Taxes

QUESTION: Wasn’t there an income in Britain under Addington in 1803 to pay for the war against Napoleon predate the USA? Is the income tax voluntary?

GH

ANSWER: Yes that is true. However, it actually predates even that. Income tax was first implemented in Great Britain by William Pitt the Younger in his budget of December 1798 to pay for weapons and equipment in preparation for the Napoleonic Wars. This was not really a Marxist/Socialism philosophy yet it was a graduated (progressive) income tax. It began at 2 pence on the pound (1/120) on incomes over £60 and increased up to a maximum of 2 shillings (10%) on incomes of over £200. It produced only about 60% of expectations.

It was Pitt’s income tax was levied from 1799 to 1802, when it was abolished by Henry Addington during the Peace of Amiens. However, Addington had become prime minister in 1801, after Pitt’s resignation. Addington then reintroduced the income tax in 1803 when hostilities once again appeared. This time it was not abolished in 1816, one year after the Battle of Waterloo.

Addington’s Act differed for this was a tax on ‘contribution of the profits arising from property, professions, trades and offices’ avoiding the use of the word “income”. The Act did allow taxation at the source meaning your account at the Bank of England was directed to deduct a tax amount from your account. This included a tax on interest paid to gilt holders. The maximum tax rate under Addington’s Act was 5%, which was half that of Pitt’s, but it was greatly expanded resulting in a tax increase of about 50%

These were imposed out of necessity. The taxes signed by President Taft were more of a socialistic philosophy which was gaining support at least prior to the Russian Revolution in 1917. The rise of the “progressive” movement came into real force with the Panic of 1893.

As far as the “voluntary” nature of the tax that is strictly true. However, the tax has a duty to file. The crime is a failure to file – not a failure to pay.