US citizen refuses to pay US capital gains tax

Not to mention Lady Grantham 

I can see the Christmas special now:

Cora decides to be Mayor of London, but there is a question about her citizenship. The Americans are still upset that Lord Grantham extricated Cora's brother Harold from the Teapot Dome Scandal; Tom emigrates to Boston, and under pressure upon arrival at Ellis Island, blows the whistle on her not paying US tax; the Americans get up in arms and threaten Lady Grantham; The Dowager and Lord Merton petition their acquaintances in the House of Lords to declare war on the US; the Americans overreact and a secret US spy organisation pressure Scotland Yard to turn over Anna as an informant; and the show ends with Anna being put on a boat to Cuba.............

Or, perhaps not.

Love it!

I remember seeing something to the effect that taxation on citizenship was introduced during the Civil War to discourage the rich from leaving the US. I think the income tax levied on US citizens overseas was actually higher than on US residents.

I remember seeing something to the effect that taxation on citizenship was introduced during the Civil War to discourage the rich from leaving the US. I think the income tax levied on US citizens overseas was actually higher than on US residents.

Did the Union continue to tax those living in the Confederacy? If so, were they able to collect those taxes? I've wondered how this citizenship-based taxation would work if part of the U.S. were to secede for those living in the state(s) that left.

@nun
We're depending on my memory here, so......
IIRC.....The income tax was introduced in 1861. Those resident in the 'Union' paid a flat fee of 3%(I think) on income from within the Union, while those who were non-resident (the dastardly cowards) paid 5% on income generated from sources within the Union. In 1864, the rules were revised for those non-resident, and the 5% was then applied, in addition to income from within the Union, to all income worldwide. Hence, the first application of where we are today. But, I could be wrong.

I researched my family to keep me busy when I first retired. I came across a document from one county where a relative, during the Civil War, had paid $0.06 tax on two hogs they had sold for slaughter. That side of the family were Yankees.

@Kelly85
You're not thinking of Texas are you?  During the Scottish Referendum earlier this year, Texas sent a delegation to Scotland to observe how the proceedings were organised.

During the Civil War, perhaps the Rebels felt they were airmailing a foreign tax to the Union via the scrap value of lead shot and cannonballs.

During the Civil War, perhaps the Rebels felt they were airmailing a foreign tax to the Union via the scrap value of lead shot and cannonballs.

Well they took great grandma's family silver. The story is that when the yankees came to the farm, she and her sisters tied the family silver up in amongst their petticoats. The Northern officer was quite polite but heard them clinking about and said that any valuable items belonged to the US Government...and allowed them to discreetly remove the utensils and such. My family still has one silver goblet that was overlooked.

Well they took great grandma's family silver. The story is that when the yankees came to the farm, she and her sisters tied the family silver up in amongst their petticoats. The Northern officer was quite polite but heard them clinking about and said that any valuable items belonged to the US Government...and allowed them to discreetly remove the utensils and such. My family still has one silver goblet that was overlooked.

It's important to remember that silver spoons weren't the most important "possessions" that the Union took away from the Confederacy.

It's important to remember that silver spoons weren't the most important "possessions" that the Union took away from the Confederacy.

Well that is certainly true. Neil Young keeps telling me the same thing too.

Well that is certainly true. Neil Young keeps telling me the same thing too.

Ah, yes "Southern Man". The US has many great qualities, but objective self examination is not one of them.....so it takes a Canadian to do it.....and it only has an impact because people think he's american.

Ah, yes "Southern Man". The US has many great qualities, but objective self examination is not one of them.....so it takes a Canadian to do it.....and it only has an impact because people think he's american.

I never knew Neil Young was Canadian!

@nun
We're depending on my memory here, so......
IIRC.....The income tax was introduced in 1861. Those resident in the 'Union' paid a flat fee of 3%(I think) on income from within the Union, while those who were non-resident (the dastardly cowards) paid 5% on income generated from sources within the Union. In 1864, the rules were revised for those non-resident, and the 5% was then applied, in addition to income from within the Union, to all income worldwide. Hence, the first application of where we are today. But, I could be wrong.

The Union was looking for more ways to finance the war effort and, thus, instituted the first personal income tax which was 3% on income between $600 and $10,000 and 5% on amounts over $10,000.  This law subsequently expired in the 1870s and income tax wasn't levied again until the 1890s.  Before the Civil War some southern states did pass income-based taxes on gains from land based on English taxation laws.

According to my great-great-grandfather, his father had the tendency to 'gift' his livestock to people so that he wouldn't make enough money to owe any income tax.  He also hired someone to fight in his stead during the war, though I'm inclined to forgive him as he was in the midst of a truly ugly divorce and custody battle.

The Union was looking for more ways to finance the war effort and, thus, instituted the first personal income tax which was 3% on income between $600 and $10,000 and 5% on amounts over $10,000.

From a Wall Street Journal article:
"The first U.S. income tax, enacted in 1861 in the early months of the American Civil War, levied a 3% tax on incomes over $800, but a 5% tax on income earned in the U.S. by “any citizen of the United States residing abroad.”

http://blogs.wsj.com/washwire/2012/05/18/tax-history-why-u-s-pursues-citizens-overseas/

From Taxes for Expats:
"The first income tax enacted  by Congress, passed in 1861 to help fund Civil War efforts, only taxed citizens abroad on their income from U.S. investments; overseas income was specifically excluded. In 1864, Congress moved to citizenship-based taxation and passed a new law which taxed non-resident citizens on their non-U.S. income as well."

http://www.taxesforexpats.com/expat-tax-advice/Background-and-History-of-Tax-On-Expatriation.html

3%, 5%, hogs, family silver, cannonballs, $800, 7%, Neil Young, the tax on non-residents, and if the war is over and non-residents are no longer "opting out of their military duty by going abroad".......

It is interesting about all the family history. It's also good to know people still remember it.

From a Wall Street Journal article:
"The first U.S. income tax, enacted in 1861 in the early months of the American Civil War, levied a 3% tax on incomes over $800, but a 5% tax on income earned in the U.S. by “any citizen of the United States residing abroad.”

http://blogs.wsj.com/washwire/2012/05/18/tax-history-why-u-s-pursues-citizens-overseas/

From Taxes for Expats:
"The first income tax enacted  by Congress, passed in 1861 to help fund Civil War efforts, only taxed citizens abroad on their income from U.S. investments; overseas income was specifically excluded. In 1864, Congress moved to citizenship-based taxation and passed a new law which taxed non-resident citizens on their non-U.S. income as well."

http://www.taxesforexpats.com/expat-tax-advice/Background-and-History-of-Tax-On-Expatriation.html

Interesting about the over-seas taxation.  I did not know that as my research has mostly focused solely on the US.  Shall definitely add that to the notes.  The 3% of tax on income over $800 was the Revenue Act of 1861 which was replaced by the tiered system the next year because it only applied to about 10% of the population.   

....The 3% of tax on income over $800 was the Revenue Act of 1861 which was replaced by the tiered system the next year because it only applied to about 10% of the population.   

As you've noted, several years after the war income tax was done away with, but then reinstated in 1894, and only on the rich with incomes over $4,000, which was 'the 1%' of the population back then. But, in 1895, the tax was overturned by the Supreme Court and done away with. No more income tax.

Federal income tax was not introduced again until 1914(? or 1913) to pay for another war, WW1.

Do we have income tax because we have war, or do we have war because we have the income tax to pay for it?

Do we have income tax because we have war, or do we have war because we have the income tax to pay for it?

Interesting point.