TAX STRATEGIES FOR INDIVIDUALS AND THEIR LEGACY
How it All Started
“In this world nothing can be said to be certain, except death and taxes”.
We’ve all heard this famous quote many times. The fact is the when Benjamin Franklin was alive, the United States did not have an income tax. The reality is that the very first income tax was a 3% tax on incomes above $800.00. This tax was imposed in 1861 to help fund the civil war. The tax lasted until approximately 1872. In 1895, a supreme court decision made it clear that income taxes were a violation of Article One of the United States Constitution. This Supreme Court ruling lead to the introduction of and eventual passing of the 16th Amendment to the Constitution which allows for a Federal Income Tax. The amendment was ratified on February 3rd, 1913 and became official on February 25th 1913. In the first income tax law, people earning above $500,000 per year paid a 7% tax on everything above that. My how things have changed!
Since the implementation of the income tax, there have been numerous changes and amendments to the law. It appears that there have been many attempts to find ways to reduce or avoid paying income taxes altogether. This has been true since the tax was implemented.
Today, the question is, “Can I create a financial strategy that helps me to legally avoid paying income taxes? A famous quote from Supreme Court Justice, Learned Hand, who was born in Albany, NY in 1872 (the same year the Civil War tax ended), made it clear that you have the right to do everything in your legal authority to plan ways to reduce your income taxes. Here is his famous quote on the subject.
“Anyone may arrange his affairs so that his taxes shall
be as low as
possible; he is not bound to choose that pattern which best pays the
treasury. There is not even a patriotic duty to increase one’s taxes.
Over and over again the Courts have said that there is nothing sinister
in so arranging affairs as to keep taxes as low as possible.
Everyone does it, rich and poor alike and all do right, for
nobody owes any
public duty to pay more than the law demands.”
It is in this spirit that we strive every day to help clients to find ways to reduce or even to eliminate their income tax liability.