Website of the Month: Tax History Project

By Susan B. Anders

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FEBRUARY 2007 - The Tax History Project (THP) website, www.taxhistory.org, is a public service of the subscription service Tax Analysts (reviewed in the January 2003 CPA Journal). While the main users of the THP website are probably accounting educators and students, tax professionals will find much of the information to be entertaining and useful. Tax professionals who think they know a lot about taxation may be surprised by how old our current methods of taxation really are, as well as by the historical reasons the tax law is the way it is.

The THP homepage is organized with a banner header that is also displayed on the main pages. The center of the homepage is used to display larger links to the website’s regular features and to highlight readings. The main navigation tool is a left-side index appearing on the home and main pages with links to “Tax History Museum,” “The Price of Civilization,” “Presidential Tax Returns,” “Taxing Federalism,” “Image Gallery,” “Readings,” “Free Newsletter,” “About the Project,” “Contact THP,” “THP Home,” and “Tax Analysts Home.” On subsidiary pages that do not open in separate windows, the browser’s back button is the key navigation feature. The website is not consistent in the use of separate windows for linked pages or resources; however, this does not make the search process difficult.

‘Tax History Museum’

The “Tax History Museum” is the THP’s “virtual museum,” with online displays covering nine periods in the history of taxation in the United States. The museum’s main page is an architectural floor plan of the different virtual galleries, each representing a period in U.S. tax history. Users can access a time period by selecting an era. The museum begins in 1660 with the British colonial period, focusing on the interplay between colonial market activities and taxation.

The nine periods have their own subsidiary pages, containing left-side indexes with links to the others, the Tax Museum homepage, and the THP homepage. Most eras offer fairly detailed HTML documents addressing the tax, commercial, and legislative history for that period. The readings are well written and entertaining, and interspersed with downloadable artwork and photographs as well as links to more-detailed resources from the Avalon Project of Yale Law School.

An example of eye-opening history that has affected our “modern” tax system can be found as far back as the 1777–1815 period. Article 1, sections 2 and 9, of the Constitution use the term “direct taxes,” which had not been widely used or defined before 1787. The term did not derive from taxation concepts, as most tax experts would assume, but rather in relation to slavery!

The U.S. Constitution, Article 1, section 2, provides that “direct taxes shall be apportioned among the several States” and Article 1, section 9, states that direct taxes must be proportional to the population. According to the Tax History Project, the direct tax clauses were not included to protect the states from the taxing power of the federal government, but rather as a means to account for slaves when determining the number of congressional representatives allotted to southern states. Similarly, section 8’s “uniformity” requirement was included both to shield the South from export taxes on slave-produced products and to tax the import of slaves to make it prohibitively expensive. Modern-day tax protestors who claim that the income tax is unconstitutional come up short on a full understanding of the issues with which the Founders were really concerned.

‘Readings’

The “Readings” feature may attract tax preparers who are more concerned with the present than with history. At the time of this review, more than 85 articles and documents were available. The “Readings” main page is presented as an article index in chronological order, with the most recent additions listed first, so regular users can start at the top. Many readings are from Joseph J. Thorndike’s “Politics of Federal Taxation” column in Tax Notes magazine. A subscription is required to access the PDF version on Tax Notes, but the HTML version on the THP is free. Many articles are tied to current events, such as “The Phone Tax: Gone but Never Forgotten.”

Users particularly interested in history will find several resources of major importance. “Adam Smith’s Wealth of Nations, Book 5” includes Smith’s foundational four maxims of a good tax system, plus detailed discussions on a variety of different taxes in Chapter II, Part 2. “CRS Report on History of Federal Taxes” provides an abbreviated history of U.S. taxation written by the Congressional Research Service in 2001. “The Birth Pangs of the Modern Income Tax” is a Treasury Department study from 1937. “Facing the Tax Problem” is a lengthy report on tax reform produced by the Treasury Department, also in 1937, which displays some eerie similarities as well as differences with the modern age.

Other Resources

The “Price of Civilization” feature addresses U.S. taxation from the Great Depression in 1932 through World War II in 1945. The main pages provide links to the two features in this section: a document archive and a poster gallery. The document archive is further divided into the Treasury, the White House, and Congress. The Treasury section is the best developed of the three, providing documents grouped under 14 different topics, including taxation of married couples, Social Security, and value-added taxation. The poster gallery offers several downloadable JPG format graphics from the National Archives, including “We Can Do It!” (Rosie the Riveter), by J. Howard Miller, and “Four Freedoms,” by Norman Rockwell.

The “Image Gallery” feature offers several tax-related political cartoons, including a comparison of Einstein’s Theory of Relativity and the complexity of the tax law, circa 1929. The “Presidential Tax Returns” feature offers the filings of a selection of presidents, including Franklin D. Roosevelt, Richard Nixon, and George W. Bush. These may be most interesting from an historical perspective of what the tax forms looked like in “the old days.”

The “Taxing Federalism” section presents the full text of the nine Federalist Papers that address taxation, written by Alexander Hamilton between November 1787 and January 1788. The issues of direct taxation and uniformity, discussed above, receive considerable attention. Other major topics include the fairness and efficiency of consumption taxes. The spirited debates over taxation that occurred at the United States’ founding remain relevant and engaging, even in the present day.


Susan B. Anders, PhD, CPA, is an associate professor of accounting at St. Bonaventure University, St. Bonaventure, N.Y.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 



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