Tax Law

In: Business and Management

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Tax Law and Accounting
ACC 483
June 21, 2010
Jeff Hough

Modern taxation comes from a long history of changes in the United States beginning with the Revenue Act of 1861 that was designed to assist with funding the Civil War. This tax was repealed 10 years later. “In 1894 Congress enacted a flat rate federal income tax, which was ruled unconstitutional the following year by the U.S. Supreme Court because it was a direct tax not apportioned according to the population of each state” (Terrell, 2009, History of Tax Law, para. 2). In 1913, the Sixteenth Amendment enacted modern day federal income tax in the United States. Before 1913, the federal government relied on customs duties and excise taxes as its source of income. As America developed the U.S. government needed additional income to sustain its operations. The Sixteenth Amendment consisted of just one sentence: “The Congress shall have the 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” (Pope, Anderson, & Kramer, 2010, p. 1-3). The implementation of income tax remains one of the most remarkable institutions created in this era.
Modern Income Tax Statutes The primary objective of modern tax statutes is to generate revenue to sustain governmental operations. The largest source of federal revenues is individual income taxes. Other sources come from corporate income taxes and Social Security. Modern day individual income taxes account for 45% of federal revenues as of 2008. In recent years, the federal government has broadened its use of the tax laws to accomplish various economic and social policy objectives. Economic objectives include using the tax law as a fiscal policy tool to stimulate private investment, reduce unemployment, and mitigate the effects of…...

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