.

1794 – Uprising Quelled

North Carolina and Western Pennsylvania were in a state of civil unrest after being cited by the federal government for dodging taxes.

The federal government forced the states to send militia to occupy these territories and take down any organized resistance.

President Madison appealed to Congress for a Declaration of War against Britain as the tension between the two countries reached a head.

There was a lot of conflict over fundraising for the war, but Congress eventually settled on doubling the tariff schedule.

 

Important Dates In Colonial American Tax History

In the spirit of summer, we’re creating a series containing some of the important dates in US tax history.

blog dates in history

Credit: Matt Briney on Unsplash

Why is this something we talk about in July? Back on July 4, 1776, Congress adopted the Declaration of Independence, a document that stated the American colonies wouldn’t accept British rule — or taxation.

But that’s just one key date in the history of American taxes. Let’s look at critical years and dates that lead up to the adoption of the Declaration of Independence.

 1733 Molasses Act

This tax was imposed to keep the American colonies buying from the British West Indies and not the lower cost imported options. The imposition of this act was effective the first year then led to corruption.

 1764 Sugar Act

An extension of the Molasses Act, this act increased the tariff per gallon on molasses. It was enforced by prohibiting vessels from shipping directly to the colonies. Ships would have to unload their cargo, pay tariffs, then reload and proceed to the colonies. It also expanded what the Crown could tax.

 1765 Stamp Act

This act said that every official document in the colonies would need a stamp on it. This was done to solely to increase the revenue of the British government, which caused opposition to emerge.

 1766 Declaratory Act

This act repealed the Stamp Act while also declaring that the American colonies are subordinate to the British Government and so the government had the right to tax them. As you can imagine, this didn’t go over well.

 1767 Townshend Acts

This act taxed 72 addition imports including paint, tea, and paper. The revenue raised was to fund the salaries of colonial officers and its administration. The protests from this act eventually caused the Boston Massacre.

 March 5, 1770 – Boston Massacre

What started as a protest of angry American colonists harassing a single British soldier escalated to a bloody conflict where several colonists were shot and killed. This was used to fan the flames of anti-British sentiment.

 1773 Tea Act

This act established that only tea from the East India Trading Company could be sold in the American colonies. The new tea was cheaper, but it hurt independent shop owners, shippers, and smugglers, which is why it caused a backlash.

 December 16, 1773 – Boston Tea Party

Protesters dumped more than 300 chests of tea into the Boston Harbor in protest of the 1773 tea act.

 1774 Coercive Acts

The British pass a series of policies designed to reestablish authority over the American colonies. One of the provisions was Boston Harbor would remain closed until the colonist paid the East India Trading Company for the losses of the tea party.

 July 4, 1776

The Declaration of Independence is adopted after days of the discussions and 12 of 13 colonies agreeing to succeed. The actual signing of the Declaration didn’t occur until August 2.

 

Taxation is a large portion of why the American colonies felt it necessary to break away from England. Taxation continues to be a large part of America’s history, especially in the years immediately following the Revolution.

 

We’ll cover that time period next.

 

6 Tax Deductions That Went Extinct in 2018

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The Tax Cuts and Jobs Act of 2017 was called one of the largest tax overhauls in 30 years. It went into effect at the beginning of 2018, which means taxpayers are starting to feel the impact now. Some households will benefit from it, others will not. Here are some deductions that have been eliminated or reduced.

Moving Expenses
Unless you or a spouse is in the military and is currently on active duty, you won’t be able to take any deductions for moving. In the past, those who moved for a job and paid the moving cost could deduct most of their expenses.

Personal Deductions
Deductions for personal exemptions, which can be worth $4,050 for each exemption, were eliminated and replaced with a larger standard deduction and an expanded child tax credit.

Paying Alimony
If you’re paying alimony on a divorce finalized before December 31, 2019, then you can deduct those payments one last time.

Unreimbursed Job Expenses
This fell into the category of miscellaneous itemized deductions, an area that has been greatly reduced by the latest tax laws. It means that anything an employee pays for while on the job and doesn’t get reimbursed for, is not deductible.

State and Local Taxes
You used to be able to fully deduct any amount of state or local taxes. Now that cap is set at $10,000 meaning those with high state income and property taxes will get much less back.

Tax Preparation Fees
Tax preparation fee deductions were eliminated as part of the miscellaneous fees. This is will occur from 2018-2025. That means you cannot deduct payments to accountant, tax prep firms, or tax preparation software.

Any U.S. tax advice contained in the body of this website is not intended or written to be used, and cannot be used, by the recipient for the purpose of avoiding penalties that may be imposed under the Internal Revenue Code or applicable state or local tax law provisions.