Snapshot: Taxes We Paid Then vs. Now

A couple of weeks ago, I wrote about the rise of withholding income taxes from payroll checks. I mentioned that today we enjoy some of the lowest income tax rates in the history of the country.  However, to get the full impact of what we are paying tax wise, we should include all the other taxes that we now pay that were unheard of back in the day.

But lets start with what was levied initially:

1. Excise taxes: First levied July 4, 1789, they accounted for 80-95% of all federal government revenue. Tariffs were the main source of government revenue through the 1800s.

2. Property tax: One of the earliest taxes imposed. In 1634, property taxes were assessed by the colonies. In 1796, 14 of the 15 states collected property tax. Delaware levied tax on income from property, but not on the property itself.

Not too bad.

But as time rolled on, the government realized it should tax everything!

The excise taxes imposed today are too numerous to list here. Revenues from excise taxes in 2010 totaled $66 million.

In 1861 and 1862, an income tax was levied to finance the civil war. Then in 1913, our modern system came into being. Individual federal rates today run from 10% to 35% and corporate rates from 15% to 35%. And dont forget about state income taxes.

Employment taxes: A reader wrote that although the rates were higher earlier on, we did not have to contend with Social Security (6.2%) and Medicare tax (1.45%) withholdings, which, by the way, is also matched by the employer. Nor did employers have to pay in FUTA (Federal Unemployment Tax) 0.8% of up to $7,000 of wages per employee. Then there is SUTA (State Unemployment Tax), which is levied at the state level and varies from state to state. California rates run from 0% all the way up depending on the number of layoffs and firings (experience rate) with the initial rate levied on a new employer at 3.4% of first $7,000 in employee wages. Did I mention State Disability Tax? Some states tax wages at the county and city level as well.

Sales tax: Today 45 states collect sales tax, which was first introduced in Pennsylvania as a mercantile license tax in 1821.

What else have we got? Heres a list of the taxes which have exploded onto the scene in recent decades. Ive included some of the rates:

Accounts Receivable Tax

Alternative Minimum Tax

Building Permit Tax $.82 to $336.81 per sq foot depending on type of construction (San Francisco)

CDL license Tax - $31 to $66

Cigarette Tax .17 to 4.35

Dog License Tax

Fishing License Tax - $6.44 to $781.50 for lifetime fishing license in CA

Food License Tax

Fuel Permit Tax

Gasoline Tax - 26.4 to 68.0 cents per gallon combined federal and state

Gross Receipts Tax levied by many states in AZ its called a transaction privilege tax. Excuse me? .096% (Delaware) to 7.875% (New Mexico) for the privilege of doing business in the state

Hunting License Tax

Inheritance Tax federal 35% of the value of the estate in excess of $5 million set to rise in 2013 to 55% of an estate valued at more than $1 million

Inventory Tax charged by 15 states

IRS Interest Charges and IRS Penalties (tax on top of tax) loan sharks! Penalties are .5% per month up to 100% for employers on trust fund (payroll tax) liabilities, Interest rates change quarterly

Liquor Tax 26.03 cents per gallon (WA) to low of 2 cents per gallon

Marriage License Tax

Occupancy Tax (hotel stays)

Personal Property Tax

Property Tax

Real Estate Tax

Service Charge Tax

Road Usage Tax

Recreational Vehicle Tax

School Tax

State Income Tax 0% to 11% (Hawaii, Oregon), 9 states with no income tax

Telephone Federal Excise Tax 3%

Telephone Federal Universal Service Fee Tax

Telephone Federal, State and Local Surcharge Taxes

Telephone Minimum Usage Surcharge Tax

Telephone Recurring and Nonrecurring Charges Tax

Telephone State and Local Tax

Telephone Usage Charge Tax

Utility Taxes

Vehicle License Registration Tax

Vehicle Sales Tax

Watercraft Registration Tax

Well Permit Tax

Workers Compensation Tax

Ouch! Did that hurt your eyes as much as it did mine?

Final closing note: In 2005, the folks who run the Academy Awards went before the IRS and said, Hey, should we be sending 1099s to the celebrities who get gift bags during the awards ceremonies? You see, these gift baskets dont contain just a cheese stick some stickers. Were talking serious stuff: electronics, luxury vacations, jewelry, and other high end products. The IRS said, Yeah, we can use all the money we can get!

So if you provide goodie bags to all those little guests at your kids birthday party, dont forget to send a 1099 at year end! Is that what its going to come to?

Bonnie Lee is an Enrolled Agent admitted to practice and representing taxpayers in all fifty states at all levels within the Internal Revenue Service. She is the owner of Taxpertise in Sonoma, CA and the author of Entrepreneur Press book, Taxpertise, The Complete Book of Dirty Little Secrets and Hidden Deductions for Small Business that the IRS Doesn't Want You to Know, available at all major booksellers. Follow Bonnie Lee on Twitter at BLTaxpertise and at Facebook