June 1215, Magna Carta: The “Great Charter” is signed by King John of England, providing for specific liberties and limiting feudal payments (taxes) to the crown. It influenced early American colonists and the formation of our Constitution.
March 1733, Molasses Act: Parliament imposes a tax of six pence per gallon on imports of molasses, not to raise revenue, but to regulate trade by making British products cheaper.
April 1764, Sugar Act: This act, also known as the American Revenue Act or the American Duties Act, cuts in half the previous tax on molasses. This is Parliament’s first attempt to specifically tax the American colonies.
September 1764, Currency Act: Because there were no gold or silver mines, the colonies could only get hard currency through trade with Great Britain. Parliament, favoring “hard currency” based on the pound sterling, passed this act to gain control of currency in the colonies.
March 1765, Stamp Act: Parliament passes the first direct tax on the American colonies, requiring colonialists to pay a tax on every piece of printed paper. Response to this tax led to the first act of open rebellion and the first joint colonial Congress.
March 1766, Stamp Act repealed: American colonialists begin to raise the issue of taxation without representation.
June 1767, Revenue Act of 1767: This act, known as the first of the Townshend Acts, levies a duty on imports—an indirect, or external tax—because Parliament believed the colonies only objected to the Stamp Act because it was a direct, or internal tax.
May 1773, Tea Act: Parliament passes a measure to prop up the foundering East India Company. This act triggers the final spark to the revolutionary movement, leading to the Revolutionary War.
December 1773, Boston Tea Party: In defiance of the Tea Act, colonialists stage a political protest that became known as the Boston Tea Party.
July 1776, Declaration of Independence: Congress approves our independence from Great Britain. One of the grievances cited was “For imposing Taxes on us without our Consent.”
November 1777, Articles of Confederation: The Continental Congress adopts the Articles of Confederation, creating the first union of the colonies. The Congress was not given any taxing authority under the Articles.
September 1787, US Constitution: The failure of the confederation leads to a new Constitutional Convention. Delegates to the Constitutional Convention sign the new Constitution. Article I, Section 8, gives to the Congress the “Power To lay and collect Taxes, Duties, Imposts and Excises.”
March 1791, The Whiskey Act: The newly formed federal government imposes the first tax on a domestic product—distilled spirits.
December 1791, Bill of Rights: The House and Senate approve twelve articles of amendment to the Constitution. Articles three through twelve are ratified by the states and become part of the Constitution. These ten are collectively called the Bill of Rights.
July 1794, Whiskey Rebellion: The protest to the Whiskey Tax, led by distillers in western Pennsylvania, which began in 1791, comes to a head. Using military force, the federal government demonstrates the will and ability to enforce its laws.
November 1832, Ordinance of Nullification: South Carolina passes its Ordinance of Nullification, declaring that the federal Tariffs of 1828 and 1832 were unconstitutional and therefore null and void.
August 1861, Revenue Act of 1861: Costs of the Civil War lead to new and higher taxes. Congress introduces a federal income tax “levied, collected, and paid, upon the annual income of every person…from any…source whatever.” This act creates the first income tax in the United States—a flat tax.
July 1862, Revenue Act of 1862: Congress passes a new measure, modifying the income tax rates set in 1861 and creating the first progressive income tax. The new law establishes the office of the Commissioner of Internal Revenue, predecessor of the Internal Revenue Service.
June 1864, Internal Revenue Act of 1864: Congress passes another income tax law. This adds a third tax bracket and increases tax rates established in 1862. For the first time, this law imposes a tax on “every person residing in the United States…and any citizen of the United States residing abroad.”
June 1873, Internal Revenue Act of 1864 expires: Viewed by most Americans as an emergency wartime measure only, the law is allowed to expire. This is the first and last time an income tax law would “go gentle into that good night.”
January 1881, Springer v. United States: Although the Internal Revenue Act of 1864 is no longer in effect, the Supreme Court renders a decision upholding the constitutionality of the income tax imposed under that statute.
August 1894, Revenue Act of 1894: This act, also known as the Wilson-Gorman Tariff Act, was proposed by Democrats in favor of free trade to lower tariffs. The law levies a 2% income tax on incomes over $4,000, affecting less than 10% of all households.
April 1895, Pollock v. Farmers’ Loan and Trust Co.: The Supreme Court rules that the income tax levied by Wilson-Gorman is unconstitutional because a tax on income from real estate is a direct tax. Pollock leads to the Sixteenth Amendment allowing income tax.
July 1909: Congress approves an article of amendment to the Constitution and refers it to the states for ratification.
February 1913, Sixteenth Amendment: The requisite number of states ratify the article of amendment, making the Sixteenth Amendment part of the US Constitution and exempting income taxes from the constitutional requirement to apportion direct taxes.
October 1913, Revenue Act of 1913: Also known as the Underwood Tariff, the first tax bill passed under the Sixteenth Amendment reimposes the federal income tax. This law provides progressive tax rates, including seven brackets. All income was subject to a 1% normal rate.
September 1916, Revenue Act of 1916: Congress passes a second income tax measure, raising the lowest tax rate from 1% to 2% and the top rate to 15% on taxpayers with incomes above $2 million.
October 1917, War Revenue Act of 1917: The War Revenue Act is approved, raising the top rate from 15% to 67% and lowering exemptions. Tax revenue collected in 1917 is greater than the total tax revenue collected for all prior years.
February 1919, Revenue Act of 1918: Congress approves another tax law, again raising tax rates. The due date for filing a return is pushed forward from March 1 to March 15.
November 1921, Revenue Act of 1921: A Republican-led Congress passes the first-ever tax reduction, lowering the top individual tax rate from 73% to 58%.
June 1924, Revenue Act of 1924: This law cuts federal tax rates, lowering the bottom rate assessed on income under $4,000 from 1.5% to 1.125%.
February 1926, Revenue Act of 1926: Congress again lowers overall taxes, reducing inheritance and personal income taxes and eliminating the gift tax.
May 1928, Revenue Act of 1928: Congress passes a law including Sec. 605, which offers a conundrum. “In case a regulation…is amended by a subsequent regulation…such subsequent regulation…may…be applied without retroactive effect.” Wait! What?
October 1929, Black Monday: Congress, with the urging of President Harding, passes the ill-advised Smoot-Hawley Tariff Act, which leads to a calamitous decrease in world trade.
June 1932, Revenue Act of 1932: Congress raises income tax rates across the board. The rate on top incomes rose from 25% to 63%, the estate tax was doubled, and corporate taxes increased by 15%.
May 1934, Revenue Act of 1934: Roosevelt continues increasing taxes on the wealthy. The top individual income tax rate remained at 63%.
August 1935, Revenue Act of 1935: This law, popularized as the “Soak the Rich” tax, introduces the “Wealth Tax,” once again raising tax rates on higher income. The top marginal tax rate is set at 75%, a rate previously seen only during time of war.
August 1935, Social Security Act: President Roosevelt realizes his most revolutionary New Deal initiative: passage of the first social welfare legislation to make caring for the elderly a national responsibility. Payroll taxes are levied on both employers and employees.
June 1936, Revenue Act of 1936: Congress, in an effort to tax the income and wealth of those who use of the vagueness of the tax code to avoid paying tax, establishes an “undistributed profits tax” on US corporations and a tax on “unjust enrichment.”
June 1940, Revenue Act of 1940: WWII was met with higher income tax rates. The act embodied a program of super-taxes and went through Congress in less than a month.
October 1940, Second Revenue Act of 1940: After passing the Revenue Act of 1940, Congress enacts an excess-profits tax, retroactive to the start of the year, and increased the top corporate tax rate to 35%.
September 1941, Revenue Act of 1941: Waging war requires money—lots of it—and traditional taxation objectives of fairness and simplicity became harder than ever to achieve as this measure continues an inexorable march to higher individual tax rates.
October 1942, Revenue Act of 1942: Congress introduces a novel new tax, the “Victory Tax,” which applies to every American, and levies a 5% tax above the normal taxes and surtaxes on all income over $624. Tax rolls swell from two million taxpayers in 1932 to almost fifty million.
February 1943, Revenue Act of 1943: Congress increases federal excise taxes on, among other things, alcohol, jewelry, telephones, and admissions to entertainment events. The law raised the excess profits tax rate to 95% but lowered the Victory Tax to 3%.
June 1943, Current Tax Payment Act of 1943: Congress reintroduces the withholding requirement for federal income tax. America’s income tax system becomes a “pay-as-you-go” system.
May 1944, Individual Income Tax Act of 1944: Congress again raises individual income tax rates. The Victory Tax, lowered to 3% in 1943, is repealed.
November 1945, Revenue Act of 1945: For the first time since 1929, Congress passes major tax reduction legislation. The top individual rate dropped from a wartime high of 94% to 86.45%.
April 1948, Revenue Act of 1948: The law again reduces individual income tax rates, by 5 to 13%. For the first time, this law permitted married couples to split their incomes for tax purposes.
September 1950, Revenue Act of 1950: Congress reverses the postwar trend of lower taxes and eliminates some reductions from the 1945 and 1948 tax acts.
October 1951, Revenue Act of 1951: The 1951 act introduces the “head of household” filing status.
August 1954, Internal Revenue Act of 1954: The due date for filing individual tax returns is moved from March 15 to April 15.
October 1962, Revenue Act of 1962: This measure institutes dividend and interest reporting requirements for financial institutions.
February 1964, Revenue Act of 1964: This law is also known as the Tax Reduction Act. Congress passes a bipartisan tax bill to cut individual income tax rates across the board by 20%.
June 1968, Revenue and Expenditure Control Act of 1968: This measure creates a temporary 10% income tax surcharge on both individuals and corporations through June 30, 1969.
December 1969, Tax Reform Act of 1969: Congress establishes individual and corporate minimum taxes, a precursor to the current alternative minimum tax, unfavorably described by Senator Curtis of Nebraska as an attempt to “cut off the dog’s tail an inch at a time.”
December 1971, Revenue Act of 1971: Beginning in 1973, individual taxpayers could designate $1 for the Presidential Election Campaign Fund.
March 1975, Tax Reduction Act of 1975: This law begins the “tinkering” that now permeates our tax laws, providing a 10% rebate of 1974 tax and added a temporary $30 general tax credit.
October 1976, Tax Reform Act of 1976: Congress again includes several ways to lower the tax burden, extending the general tax credit and increasing deductions.
May 1977, Tax Reduction and Simplification Act of 1977: This law replaces the percentage standard deduction and minimum standard deduction with a single standard deduction; hence, for the first time, simplification is used in a tax title.
November 1978, Revenue Act of 1978: Congress reduces individual income taxes, increases the personal exemption, and increases the standard deduction for joint returns. The act establishes flexible spending accounts and adds section 401(k) to the tax code.
August 1981, Economic Recovery Tax Act (ERTA) of 1981: This measure is also known as the first of the Reagan tax cuts or the “Kemp-Roth Tax Cut.” It lowers the marginal income tax rates by 23% over three years. For the first time, tax rates were indexed for inflation.
September 1982, Tax Equity and Fiscal Responsibility Act of 1982: This measure, known as TEFRA, leads to a lawsuit because the Senate violated Article 1, Section 7 of the Constitution that states, “All bills for raising Revenue shall originate in the House of Representatives.”
July 1984, Deficit Reduction Act of 1984: This law restricted income averaging.
April 1986, Consolidated Omnibus Budget Reconciliation Act of 1985 (or COBRA) mandates continuing health care coverage for eligible employees if a qualifying event causes loss of coverage. Contrary to instinct, reconciliation refers to a legislative process, not an accounting procedure.
October 1986, Tax Reform Act of 1986 (TRA): Congress, at the insistence of President Reagan, simplifies the tax code to lower rates and broaden the tax base.
October 1988, Technical and Miscellaneous Revenue Act of 1988: For the first time, taxpayer rights are codified under the Omnibus Taxpayer Bill of Rights —Part I: Taxpayer Rights.
November 1990, Omnibus Budget Reconciliation Act of 1990: Congress passes a measure specifically designed to reduce the federal budget deficit. Signed by President Bush, this law violates his pledge for “no new taxes,” creating an election issue during his second presidential campaign.
August 1993, Omnibus Budget Reconciliation Act of 1993: This law took a significant step to address the Social Security crisis by eliminating the wage cap for Medicare taxes and increasing the percentage of Social Security benefits subject to tax.
July 1996, Taxpayer Bill of Rights 2: In the wake of numerous complaints about IRS methods, Congress again addresses taxpayer rights and creates the Office of the Taxpayer Advocate.
August 1997, Taxpayer Relief Act of 1997: Congress lowers several federal taxes and introduces a new child tax credit. This act establishes Roth IRAs.
July 1998, Internal Revenue Service Restructuring and Reform Act of 1998: This law, also known as Taxpayer Bill of Rights III, dealt almost exclusively with the structure and methods of the Internal Revenue Service.
June 2001, Economic Growth and Tax Relief Reconciliation Act of 2001: This act, known as EGTRRA, but more commonly referred to the “Bush tax cuts,” made sweeping reductions to federal income taxes.
March 2002, Job Creation and Worker Assistance Act of 2002: Congress passes a measure designed to provide tax incentives for economic recovery.
May 2003, Jobs and Growth Tax Relief Reconciliation Act of 2003: Congress accelerates provisions of EGTRRA and further reduces tax on investment income from dividends and capital gains.
May 2006, Tax Increase Prevention and Reconciliation Act of 2005: This law prevents several tax provisions from expiring in the near future. The bill extends the reduced tax rates on capital gains and dividends and extends the alternative minimum tax reduction.
December 2006, Tax Relief and Health Care Act of 2006: This law reads, “to extend expiring provisions,” but it actually extended many provisions retroactively. How is that possible?
February 2008, Economic Stimulus Act of 2008: Congress provides several kinds of economic stimuli to boost the US economy and to avert a recession.
July 2008, Housing and Economic Recovery Act of 2008: The act establishes the first-time homebuyer credit, given to eligible taxpayers in the form of an interest-free fifteen-year loan.
February 2009, American Recovery and Reinvestment Act of 2009: This law, commonly referred to as the Stimulus or the Recovery Act, was enacted to immediately save and create jobs. The law retroactively eliminated repayment of the first-time homebuyer credit but only for purchases made in 2009.
November 2009, Worker, Homeownership, and Business Assistance Act: This measure gave an extra thirteen weeks of unemployment benefits to jobless workers in states with high unemployment rates and extended the first-time homebuyer credit until April 2010, provided a tax credit for current homeowners, and increased the income limits to qualify for the credit.
March 2010, Patient Protection and Affordable Care Act: Commonly called the Affordable Care Act (ACA) or Obamacare, this law attempts to make universal health care part of American culture. For the first time, the tax code penalizes actions—inaction actually—not specifically related to tax events.
December 2010, Tax Relief, Unemployment Insurance Reauthorization, and Job Creation Act of 2010: This bill provides a one-year reduction in the FICA payroll tax.
January 2012, American Taxpayer Relief Act of 2012: This law makes permanent the lowest rate set by the Bush tax cuts and allows the highest tax rate to revert to the pre-Bush tax-cut level.
June 2012, National Federation of Independent Business v. Sebelius: The United States Supreme Court upholds the constitutionality of the ACA’s individual mandate as an exercise of Congress’s taxing power. The court held that states cannot be forced to participate in the ACA’s Medicaid expansion under penalty of losing their current Medicaid funding. This may lead to the demise of the ACA.