To The Daily Sun,
Even before we had a nation, we had taxes. As a matter of fact, you could say we are a nation because of taxes. The colonials were getting along nicely after the French and Indian War. They were able to assist their king across the sea with his on-going disagreements with France. As time went on, the king and his colonial representatives were in need of more revenue to fill the coffers of the royal family. Taxes on tea and whiskey were considered by the king as necessary. They were viewed by the colonial leaders as taxation without representation. To protest the taxes they dumped the tea into Boston harbor. They also had what they called a whiskey rebellion. The kings representatives interpreted it as insurrection and brought troops to handle the situation.
So, the war for independence began as a rebellion against taxes on two of their favorite drinks. Once the states won their independence, they were faced with the same old reality, taxes. They soon found them necessary. States tried to develop what suited each of their needs. Their relationship as a group was under the Articles of Confederation. They gave that form of governance a good try but became convinced that they needed a stronger national government. So they met in Philadelphia and put together a Constitution. There was some need to make it more palatable to the folks back in their individual states so they added 10 amendments and called them the Bill of Rights.
At that point the taxing system was complete. The landed local paid for community needs, the state legislative representatives (usually a chosen few of the landed locals) levied taxes for roads and other perceived state needs, and the national requirements were levied as needed by the members of the newly elected members of the federal Congress.
For the next half-century the former colonies developed a monetary system, fought a few wars, and expanded the borders of their new country. Taxes were levied for all levels of government in a somewhat orderly fashion.
Those who were sent to the national capital found that they had a list of laws to be passed. Most of the acts of Congress required a revenue stream. Now they had taxation with representation. Congress had to decide how much of their resources they wished to spend on common goals such as education, health and so on.....
The goal was to reach agreement. The potential for disagreement resulted in taking sides. Later, that taking of sides resulted in the creation of political parties. Those who had large amounts of capital (money) wanted to conserve it. Those who were earning money through labor wanted to spend it on goods and services, not on government taxation. Faced with a general population that felt taxes were necessary, but didn't want to forfeit as much as was required, legislators had to become the final arbiters.
Therefore, the choices came down to taxes on income, capital or on consumption. Income taxes came in two flavors, one on capital and one on earnings. Right away, the ones with the most money (capital) began developing strategies to conserve wealth. Color that avoiding taxation. The poor laborers were at a distinct disadvantage. In an effort to equalize the burden, they came up with an estate tax on the rich. It was to be levied when the heads of families died. The amount of tax was a percentage of the total value of the estate being passed on to survivors.
Of course we must not forget indirect taxes. Those were levied on goods and services. The list of taxes of this type varied from time to time, but it usually included taxes on liquor, tobacco and of course, after the development of automobile transportation, gasoline. Taxation on imported goods was called tariffs.
As the country struggled through the first part of the 20th century, it became evident that some sort of program was needed to support the poor and elderly population. A government sponsored program of "social insurance" was developed. It was to be financed by a direct tax on wages and salary income. The Social Security system has some flaws but it has endured despite some instances of poor management. Enhancing it with Medicare and Medicaid was welcomed by the seniors but has depleted the fund significantly. Due to a falling birth rate and stagnation in the economy there needs to be an adjustment in the collection rate soon.
So, we have many tax questions for the Congress and the Trump administration to find answers for. The Affordable Care Act, our latest effort to provide health care for all the citizens, is due for some adjustments. The incoming president and Congress may find it hard to scrap completely. Insurance premiums aren't taxes; they just feel like they are.
The subject of taxes is both a political and philosophical. It has always been so. It poses the question of how can a sovereign citizens decide how much of their earnings or profits to spend on the common needs or wants? Can we get beyond the idea that taxation is just continuous attempts at wealth redistribution? The reality is that our ability to pay is limited to how much we earn versus at what rate each is required to pay. Is everyone paying a fair share? How will the new administration handle needs versus resource allocation? Can he really make America great — again?