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What Taxes Are
It is easy for us to think of taxes as something that always was, and quite possibly, always will be. You could go back a number of years to the pre-Revolutionary war era of this country, and one can't help but think that taxes were the main reason for the revolt. That and representation. So how did we become a nation that needs 142 or so odd days to pay all of the taxes that are due.
Perhaps a brief history lesson is in order. Especially if you have ever felt militant about the subject. It is just good business to know something about which you are complaining.
We won the Revolutionary War. From the war came the Articles of Confederation and these were designed to keep a centralized government, one like the country they had just defeated, from forming. These Articles contained no provision for taxation at all determining that whatever was need be ask for from the thirteen states. And the states were under no obligation to pay. This arrangement resulted in a central government with no money to operate.
Spurred on by an uprising in Massachusetts , the founding fathers decided that a revision to the Articles was in order. The states could not successfully mount any sort of military attack on their own.
The first order of business was to determine that repair of the Articles was not possible. The Constitutional Convention then determined that money would need to be raised by this central government and the subject of taxation popped up. A government would have no power without some form of taxation but they all agreed that the taxation be equal among the majority and the minority.
The representation issue arose and from that particular matter, it was determined that no one should pay taxes without the right to vote. What came of that convention was the acknowledgement there should be two kinds of taxes: direct and indirect.
Direct taxes are just that; paid for directly by the individual. Indirect tax would leveled on goods. the difference was that when you are directly taxed, you are aware of the tax burden. With indirect levys, the tax would be less clear and the person would be unaware that they were paying it. But direct taxation was considered dangerous. To pay the tax, the individual would be giving up their right to privacy. Besides, the Founding Fathers thought that the states would be in a better position to collect.
So this perfect union was formed on this compromise.
So right from the start, the Constitution determined that direct taxes were oppressive and they should only exist for the sake of emergencies. This kept the power of the government at it least, putting the indirect tax, or the consumption of products as the only way the government could raise money to support itself.
Direct taxes were meant to be a single need at a time, raising the money after much debate and approval, and the allowing the act to run out which literally shut the flow of money from that source and for that reason.
But even this code had flaws. The first direct tax in 1798 was approved to pay for the debt incurred by the Revolutionary War. the tax itself was calculated on land and dwelling and property such as slaves. But the Founding Fathers had brought something to this act that they had inherited from the past, Noblesse Oblige.
This page was first published in 2003.