{"id":22037,"date":"2017-07-05T00:20:14","date_gmt":"2017-07-05T00:20:14","guid":{"rendered":"https:\/\/www.hrblock.com\/tax-center\/newsroom\/the-history-of-income-taxes-lifes-one-certainty-creates-considerable-doubt\/"},"modified":"2023-03-01T12:44:41","modified_gmt":"2023-03-01T18:44:41","slug":"the-history-of-income-tax","status":"publish","type":"newsroom","link":"https:\/\/www.hrblock.com\/tax-center\/newsroom\/income\/the-history-of-income-tax\/","title":{"rendered":"The history of income taxes: life\u2019s one certainty creates considerable doubt"},"content":{"rendered":"

Although it has been said many times that \u201cnothing can be said to be certain, except death and taxes,\u201d a century ago paying income taxes was much different than it is today. And another thing is certain \u2013 income tax policy likely will keep changing.<\/p>\n

Through 1860, Americans did not pay individual income taxes. Instead, the government collected revenue through excise taxes, like\u00a0the whiskey tax<\/a>. The government started collecting income taxes from citizens with\u00a0at least $800 of annual income<\/a>\u00a0starting in 1861 to\u00a0help fund the Civil War<\/a>, but repealed the tax a decade later after the war had ended.<\/p>\n

When Congress tried to implement another income tax in 1894, the Supreme Court\u00a0ruled the tax unconstitutional<\/a>\u00a0even though it had\u00a0upheld the income tax during the Civil War<\/a>. This led to the ratification of the 16th<\/sup>\u00a0amendment in 1913, allowing for a federal income tax. With just one percent of Americans began paying a\u00a0one percent tax on their net income<\/a>, the income tax system used today was born.<\/p>\n

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While\u00a0the top tax rate jumped to 77 percent<\/a>\u00a0in 1918, most Americans still did not have to pay income taxes or file a tax return through the 1930s. Americans with net income of $3,000 or more had to file a tax return, but\u00a0fewer than 6 percent met this threshold<\/a>. Those who were required to file usually had their local IRS office prepare their return by the\u00a0March 1 filing deadline<\/a>. Early DIYers could do their own taxes following just\u00a0one page of instructions<\/a>. A century later, instructions for form 1040 reached\u00a0207 pages<\/a>.<\/p>\n

By the middle of the 20th<\/sup>\u00a0century, more changes were underfoot. Employers started to\u00a0withhold taxes from employee wages in 1943<\/a>. The tax deadline moved to\u00a0April 15 in 1954<\/a>. By then,\u00a0more than three-fourths of Americans had an income tax obligation<\/a>\u00a0and they\u00a0paid $29.5 billion in income taxes, up from $420 million two decades earlier. As more Americans were required to pay income taxes, they couldn\u2019t rely as much on a local IRS office to prepare and file their tax returns.<\/p>\n

\"\"<\/a>In Kansas City, the\u00a0IRS discontinued its local tax preparation services in 1955<\/a>, the same year that Richard and\u00a0Henry Bloch<\/a>\u00a0decided to advertise their United Business Company\u2019s tax preparation services in the\u00a0Kansas City Star<\/em>. United Business Company primarily focused on bookkeeping for small businesses but offered tax preparation as a courtesy to clients. Within weeks, the company grossed nearly a third of the annual volume United Business Company had taken years to develop. H&R Block was born and opened offices in New York City the following year, where the IRS was next discontinuing its tax preparation services.<\/p>\n

By the early 1960s,\u00a0taxpayers had to look beyond the IRS<\/a>\u00a0to complete their income tax returns. It was also in the 60s that the IRS opened its\u00a0National Computer Center<\/a>, although the\u00a0IRS would not accept electronically filed tax returns until 1986.<\/p>\n

While income taxes have changed over the last century, that change has only contributed to another universal truth put so well by Albert Einstein: \u201cThe hardest thing in the world to understand is the income tax.<\/a>\u201d<\/p>\n<\/div>\n<\/div>\n","protected":false},"excerpt":{"rendered":"

Although it has been said many times that \u201cnothing can be said to be certain, except death and taxes,\u201d a century ago paying income taxes was much different than it is today. And another thing is certain \u2013 income tax policy likely will keep changing. Through 1860, Americans did not pay individual income taxes. Instead, […]<\/p>\n","protected":false},"author":418,"featured_media":24534,"menu_order":0,"template":"","tags":[],"news-categories":[23360],"class_list":["post-22037","newsroom","type-newsroom","status-publish","has-post-thumbnail","hentry","news-categories-income"],"acf":{"post_rest_thumbnail_alt_id":null},"yoast_head":"The history of income tax | H&R Block Newsroom<\/title>\n<meta name=\"description\" content=\"H&R Block tax experts are explaining the history of income tax and why they are certain income tax policy will constantly change.\" \/>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"https:\/\/www.hrblock.com\/tax-center\/newsroom\/income\/the-history-of-income-tax\/\" \/>\n<meta property=\"og:locale\" content=\"en_US\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"The history of income taxes: life\u2019s one certainty creates 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