After the IRS postponed tax day for all US applicants for the second time in so many years, it’s time again for a fun change when you look back on tax history! Use these questions to test your tax knowledge to surprise your friends and family.
In 1861, President Abraham Lincoln passed a flat tax on wages over $ 800 to help finance the Civil War. What was the tax rate?
• a. 3%. Although Lincoln waived this 3% tax, the federal government had no effective way to collect the tax at the time. The result? The tax fell far short of its planned revenue targets. Fortunately, the government is now making changes to the tax law and has ample time to implement the change. Oh, maybe not that much has changed after all!
What year were taxes withheld from paychecks?
• c. 1943. In order to raise money for a war, the government required that taxes be withheld directly from paychecks rather than waiting for quarterly or annual payments.
The estate tax that may be payable on your property after your death was originally enacted in 1797 to help fund which branch of the U.S. military.
c. air force
• b. Marine. It was repealed in 1802 but later returned to fund the civil war.
Which state was the first to enact sales tax in 1921?
d. West Virginia
• d. West Virginia. To date, all but 5 states (Alaska, Delaware, Montana, New Hampshire, and Oregon) have sales tax. And it’s as complicated as imagining the country’s legislation.
The United States has a progressive income tax system where your first dollar is tax-free and your last dollar earned is taxed up to 37%. What was the highest tax rate when this progressive income tax system was introduced in 1913?
• b. 7%. It’s hard to believe that the federal government no longer needed taxes. However, the top tax rate rose to 77% five years later in World War I. The highest individual income tax rate for 2021 is 37%.
This year’s tax day is May 17th, postponed a month before the traditional April 15th. However, the deadline was not always April 15th. Tax day was postponed to April 15th in 1954. What day were taxes due before 1954?
a. March, 15
b. February 15th
c. April 1st
d. May 15
• a. March, 15. The deadline has been moved from March 15 to April 15, 1954 to give taxpayers more time to deal with the additional complexities that will be built into the tax law.
How many pages of instructions did it take for the first Form 1040 in 1913?
• d. 1. Speaking of additional complexity, the basic instructions in Form 1040 for the 2020 tax year are 111 pages.
– By Nancy J. Ekrem, CPA
DME CPA Group PC
Auditor & Management Consultant