HISTORY AND OBJECTIVES OF TAX LAW
Tax Law in our country is as old as the constitution itself and the historyof taxes in this land goes back to the days of British colonial rule. Onething, which must be remembered, is that tax law id directly connected withgovernment revenues. Higher the taxes, greater the revenues. For thisreason, taxes are used as a good source of government's income. Revenuecollection is usually the most important purpose behind the imposition of anew tax or increase in the present ones. However revenue collection is notthe sole objective even though it is certainly the most important one.There are other reasons for which taxes are either increased or decreased.Tax law is actually one of the very few fiscal measures that government hasto control the financial markets. Apart from its main objective, which isrevenue for the government, taxes also help in controlling economicactivity in the country and are often used by the government to control theflow of money in the markets. During the colonial days, when British rulersneeded money for their war with France, taxes were levied on poor colonies,which did not enjoy any representation in the government. This led to thefamous ' no taxation without representation' de
Constitutional provisions were the main hurdle in the wayof income tax law and for this reason the historical 16th amendment wasmade to the Constitution which stated: The Congress shall have power to lay and collect taxes on incomes, from whatever source derived, without apportionment among the several States, and without regard to any census or enumeration. Supremecourt upheld the earlier decisions and termed income taxationunconstitutional. Tax rates were further increased the following yearwith War Revenue Act of 1917 and fewer exemptions were offered. This rate has been increased anddecreased according to the needs of the government and economic andpolitical demands of the time. Tax law has changed over the decades and it has mostly been used for thepurpose of revenue collection. Successive attempts tolevy income taxes were challenged by the public and businesses. Income tax howevertook a little longer to appear in the country because prior to 1913,attempts to levy income tax were thwarted on the 'free exercise of one'sindustry' principle. lay and collect taxes, duties, imposts, and excises, pay the Debts andprovide for the common Defense and general Welfare of the United States. (1)Income tax has since then been an important part of American tax system andan average American citizen is required to pay income tax in proportion tothe size of his earnings. For example in recent years we saw many tax cuts offered bythe government in order to increase consumer spending and boost economicactivity. "Excise duties were then imposed on many items including tobacco, alcohol,sugar and property. "Amazingly, for more than eight decades after the independence, the citizensenjoyed tax-free income since no income tax law existed and the one thathad been imposed in 1861 was repealed in 1872 (1). Since there was no clear constitution for more than a decadeafter the independence, federal tax law was non-existent and only statetaxes existed.
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