“In this world nothing can be said to be certain, except death and taxes.”
Benjamin Franklin, 1817
Long, long ago, before there were forensic accountants and tax accountants, there were taxes. Taxes have roots that stretch back to the ancient world. More than 4,500 years ago, ancient Mesopotamians paid taxes in the form of livestock (the currency of the time). Ancient Egyptians, Greeks, and Romans paid taxes based on their wealth and social status. Starting in 700 BC, Egyptians also paid a 10% estate, or death tax, on property transferred at the time of death.
Taxes, or tithes, were often used to finance wars. In England in 1188, King Henry II created the “Saladin tithe” to raise money for the Third Crusade. The tithe required people in England and Wales to be taxed 10% of their personal income and “moveable” property. This pattern continued throughout the Middle Ages and Renaissance. The taxes were generally allowed to expire after the war ended.
The United States was no different. America, for example, only added income taxes as a mechanism to finance the U.S. Civil War starting in 1862. The income tax was assessed at 3% of all income greater than $800.00 (approximately $25,000.00 in 2020). Congress also passed the Internal Revenue Act, creating the Bureau of Internal Revenue, a predecessor to the IRS. The Bureau of Internal Revenue placed taxes on everything from tobacco to jewelry.
Taxation on specific items was nothing new. Over the years, everything from stamps to wig powder to wallpaper to candles and candies has been subject to taxes in countries around the world. In Ancient Egypt, cooking oil was taxed. (and people had to buy it from the pharaoh’s monopoly and were prohibited from reusing it). In the Middle Ages, there was a tax on soap. In 1705, Russian Emperor Peter the Great placed a tax on beards, hoping to force men to adopt the clean-shaven look that was common in Western Europe.
Sales tax has remained a constant. However, in the United States, the income tax did not last and was not renewed in 1872. In 1913, Woodrow Wilson ratified the Sixteenth Amendment to the U.S. Constitution, making income tax a permanent fixture.
Today, we are well familiar with income tax and sales tax. Although we no longer pay our taxes in livestock, the concept of income tax and sales tax is no different today than it was centuries ago. As Benjamin Franklin said, taxes are a constant. Unless you live in New Mexico, where people over 100 years old are tax-exempt (provided they are not dependents).
Interesting and Unusual Tax Facts
- The term “bean counters” has been used since ancient times to describe people who tallied and tracked one of humanity’s first mobile currency: beans.
- April 16 is National Bean Counters Day – a Day of Rest for Accountants
- New York City places a special tax on prepared foods, so sliced bagels are taxed once as food and again as prepared food, thus creating a sliced bagel tax.
- Iowa, Pennsylvania, and New Jersey exempt pumpkins from a sales tax but only if they will be eaten and not carved.
- In Kansas, untethered hot air balloon rides are exempt from sales tax because they are considered a legitimate form of air transportation.