3. In the Beginning
“No Taxation Without Representation” - Immediately after
the Revolutionary War, Americans decided who could and
could not tax them. Under the Articles of Confederation,
the national government could only ASK states for money.
States, not Congress, could tax INDIVIDUALS if they
chose. America quickly(6 years) realized a government
that has no power to tax is really no government. It needs
money to carry out its duties.
“Taxation With Representation” - Our founding fathers
created a taxation framework in the Constitution that would
give government the power to tax, but limit the power so it
would not be abused.
4. 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 population
3. “All (national) duties, imposts, and excises” will be
uniform throughout the US
Important - Income taxes were unconstitutional because
they are based on income and not population
5.
6. 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
7.
8. 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.
9. 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”
