WEDNESDAY, OCTOBER 19, 2005
- - - - - - - - - -
To read about the President's Advisory Panel on Federal Tax Reform recommendations
go to:
TAFN
SUNDAY, OCTOBER 16, 2005
The New Jersey Department of Labor has announced the new Unemployment/Disability
wage base for 2006.
Wages subject to taxation under the unemployment and temporary disability insurance programs
will increase to $25,800.00 in 2006, up from the current level of $24,900.00.
It would therefore appear that the maximum withholding for 2006 is $238.65, $109.65 for SUI
and $129.00 for SDI.
TAFN
MONDAY, OCTOBER 3, 2005
Happy birthday to you, happy birthday to you, happy birthday dear income tax, happy birthday
to you!
Today is the 92nd birthday of the federal income tax.
In February of 1913 the 16th Amendment was ratified by the required two-thirds of the states.
The amendement gave Congress the power to "lay and collect tax on incomes, from whatever sources derived, without apportionment
among the several states, and without regard to any census or enumeration." On October 13, 1913, Congress passed the
Revenue Act of 1913, which created the first permanent federal income tax.
Congress had made two previous attempts at instituting a federal income tax. The first,
in 1861, was an emergency measure to fund the Civil War and was repealed in 1872. In 1894, in response to complaints
that excessive reliance on tariffs as a source of revenue caused the price of imported goods to rise, Congress again passed
an income tax law, which the Supreme Court ruled unconstitutional in 1895.
In celebration of this special occasion, here are some facts about the very first Form 1040:
- The tax applied to salaries and wages, interest, dividends, rents, royalties, pensions and annuities,
income from estates, trusts, sole proprietorships and partnerships, and gains from the sale of most types of property.
- The salaries and wages of state and local government employees were exempt from income tax.
- Interest from federal, as well as state and local, government bonds were exempt from income
tax.
- Deductions were allowed for "personal" interest, federal excise taxes, taxes paid to state and
local governments, casualty and theft losses, bad debts, business expenses, and depreciation of property used in business.
- There was an exemption of $3,000.00 for single persons and $4,000.00 for married couples.
- A "normal" tax of 1% was applied to the first $20,000.00 of taxable income. Dividends
were exempt from this "normal" tax. An additional or "super" tax of from 1% to 6% was applied to income, including dividends,
in excess of $20,000.00.
- The return was due "on or before the first day of March."
- There was only one page of instructions!
- In the first year of the income tax only 1 out of every 271 American citizens were taxed and
$28 Million in revenue was raised.
More details on the history of the federal income tax appear on the TAX HISTORY Page of my website
at http://www.robertdflach.net.
- - - - - - - - - -
The NJ Division of Taxation will follow the federal government in extending the due
date for returns and payments for victims of Hurricanes Katrina and Rita to February 28, 2006. Go to http://www.state.nj.us/treasury/taxation/katrinarelief.htm.
- - - - - - - - - -
If there are any comments you would like to share with your fellow tax pros on New
Jersey taxes or praciticing in New Jersey please emal me at mailto:rdftaxpro@comcast.net.
TAFN
