There is a fine layer of complexity when it comes to the mechanisms and operations for running countries. All around the world, countries and states have come up with ways to keep their establishment prosperous and growing. Taxation is one way that helps keep a states government intact and in a working position. Almost everyone knows the significance of taxes as they pretty much affect everything connected to the economy. The majority of the population thinks that the concept of taxation is as old as the civilization; however, to many peoples’ surprise, the great state of America spent a few initial years without any kind of taxes. Even after the emergence of the American state ion, there were only a few taxes added into the states law and regulation.
After the few years of industrialization of America, additional taxes were added. Those new additional taxes were as follows:
- Federal Taxes
- Governmental Taxes
- Alternative Taxes
- FICA (Federal insurance contribution act)
The list does not end there because as the years went by, plenty of things changed, and so did the economy of America. To stabilize the state and have a reliable momentum of resources, the government started adding up more forms of taxes, which eventually initiated America’s now present taxation system.
This article will discuss how America spent its day without taxes and how it managed to survive as a country. In addition, we will be discussing major events that shaped the now present taxation mechanism.
History Of Taxation
Income taxes are the oldest form of taxation that has been one of the first taxes added to the American rulebook. However, it happened after a decade. In the beginning, Americans didn’t even have income taxes, and civilians enjoyed all of their income by themselves. In the initial decade of America, most of the administration’s revenue came from various tariffs and luxury items off consumption. As a result, the revenue system was highly dependent on bulk buys of the following items.
- Alcoholic beverages
- Tobacco products
- Caffeine products
- Sugar-based items
- Canned sugar
- Social documents
- Registration fees
This was the time in America was struggling to create a solid administration for the civilians as the imposing tax plan was not working, and the economy was on a low estimate. While the times were hard enough, the Whiskey Rebellion happened. Everything came crashing down when the farmers started protesting. The native farmers had massive opposition regarding the tax money which was imposed on whiskey. Under the influence of rage, the farmers of Pennsylvania burned down the houses of administrational officers and tax collectors.
Due to this rebellion, America suffered the loss of few governmental officers and a lot of resources while the farmers were still in rage and wanted direct taxes elimination. The program did not end there as it became the sole cause of the military actions in the year 1794. America had to invest a lot of finances and resources to create peace with the civilians as well as the farmers; however, they suffered for about two and a half years have lost plenty of resources and estate property.
If you want to know more, then scroll down because we have listed all the details below;
The Reason Behind No Taxation
Once America was discovered, there were a lot of things America needed as a state. One of the most important things was the safety of the civilians, management of the resources and country funds. America was trying to come up with solutions to survive as a state; however, due to the low amount of resources and new management America had to go under the rule and regulation of the British government by the colonist.
So the main reason behind no taxation was the absence of an absolute governmental system. In simple terms, American lacked a national government. Now that America didn’t have a government to represent it, colonists took over the management and communicated with the British authorities regarding economic matters. Even after eight years, America could not be able the finalized administration due to a lack of resources and rebellions. Due to initial struggles, there was a huge delay in constructing a government for America; however, exceptions were imposed once the administration was made.
Initial Years Of America Without Taxes
As mentioned earlier, America spent its initial years without any addition of taxes into its system. The civilians were living forcefully under the administration of colonists. America worked on individual funds and cooperate funds to prosper as a country as it was not taking money from the civilians. There was no such concept of taxes till the end of 1796.
Local export and import were made to have systematic growth in the economic statistics of America. However, the growth prospect was very slow due to the absence of taxes. In addition to that, moderation of money did not become an issue as the administration was not responsible for a thing like health care etc. Lack of taxes meant that the administration of the state was free from additional responsibilities to the civilians.
Following is how America work before the advent of each new tax:
Before Estate Tax
With the discovery of America, the infancy period was all about trial and error. The colonists were the main leads in the story as whoever law they followed, the American citizens followed as well. As an estate, America needed a lot of safety precautions to be independent and capable of protecting itself. As it was a newborn and weak estate, all in all, Americans struggled with the safety issue.
The first form of defence was made, which is known as the US navy. It was made to protect the coastal areas on the upper and lower sides of the estate. In the initial years, in 1797, an unofficial attempt of posing estate tax was made, a good amount was collected, but the idea was dropped soon. Hence America was without taxes again. The defence system did not have any kind of taxation until 1916 when the government filled the official notice for estate tax imposition. After this year, America kept on adding new taxes each year.
Before Income Tax
The American citizens lived and worked on individual bases as they did not have to pay anything to the government; however, this meant they could not aspect things from the estate as they were laying it anything. Those things include:
- Governmental health benefits
- Incomes bonuses
- Profits on lands
America held up good until the year 1909 when cooperate organizations needed resources to keep the economy growing. This gave birth to the concept of cooperate tax. The arrival of cooperate was a minor addition and was accepted by the civilians with open arms. There were no additional for about fourteen years when the civil war was in progress. Due to the civil war, the administration of America had to impose the first-ever official taxation known as income tax. The official income tax taxation was to stabilize the resources for the safety of America in the civil war. The first income tax composition was known as Internal Revenue Service. After this taxation government started regular taxation on civilians as well. The bill of Taylor taxation was filed after 14 years of the first income tax imposition.
Major Defaults Due To No Taxation.
In between the years of the Whiskey Rebellion till the World War One, America was struggling with a lot of things as a state. The mismanagement of the administration and the ignorance of the constitution was very clear to the civilians of America. This was the main reason why in between the years 1780 till the year 1963, there was a lot of violence regarding taxation. Civilians were in rage as they were not getting suitable treatment as a citizen even after the advent of American government.
Following are some of the main things that were observed due to the lack of taxes.
- Lack of security; Within the first decade of the formation of America, due to low resources and low revenue in the government funds, there was not a sufficient budget regarding arms and weapons for the protection of the state.
- Unsatisfied civilians: As America was ruled by the British government majority of the American citizens had to pay extra taxes according to the rules of a colonist by British government.
- Frequent change in contribution: Due to frequently rebellion moments, the constitution kept on adding new reforms with each revolution. Due to this, the main constitution of America was established in the year 1787.
Why Were Taxes Imposed In America?
As mentioned earlier, America was under the rules and regulations of colonists, so whatever colonists were doing, Americans had to do the same. This initiated the first-ever unofficial taxation in American. After the British and colonist communication, the initial taxation took place. Following taxes were imposed in the beginning by the British state government:
- Head tax
- Real estate tax
- Tea tax
After that, with the advent of the first few minor taxes, more taxes were added within the same year when the end of the Revolutionary war was declared. The taxes were assigned by congress via approval of the upper constitution. The collection of the overall amount of taxes was assigned to the state, which will forward it to the main government. The newly added taxes included the following:
- Alcohol taxes
- Tobacco taxes
- Property taxes
- Export goods taxes
These were one of the four major and significant taxes added for the American citizen. Within the span of two years, personal taxation for individual civilians was imposed; however, it could not last long due to the absence of government rules.
To conclude all the given information and to answer the question of the subject line, America did manage to function fairly well while keeping up with the issues as a new country. America did make a lot of mistakes in the initial years regarding the management of country funds and could not come up with easy solutions regarding imposing taxation. It still managed to climb up and create a constitution of its own within a few years. Not to forget that the initial years of America for not peaceful at all as there were a lot of wars and violence included as well.
Hopefully, this article will help you understand the history of taxation in America and how the taxation mechanism started. America has grown into such a magnificent country with a solid constitution and management. It would not be an understatement to say that America has learned from all its past mistakes and has come out strong. Americas now present taxation system is one of the best taxation mechanisms in the world as it includes physical money as well as for cryptocurrencies through the integration of IRS. Only time will tell what more changes will occur in the taxation mechanism of America.