U.S. Tax System History in the 18th Century

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Taxes have been imposed on Americans since 1765 and evolved throughout the centuries, some related to historical events and others were more added more gradually.

Federal, state and local tax systems have changed significantly over the years as did circumstances and as the role of government evolved. Starting in Colonial times and though out the ensuing years, Federal taxes were derived from excise taxes, tariffs and custom duties. Some can be traced to specific historical events such as a war, or the the passage of the 16th Amendment to the Constitution that granted Congress the power to levy a tax on personal income. Today, in addition to federal levies, there are also state and local taxes.

Colonial Period

During the early part of American history, most Federal taxes came from excise taxes, tariffs,and custom duties. The Southern colonies imposed a property tax and a “head” or poll tax levied on each adult male. New England colonies raised money through general real estate taxes, excise taxes, and taxes based on occupation.

England imposed taxes on the colonies to help pay for its war against France. In 1765, the English Parliament passed the Stamp Act, the first tax imposed directly on the American colonies which was followed by a tax on tea. Americans revolted against these taxes in what became the American Revolution.

American Revolutionary Period

In 1781, the Articles of Confederation was adopted, reflecting a strong fear of a strong central government, leaving much of the political power in the States. The central government depended on donations from the states as its revenue as there was no nationwide system.

When the Constitution was adopted in 1789, the Federal Government was granted the authority to impose taxes. It gave Congress the power to collect taxes, duties, imposts, and excises and to pay debts and provide for the “common Defense and general Welfare of the United States.” The collection of taxes were left to the State governments.

In order to pay for the Revolutionary War, Congress levied taxes on distilled spirits, tobacco and snuff, refined sugar, carriages, property sold at auction and certain legal documents. Additional taxes were imposed by some states, for example, Pennsylvania imposed an excise tax on liquor sales to “restrain persons in low circumstances from immoderate use.

Opposition to Taxation

In 1794, a group of farmers in southwestern Pennsylvania physically opposed the tax on whiskey in what was called the Whiskey Rebellion. President Washington sent Federal troops to suppress the revolt against the revenue laws. It was an indication that resistance to unfair or high taxes that led to the Declaration of Independence did not die when the new, representative government was formed.
Land Taxes

The Federal Government imposed its first direct taxes on owners of houses, land, slaves, and estates in the 1790’s during the war with France. As direct taxes, this was a recurring tax paid directly by the taxpayer to the government, using the value of the item as a basis for the tax. This was abolished when President Thomas Jefferson took office in 1802 and no internal revenue taxes, other than excise would be charged for the next ten years.

The 18th century began the process of levying taxes on Americans and would lay the groundwork for the system that persisted into the following century.