Taxation
Government Part 4




Early mankind was largely tribal with bands of households sharing a close-knit community. Each person had a job or duty to the tribe as well as a duty to their own household. All the strong men went on hunts and protected the encampment from attacks by wild animals and human marauders. The older men were often the religious, spiritual and government leaders. Some men or women were crafts people or specialists, such as the medic or spear makers or fabric makers. The women packaged and preserved the food, which included plants, meat and eventually grain harvests. Food was distributed among the various people in the community.

Somewhere along the lines of human development many of the individual households became or chose to become separated and autonomous from the central core of the tribe. Some may have been ousted from the tribe for violation of the rules. Some may have left because they didn’t like the direction or philosophy of the current governing council. Some may have decided to just be alone to live life on their own terms, farming and hunting just for themselves.

Some tribal areas became so large that it was impractical to continue in the tribal ways. How many thousands of men can go on a single hunt? What of those who catch nothing or do nothing because the others wiped out the herds of animals first? Dissent arises and eventually the distribution of the hunt becomes proportional to the people to did all or most of the work, with a portion going to those who got left out of the action due to overkill.

This, therefore, can be the origin of taxation where those who did not or were unable to do gave up part of their share to the majority who prevailed. The origin of the haves and have nots.

The barter system also began as a result of communities exceeding the limits of tribalism. Hunters would go out and trade their kill for cloth, grain, precious metals accepted as tender, tools, dishes, ready made shoes, weapons and other items that they no longer made themselves.

The tribal rulers or elders were too old to do any hunting and may not have been able to do much at all. So for government to continue (and it must, least their be no government or anarchy) and expand with protection for the people (police and warriors to fight off enemies) and services such as bringing water to the farmlands government also bartered or in some instances demanded tribute, which would then fund government and leadership.

As far back as the days of the Pharaohs the tax collectors or scribes once put a tax on cooking oil and regulated what people could use as oil for cooking. There was also a quota on what a person had to use in their cooking needs. The scribes would go out and audit each household to verify they were following the rules and using only the taxed oil.

The early Greeks imposed a tax on each person residing in the country who did not have both a Greek Father and a Greek mother. They also imposed a tax on everyone to fund war efforts, which was curtailed after achieving their goals and even refunded if the spoils of war were sufficient to make such a distribution.

The Romans instituted a wide range of tax and tax innovations, starting with taxes on imports and exports (portioria). Roman tax collectors were called Publicani and Rome eventually started imposing a tax on sales within their Empire.

For a time Roman experimented with regional tax on a city by city basis, instead of a national tax. The cities, in turn, had to pay a portion to Rome.

An inheritance tax was also instituted to pay retirement funds for the Roman military. This tax served as a model in later times for England and The Netherlands who also instituted an inheritance tax.

When the age of the Roman Empire ended, the Saxony Kings of England instituted their own taxes, including those on land, other property and imports.

“Progressive” taxes came about in the 14th century where nobles paid hundreds of times more than peasants or common Burgers (city dwellers) and when income taxes were eventually enacted the poor paid little or no tax, while the wealthy, nobility and clergy paid considerably.

Excise taxes were also imposed but these were initially regressive and lead to riots as the common folk in England couldn’t afford to buy enough wheat to live on due to the excise tax on wheat.

In the English Colonies in North America the first tax imposed by England was on sugar and molasses, followed quickly by the “stamp tax” which required that certain items and documents have a “stamp” on them, which you bought from a government office. All newspapers, for example, had to have the “stamp” placed on them. (Those of you from certain states inside the U.S. today note that a “stamp” is placed on the bottom of every cigarette package or neck of every hard liquor bottle, showing that “tax” has been paid on that item.)

Finally came the Tea Tax, which resulted in the rebellious Boston Tea Party and the concept of “no taxation without representation” helped generate fuel for independence from England.

When the initial Confederated States of America was created it was impossible to levee duties and custom taxes or print national money, thus came the Constitutional Convention and the United States of America. In that constitution was a clause preventing direct taxes levied on the citizens that was disproportionate and based upon wealth. The U.S. could only tax goods and services. To tax people required it be proportion and equal. In otherworlds everyone had to be taxed the same, neither regressive or progressive.

In the late 1800s government did impose an income tax on the people that was actually in violation of the Constitution, but the Supreme Court, in the middle of a Civil War and responsive to Lincoln and the Congress, upheld this tax.

Out of the 38 million citizen only a few hundred thousand actually filed and paid income taxes. The Supreme Court at a later date invalidated this tax, as the Civil War had ended and the courts was no longer supportive of this obvious illegal tax.

In the 1900’s the government needed to raise money and wanted to impose income taxes on the people in a progressive manner, which required a constitutional amendment. If the states didn’t pass the amendment, they feared that the Federal Government was start taxing the states to raise their money, so most states pushed through the amendment, which cleared the way for a progressive income tax.

The United States now imposes duties on items coming into this country, including these to citizens over $200 in value. The United States taxes liquor, beer, cigarettes and other “vices.”

Starting in 1930 a tax was levied on employees and employers to provide for retirement of all workers, known as the Social Security tax and it amounts of 15% of all income received up to about $100,000 (this level will probably be raised to $200,000 or even $300,000 in the next few years as a measure to shore up the Social Security Tax) with half paid by the employee and half by the employers.

There are also income taxes to support disability, unemployment, retirement (see our piece in this section last month on Social Insecurity) and workman’s compensation.

Finally there is the income tax, in which everyone making more than $8,000 is taxed. Those making $8,000 to $25,000 pay roughly 10%. Those making $25,000 to about $50,000 pay roughly 20%. Those making over $50,000 pay roughly 25 to 30%.

To prevent the non-filing of taxes the United States imposes mandatory withholding of taxes from a given paycheck and a reporting of all other payments made over $500 in a single year to the same person or firm from one other person or firm. All payments made over $10,000 are reported immediately to the Federal Government.

Most states in the United States also have an income tax (one exception is Texas). Most states also make mandatory deductions from income. California, for example, started making mandatory deductions in the late 1960s because no one was filing or paying tax.

Someone making about $20,000 in the United States who is single with no other family ends up paying about $3,000 total dollars in combined taxes for unemployment, workman’s compensation, disability, state, federal and retirement taxes. That’s about 15%.

Most non-food items are taxes between 5 and 9% so the total tax bite for such a worker is around 20% each year if they don’t drive a car, smoke cigarettes or drink alcoholic beverages.

Gas, cigarettes and liquor are taxed about 50%, so the person making $20,000 a year who drives a car, smokes and drinks is now paying closer to 35% in taxes.

Property is taxed from 1.5 to 4% of value with the average property tax bill amounting to $200 for a piece of un-developed land to $5,000 a year for fair sized home. This can bring the tax bite on a $20,000 worker to over 50%, however no one making $20,000 a year can actually afford to buy or own a home. Generally you have to be making over $35,000 to own a home in some areas and over $50,000 to own a home in the larger cities. The tax rate for income on these people is even greater than on the person making only $20,000.

 






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