In the Beginning“No Taxation Without Representation” - Immediately afterthe Revolutionary War, Americans decided who could andcould not tax them. Under the Articles of Confederation,the national government could only ASK states for money.States, not Congress, could tax INDIVIDUALS if theychose. America quickly(6 years) realized a governmentthat has no power to tax is really no government. It needsmoney to carry out its duties.“Taxation With Representation” - Our founding fatherscreated a taxation framework in the Constitution that wouldgive government the power to tax, but limit the power so itwould not be abused.
How?1. All tax bills originate in the House of Representatives (2 yr. terms directly elected)2. National taxes paid by each state will be according to their population3. “All (national) duties, imposts, and excises” will be uniform throughout the USImportant - Income taxes were unconstitutional because they are based on income and not population
What Was Out First Tax?Not Income or Sales Tax:• Tariffs (Imports) 1790 - Most items were given a 5% duty. “Luxury” items such as liquor, coffee, and soap were set higher. Imports shipped on US ships were taxed at 4%. These tariffs were “revenue tariffs” (designed to raise money) not “protective” tariffs (design to drive out foreign competition) and were successful.• Excise Tax - Many items were chosen over the years for tax (carriages, snuff, stamps). However, the whiskey tax of 1794 led to the famous Whiskey Rebellion.• 16th Amendment (1963) - Income tax and the end of the servant class
Tax Resistance in History• American Quakers refusal to pay taxes during the French and Indian War (1757 - 1763)• 1770s - American colonists resistance to British taxes• 1848 - Author Henry David Thoreau was jailed for refusing to pay taxes in opposition to the Fugitive Slave Act and the Mexican American War• 1930 - Gandhi’s famous Salt March to resist British tax on salt• 1965 - Amish are exempt from Social Security taxes. They feel God is the only insurance they need• Recently - Anti-abortion and capital punishment activists have refused to pay taxes which support it. Also, gay rights activist.
Forms of Tax Resistance• Redirection - Refuse to pay but make an equivalent donation to charity• Refusal of Specific Taxes - War protesters commonly refuse to pay the federal telephone tax. (Small and carries no penalty)• Refusing to Pay - Refusal to pay all taxes or a portion in a symbolic way. Ex. - % of military spending in Federal budget• Paying Under Protest - Payment with letters of protest or paying in creative ways (Pennies, Hammers, etc.)• Tax Avoidance - By creating a “tax haven” (Corporation, church, trust, foundation, offshore company)• Tax Evasion - “underground economy”