Wk 1 Discussion (Avoidance vs. Evasion) - Post 1
mvazquez21
1.docx1
Introduction to Federal Taxation and Understanding the Federal Tax Law
OBJECTIVES
After completing Chapter 1 , you should be able to:
1. Identify types of taxes used by federal and state governments to raise revenues.
2. Understand the methods of tax collection and the trends shown by tax collection statistics.
3. Differentiate between tax avoidance and tax evasion.
4. Recall the underlying rationale of the federal income tax and its historical development.
5. Describe the route a tax bill takes until enacted into law.
6. Define the basic tax concepts and terms of federal income taxation.
INTRODUCTION
Federal taxation is the fuel by which Americans power their “Ship of State.” The tax structure which supports our federal government has gone from quill and ink records of revolutionary assessments to lightning speed computers which calculate and validate millions of income tax returns submitted by individuals and corporations. Federal taxes, in addition to the income tax, include a variety of other taxes covering estates, gifts, and customs, as well as excise taxes, and other minor categories of tax. Our governments can thus select among a variety of tax alternatives to produce the revenues required to operate national programs and carry out national policies.
Taxes are big business. Unfortunately, many business decisions are made in the United States today without regard to federal tax consequences. Individuals are concerned with personal income tax decisions and gift and estate tax decisions, while corporations concern themselves with corporate taxes, personal holding company taxes, and accumulated earnings tax decisions. Further, businesspersons must concern themselves with the choice of business entity: corporation, partnership, or S corporation. Differences in tax costs can be considerable. Advantages and disadvantages are virtually unlimited. This book presents information which is required knowledge if you make business decisions.
While most businesspersons (and many advisors) think about how to make decisions in nontax terms, the tax accountant bears the burden of introducing tax considerations. The topics presented in this book must be viewed in terms of decision-making—therefore, tax planning and tax research are of the utmost importance. Tax decisions are not made in a vacuum. Lawyers, accountants, financial managers, and a host of other experts work as a team in the decision-making process. This book is intended to serve as a guide for accounting students and for MBA students interested in gaining insight into and expertise in the tax complexities of business decision-making.
OVERVIEW
This chapter presents information on the magnitude of federal taxes collected and on taxpayer obligations. Then, a brief historical account is presented of federal tax collections prior to and after the adoption of the Sixteenth Amendment to the Constitution, which enabled Congress to levy “taxes on incomes, from whatever source derived.” Following this is an introductory discussion of the federal legislative process and an analysis of the social, political, and economic rationale underlying the federal tax law. Finally, basic tax concepts are explained.
Fundamental Aspects of Federal Taxation
¶1101
SOURCES OF REVENUE
Types of Taxes
From the very beginning, with the ratification of the Sixteenth Amendment to the Constitution, through various Revenue Acts and many court cases, a set of tax laws has evolved that raised $2.899 trillion, net of refunds, on over 243 million tax returns processed by the IRS in 2015. This was higher than the $2.69 trillion raised in 2014. The federal government uses a number of different types of taxes to generate the cash flow it needs for operating the government. The following is a listing of the various types of federal taxes:
|
Income taxes |
Corporations, individuals, fiduciaries |
|
Employment taxes |
Old age, survivors, disability, and hospital insurance (federal insurance contributions, self-employment insurance contributions), unemployment insurance, railroad retirement |
|
Estate and gift taxes |
Estate, gift, and generation-skipping transfers |
|
Excise and customs taxes |
Alcohol, tobacco, gasoline, other |
Over the years individuals have borne the burden in the arena of tax payments. Individual taxes account for approximately 49.83 percent of total tax collections. Corporate income tax collections account for approximately 11.72 percent of total tax receipts.
Historically, Americans have been staunch supporters of the federal government’s tax efforts. The rate of participation and compliance is one of the highest in the world. Realistically, the impact of estimating withholding provisions and the threat of government audits have aided in the outstanding record of the Internal Revenue Service.
Individual Income Taxes
Presently the United States government taxes income, transfers, and several transaction-type items (excise, customs, etc.). The major source of revenues is the tax on individuals (see Table 2 ). In 2015, individuals contributed 49.83 percent of the gross internal revenue collected. Since 1943, the U.S. has been on a pay-as-you-go system. Income taxes withheld by employers increased from $1.17 trillion in 2014 to $1.24 trillion in 2015. In 2015, 119 million individual taxpayers received a tax refund which totaled almost $403.3 billion.
Corporate Income Taxes
Corporate income taxes accounted for 11.72 percent of the total revenue collected by the U.S. government in 2015. The Tax Reform Act of 1986 reduced the top corporate income tax rate from 46 percent to 34 percent. The Revenue Reconciliation Act of 1993 raised the corporate income tax rate to 35 percent. The American Jobs Creation Act of 2004 created many business incentives. The corporate tax rate has changed from 1 percent in 1913 to a high of 52 percent between 1952 and 1962. Generally, corporations are subject to tax based on net income without regard to dividends distributed to their shareholders.
Estate and Gift Taxes
Estate and gift taxes accounted for only 0.66 percent of the total revenue collected by the government in 2015. The estate tax, as we know it today, was enacted on September 8, 1916, and is levied on the transfer of property. The gift tax was originally enacted in 1924, was repealed in 1926, and then was restored in 1932.
Excise and Customs Taxes
Excise and customs taxes are levied on transactions, not on income or wealth. Examples of excise taxes are the taxes on alcohol, tobacco, and gasoline. The government collects the tax, usually at an early stage of production. In 2015, 2.64 percent of the government’s revenue, or $76.5 billion, came from excise taxes.
Customs taxes are levied on certain goods entering the country. There are several reasons why the government levies this tax but by far the most important reason is the protection of U.S. industry from foreign competition.
State and Local Taxes
Just as the federal government needs an ever-increasing amount of dollars to satisfy its requirements, so do the states and local communities. State and local taxes are also big business. The major source of revenue for state governments is the income tax and the sales tax. For local communities, the property tax is a major source of revenue. State governments raised $916.5 billion in 2015, up from $875.0 billion in 2014. California collected the most in state taxes followed by New York and Texas.
Value-Added Tax
The value-added tax (VAT) is of fairly recent origin and much more popular overseas than in the United States. The concept of a VAT was first proposed by a German industrialist and government consultant, Dr. Wilhelm von Siemens, in 1918. n the next three decades much discussion took place. France was the first major country to adopt the VAT. In 1919, France instituted a general sales tax. This stayed in place until 1948, when it was replaced with a tax on production at each stage of the manufacturing process. There are many forms of taxation, but basically all taxes can be categorized as direct taxes or indirect taxes. The federal income tax on individuals and corporations is a direct tax. Indirect taxes are those levied on producers or distributors with the expectation that these taxes will be passed on to the ultimate consumer. The VAT is an example of an indirect tax. It is merely a sales tax assessed at any or all levels of production and distribution. It is applied only on the value added to the product in an early stage of production or distribution. Notice that the VAT is a tax on products, not on business entities. The major drawback of the VAT is that it is extremely regressive. EXAMPLE 1.1 A sweater is produced at a cost of $10. If the VAT is 5 percent, then each taxpayer, regardless of income level or ability to pay, must pay the fifty cents for VAT. The VAT continues to be discussed as an attractive source of revenue in the United States. Each 1 percent of VAT would be expected to raise $12 billion. Even with the exclusions for food and medicine, $7.6 billion would be raised per percentage point of tax. Despite these attractions, the VAT worries many Americans. First, it is a very regressive tax. Second, there is some concern that ultimately the VAT will partially replace the personal income tax. Proponents of the VAT, however, maintain that its use would help shrink the “tax gap” (discussed at ¶1121). That is, the element of the population not currently paying taxes would have to pay a VAT tax, since it is a layered sales tax. Flat Tax The past several years have seen heated discussions about using a flat tax. Proponents of a flat tax point to the lower cost of administration and the ease of preparation by Americans as the major benefits. A flat tax would take an individual’s total income minus an allowance for family size and apply one tax rate. This rate would apply to all individuals. There would be no deductions. Various senators and representatives have presented proposals for consideration. A flat tax has been proposed composed of two tax forms—one for individuals and one for businesses. Their proposal would tax individuals on total income minus an allowance based on family size and then apply a 17 percent tax rate. For businesses, the tax rate would be the same 17 percent, but it would be applied against the firm’s gross revenue minus costs of purchases, wages, salaries, capital equipment, structures, land, and pensions. To date, none of these proposals has been successful. Fair Tax The Fair Tax is a consumption tax. The proponents of the fair tax would replace the Internal Revenue Code with a consumption tax. In many respects it would resemble the sales tax that many states now collect. Proponents suggest that low income individuals would receive a rebate from the government as a way to reduce the regressive nature of the tax. KEYSTONE PROBLEM The federal government currently uses many forms of taxation, both direct and indirect, to raise revenue. Would it not be more effective and less burdensome just to employ a single tax? What would you consider to be a more effective and efficient system of raising revenue? ¶1121 TAX COLLECTION AND PENALTIES Returns The Internal Revenue Service processed over 243 million federal tax returns and supplementary documents in 2015—a slight decrease from 2014. This is in comparison to 143 million tax returns processed in 1980. It collected $2.899 trillion in 2015, a 7.8 percent increase from 2014. Taxes and tax collections are indeed big business. Table 1, derived from the 1980 Annual Report of the Commissioner of the Internal Revenue Service and the 2015 Internal Revenue Service Data Book, details the magnitude of work required to support our government. Approximately 61.2 percent of all returns are filed by individuals. In 2015, individuals filed 148.8 million returns, for a total of approximately $1.44 trillion. In 2015, corporate collections increased to $339.8 billion. Table 1. NUMBER OF RETURNS FILED BY PRINCIPAL TYPE OF RETURN (Figures in Thousands) Increase or Decrease Between 1980 and 2015 Type of Return 1980 2014 2015 Amount Percent Grand total 143,446 239,875 243,249 99,803 69.58 Income tax, total 107,827 185,540 187,730 79,903 74.10 Individual 93,143 147,445 148,841 55,698 59.80 Declaration of estimated tax 8,699 23,608 24,122 15,423 177.30 Fiduciary 1,877 3,824 3,951 2,074 110.50 Partnership 1,390 3,799 3,883 2,493 179.35 Corporation 2,718 6,864 6,933 4,215 155.08 Estate tax 148 34 36 (112) (75.68) Gift tax 216 335 238 22 10.19 Employment tax 26,499 30,066 30,196 3,697 13.95 Exempt organizations 444 1,467 1,580 1,136 255.86 Excise tax 909 987 1,025 116 12.76 Supplemental documents 6,064 21,446 22,445 16,381 270.14 Sources: 1980 Annual Report of the Commissioner of the Internal Revenue Service and Internal Revenue Service Data Books 2014 and 2015. Tax Collections Tax collections have increased dramatically between 1980 and 2015. This was due in part to the growth in the economy. Table 2 gives data on tax collections from 1980, 2014, and 2015. Obviously, the increase in tax collections from 1980 to 2015 is staggering—$2,380,029,294,000. Now, notice the detail. Corporate taxes have increased 369.5 percent between 1980 and 2015, while individual income taxes have increased 402.4 percent. Estate and gift taxes have increased 194 percent in the same period. Keep these figures in mind as you read the chapters that follow. Just as the dollar amounts have increased in tax collections, so has the number of returns filed. From 1980 to 2015, the number of corporate income tax returns increased by 155.1 percent. During the same time period, the number of individual income tax returns increased by 59.8 percent. The number of individuals requesting an individual income tax refund decreased slightly in 2015 to 119 million. Table 2. GROSS INTERNAL REVENUE COLLECTIONS (net of refunds) (Figures in Thousands) Source Percent of 2015 Collections 1980 2014 2015 Increase or Decrease Between 1980 and 2014 Amount Percent Grand total 100.00 $519,375,273 $2,690,755,432 $2,899,404,567 $2,380,029,294 458.25 Income taxes, total 61.55 359,927,392 1,629,309,851 1,784,565,232 1,424,637,840 395.81 Corporation 11.72 72,379,610 317,827,591 339,835,905 267,456,295 369.52 Individual 49.83 287,547,782 1,311,482,260 1,444,729,327 1,157,181,545 402.43 Employment taxes, total 35.15 128,330,480 972,398,691 1,019,263,017 890,932,537 694.25 Old-age, survivors, disability, and hospital insurance 34.62 122,486,499 958,001,399 1,003,876,259 881,389,760 719.58 Unemployment insurance 0.31 3,309,000 8,463,751 8,956,148 5,647,148 170.66 Railroad retirement 0.22 2,534,981 5,933,541 6,430,610 3,895,629 153.67 Estate and gift taxes, total 0.66 6,498,381 19,275,209 19,119,016 12,620,635 194.21 Excise taxes, total 2.64 24,619,021 69,771,681 76,457,302 51,838,281 210.56 Sources: 1980 Annual Report of the Commissioner of the Internal Revenue Service and Internal Revenue Service Data Books 2014 and 2015. Tax Audits and Penalties The U.S. tax system is a voluntary compliance tax system. The total number of federal tax returns filed in 2015 was 243,249,000, of which 148,841,000 were filed by individual taxpayers. The IRS conducted examinations of 1,373,788 returns, and on the basis of these examinations, it recommended additional tax and penalties of $25.1 billion.
Although audits of individual returns made up the bulk of the examinations (1,228,117 returns), they resulted in only $12.3 billion of the total recommended collections, while audits of corporate returns yielded $10.4 billion. Of course, audits do not always favor the IRS, as evidenced by the fact that, of the individual returns examined, almost 40,000 resulted in additional refunds; this amount was up from 38,000 in 2014.
Until recently, there had been an upsurge in the number of taxpayers who illegally sought, either openly or covertly, to reduce or eliminate their tax obligation. However, the IRS has responded to the challenge by taking advantage of the developing computer technology. Computers already scrutinize tax returns, check errors, and perform a number of routine, repetitive tasks with speed, efficiency, and great accuracy. The IRS continues to match almost all information returns that businesses are required to submit on magnetic media to verify that correct amounts are reported on taxpayers’ returns. Information returns include W-2 Forms listing salary and 1099 Forms listing other income.
In 2015, the IRS audited over 1.2 million individual income tax returns or 0.8 percent of all individual tax returns. The percentage of returns audited was slightly lower than the previous year. Table 3 presents information on the percentage of returns audited by type of return.
For years, the audit rate for individual returns had been declining. For fiscal year 2015, the audit rate for individual returns was 0.8 percent. In FY 1997 it was 1.28 percent, and in FY 1995 it was 1.67 percent.
|
Table 3. PERCENTAGE OF RETURNS AUDITED |
||
|
Type of Return |
Percentage Audited |
|
|
|
2014 |
2015 |
|
Individual |
0.9 |
0.8 |
|
Partnership |
0.4 |
0.5 |
|
Corporation |
1.3 |
1.3 |
|
Estate |
8.5 |
7.8 |
|
Gift |
0.8 |
0.9 |
|
Excise |
1.5 |
1.3 |
|
Employment |
0.2 |
0.2 |
|
Sources: Internal Revenue Service Data Books 2014 and 2015. |
Because of severe budget deficits during the late 1980s and 1990s, the personnel needed to audit the growing number of returns filed have not been added. A major reason for the decline in audit rates has been staff reduction at the IRS and the movement of IRS personnel to focus on customer service. Since the late 1980’s, staff in the examinations division was reduced by over 30 percent. Table 4 graphically depicts the percentage of returns audited by the Internal Revenue Service.
|
Table 4. PERCENTAGE OF RETURNS AUDITED—1980—2015 |
|
|
|
Sources: 1980 Annual Report of the Commissioner of the Internal Revenue Service and Internal Revenue Service Data Book 2015. |
Naturally, for certain types of taxpayers and those with higher incomes, the probability of audit is much greater. Individuals with income of over $100,000 were most likely to be audited.
The Internal Revenue Service has acknowledged that the problem of tax evasion is indeed a serious one. The “tax gap,” that is, the total revenue lost through tax evasion, has increased from $81 billion in 1981 to $345 billion in 2001 and to $450 billion in 2006. IRS officials estimate that enforcement activities along with late payments have recovered $65 billion of the tax gap for 2006 resulting in a net tax gap in 2006 of $385 billion. The IRS updated the study and the average annual tax gap for 2008–2010 was $458 million. Enforcement activities recovered $52 billion for a net annual tax gap of $406 billion. The IRS estimated that 61 percent of the tax gap was caused by individuals and the remainder by corporations. Today, the voluntary compliance rate is estimated by the Commissioner of Internal Revenue to be 83 to 85 percent. Each percentage point of noncompliance costs the government $26 billion in lost revenue.
The Tax Reform Act of 1986 closed many of the loopholes associated with tax shelters. Since 1988 the IRS has been using a revised audit-selection formula that is aimed at high-income returns. Further, the Tax Acts of 1986 and 1987, the Technical and Miscellaneous Revenue Act of 1988, and the Revenue Reconciliation Acts of 1989, 1990, and 1993 changed the penalties imposed on taxpayers for not complying with the tax laws.
The Improved Penalty and Compliance Act, which was incorporated into the Revenue Reconciliation Act of 1989, revamped the civil tax penalty provisions of the Internal Revenue Code. The goal was to create a fairer, less complex, and more effective penalty system. The Act made changes in the following broad areas:
1. Document and information return penalties
2. Accuracy-related penalties
3. Preparer, promoter, and protestor penalties
4. Penalties for failures to file or pay tax
¶1131
TAXPAYER OBLIGATIONS
Tax accountants, lawyers, and businesspersons, since the inception of the first federal income tax law, have concerned themselves with choosing among the various forms a transaction may take. There is an acute awareness among tax accountants that tax consequences of an action may differ depending upon procedural variations and alternative approaches to a business decision. The increasing complexity of the modern tax laws serves only to accentuate the problem.
Because of the extreme difficulty experienced in trying to differentiate between tax avoidance and tax evasion, Congress enacted, in the 1954 Internal Revenue Code, a provision which illustrates circumstances that constitute prima facie evidence of the tainted purpose. The 1986 Code contends with the problem of criminal tax evasion in Section 7201, entitled “Attempt to Evade or Defeat Tax.” It reads:
Any person who willfully attempts in any manner to evade or defeat any tax imposed by this title or the payment thereof shall, in addition to other penalties provided by law, be guilty of a felony and, upon conviction thereof, shall be fined not more than $100,000 ($500,000 in the case of a corporation), or imprisoned not more than five years, or both, together with the costs of prosecution.
The goal of every businessperson should be profit maximization. The government endorses this goal. Tax avoidance is legal and a legitimate pursuit of a business entity.
Tax Avoidance
All citizens have the prerogative to arrange their transactions and affairs in such a manner as to reduce their tax liabilities. A good businessperson is obligated to search out those transactions and to time those events which will lower the tax liability. Judge Learned Hand, in S.R. Newman, declared many years ago:
Over and over again courts have said that there is nothing sinister in so arranging one’s affairs as to keep taxes as low as possible. Everybody does so, rich or poor; and all do right, for nobody owes any public duty to pay more than the law demands: taxes are enforced extractions, not voluntary contributions. To demand more in the name of morals is mere cant. CA-2, 47-1 USTC ¶9175, 159 F.2d 848.
There is a clear demarcation between tax avoidance and tax evasion. The saving of tax dollars requires specific actions so as to avoid the tax liability prior to the time it would have occurred according to law. It requires the proper handling of affairs so that items of income are subjected to a lower tax rate than would apply if no action had been taken. In some instances, it requires the postponing of income which is subject to taxation until a time when the individual’s tax bracket would be lower.
Tax Evasion
To be guilty of evading taxes, the individual must already have a tax liability. All actions must be definitely complete, and in spite of this liability, the taxpayer does not report income. The courts have ruled that it is not wrong to find a form of a transaction that does not lead to any tax liability. However, there is a legal obligation to disclose a tax liability based on completed transactions, and the refusal to report the tax liability is illegal.
The Tax Court in Berland’s Inc. of South Bend (16 TC 182, acq., 1951-2 CB 1, Dec. 18,057) said that the purpose of tax evasion must be the “principal” purpose, and the taxpayer is not guilty of tax evasion merely because the tax consequences of the particular transaction are considered. Furthermore, the Tax Court said:
The consideration of the tax aspects of the plan was no more than should be expected of any business bent on survival under the tax rates then current. Such consideration is only part of ordinary business prudence.
What frequently distinguishes tax avoidance from tax evasion is the intent of the taxpayer. The intent to evade tax occurs when a taxpayer knowingly misrepresents the facts. Intent is a mental process, a state of mind. A taxpayer’s intent is judged by his or her actions. The taxpayer who knowingly understates income leaves evidence in the form of identifying earmarks, referred to as “badges” of fraud. Internal revenue agents are on the lookout for these badges of fraud. The more common badges are:
1. Understatement of income. The IRS considers the failure to report entire sources of income, such as tips, or specific items where similar items are included in income, such as dividends received, as an indication that there may have been an understatement of income. Other such indications include the unexplained failure to report substantial amounts of income determined by the IRS to have been received, the concealment of bank accounts or other property, and the failure to deposit receipts to a business account contrary to normal practices.
2. Claiming of fictitious or improper deductions. To the IRS, a substantial overstatement of deductions is a badge of fraud that could warrant a further look at the taxpayer’s books. Other indications of improper deductions are the inclusion of obviously unallowable items in unrelated accounts and the claiming of fictitious deductions or dependency deductions for nonexistent, deceased, or self-supporting persons.
3. Accounting irregularities. Accounting practices that are considered a badge of fraud include the keeping of two sets of books or no books, false entries, backdated or postdated documents, inadequate records, and discrepancies between book and return amounts.
4. Allocation of income. The distribution of profits to fictitious partners and the inclusion of income or deductions in the return of a related taxpayer with a lower tax rate than that of the taxpayer are indications of an intentional misstatement of taxable income.
5. Acts and conduct of the taxpayer. Aside from the improper reporting of income or deductions, a taxpayer’s conduct can give the IRS reason to question the propriety of a return. For example, false statements, attempts to hinder an examination of a return, the destruction of books or records, the transfer of assets for purposes of concealment, or the consistent underreporting of income over a period of years are badges of fraud.
The presence of one or more of these badges of fraud does not in itself mean that the return is fraudulent. However, it should alert an examiner that additional probing and inquiry are necessary. Internal Revenue Manual, Sec. 4.10.
Corporate Tax Avoidance
Normally, the Commissioner and the courts accept a corporation as being distinct from its shareholders. However, if it appears that a sham transaction has taken place, then the Commissioner has grounds for taking action. Judge Learned Hand, in summarizing many cases on the subject of tax avoidance v. tax evasion, stated in National Investors Corp. v. Hoey:
To be a separate jural person for purposes of taxation, a corporation must engage in some industrial, commercial, or other activity besides avoiding taxation: in other words, that the term “corporation” will be interpreted to mean a corporation which does some “business” in the ordinary meaning; and that escaping taxation is not “business” in the ordinary meaning. 44-2 USTC ¶9407, 144 F.2d 466, 467-68 (CA-2 1944).
Section 269 of the Internal Revenue Code provides the Commissioner with a very important tool in judging whether or not a corporate acquisition is tax avoidance or merely a sham. If the Commissioner feels that there is no principal purpose for the tax-free acquisition, “such deduction, credit, or other allowance” may be disallowed. The key defense by the taxpayer is to substantiate that there was indeed a “principal purpose.” If there is a principal purpose, nothing stops the taxpayer from having other purposes, such as the saving of taxes. Kershaw Mfg. Co., Inc., 24 TCM 228, TC Memo. 1965-44, Dec. 27,268(M).
Taxpayer’s Assessment of Tax Liability
In order to decrease potential tax liability, the taxpayer must choose the action that will allow the greatest tax savings. An example of a tax savings device is investment in municipal bonds instead of corporate bonds. The interest derived from corporate bonds is taxable income, whereas the interest received from municipal bonds is tax free. In the above example, the taxpayer does not have to hide the fact that there is a lower tax liability on the profit.
When contemplating a transaction, the taxpayer makes an assessment of the tax liability. Naturally, any doubtful issues are resolved in the taxpayer’s own favor. Certainly, there is nothing fraudulent about using this procedure. On the other hand, if the taxpayer knowingly overstates expenses, thereby reducing the tax liability, then the taxpayer is guilty of tax evasion.
¶1151
BRIEF HISTORY OF THE FEDERAL INCOME TAX
The origin of taxation in the United States dates back to the Constitution and, therefore, the Constitution is the ultimate source of the power to tax. Originally, the Constitution empowered Congress “to lay and collect taxes, duties, imports and excises, to pay the debts and provide for the common defense and general welfare of the United States.” In granting this power, Congress also limited the power of taxation in that “all duties, imports, and excises shall be uniform throughout the United States, that direct taxes should be laid in proportion to the population.” It was within these confinements that many cases tested the constitutionality of the early tax laws—a test many of the taxes did not pass. During the late 1800s, the terms “uniform” and “direct taxes” were very important concepts.
Income Tax Law of 1894
