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Taxes - Tools of Government Policy:

The United States Congress, and the legislatures of the several states, have a long history of employing taxation as a means to achieve certain perceived political, social and even religious objectives. Our legislators may have learned this tactic from the British Crown, whose unjust taxes on colonial American tea and documentary stamps, among other things, spawned a highly successful revolution, the concentric effects of which are still reverberating in the modern world. Thus we Americans revel in habit taxes that boost the price of tobacco and alcohol products far beyond any intrinsic value a pack of cigarettes or a fifth of bourbon has in and of itself - even taking into account personal taste or addiction.

Thus the most valuable real estate in America, worth a combined total of billions of dollars, often located in the heart of major cities, is totally tax- exempt because it is owned, not by the Japanese, but by a recognized established religion - Protestant, Catholic or Jewish or whatever.

Before international free trade became a more acceptable political doctrine, almost all federal revenues came from heavy import taxes ("customs duties") on products and commodities, surely a revenue source but equally a means of protecting home-grown U.S. merchandise.

At times legislators have gone too far in the realm of social policy by taxation. In 1994 the U.S. Supreme Court ruled unconstitutional a Montana tax imposed on persons convicted of possessing, selling, distributing or manufacturing "controlled dangerous substances" - illicit drugs like marijuana or cocaine. The Court said such acts could be made punishable crimes, but that to impose additional tax liability amounting to millions of dollars based on the amount of drugs involved, in effect constituted double jeopardy and cruel and unusual punishment.

So revenue alone has never been the sole object of government tax laws.

Unquestionably the single greatest political, economic and social impact ever imposed by taxation in America began on February 25, 1913, the date the requisite number of states ratified the Sixteenth Amendment to the United States Constitution - giving Congress "the power to lay and collect taxes on incomes, from whatever source derived . . ." Many would argue it has been down hill ever since. Fortunately, in 1913 when the income tax was authorized, Americans still firmly believed in those voluntary non-governmental institutions which had an admirable record of serving the needs of less fortunate citizens - thousands of voluntary religious, charitable, and philanthropic organizations and groups. In the days before the "welfare state" mentality took hold, these altruistic activities ranged from local soup kitchens to the vast eleemosynary exertions of men like Andrew J. Carnegie, a self-made Scottish-American steel baron who donated millions of dollars to build and support free public libraries, the International Endowment for World Peace and countless other causes. Also fortunately - for those seeking legal ways by which to escape the ultimate excesses of modern federal income taxes - from 1913 on, Congress took into account the need for private philanthropy, writing federal tax law so as to promote charitable giving by individuals as well as organized groups. The original tax code contained then, as it does today, "tax breaks" for those willing to give of their personal substance to help their fellow man (and woman). Born in tandem with the federal income tax was the charitable tax deduction.

Under current law charitable deductions are available for donations to corporations organized or exclusively operated for religious, charitable, scientific, literary, or educational purposes, or for groups that foster the arts, sports competition, prevention of cruelty to children or animals, or to fraternal associations and veterans organizations.