When Mainers file their federal income taxes next year, many of them will do so for free thanks to a new IRS program that was piloted in 12 states for tax year 2023 that will now be expanded nationwide. Not every state will participate, but Maine Revenue Services announced its intention to join recently – in keeping with state policy, which has allowed free income tax filing since 2001. It’s always been outrageous that low-income workers, many of who qualify for substantial refunds, had to pay private tax preparation companies for the privilege of accessing money that’s legally due them.
That reality stems from many separate decisions, decades apart, that illustrate the changing nature of the income tax system – the bedrock for revenue-raising by the federal government and many states, including Maine, where income tax proceeds have long since outstripped the sales taxes. When the modern federal income tax was adopted in 1913 following passage of the 16th Amendment making it constitutional, the tax fell mostly on the wealthy, and was often described as a “luxury tax.” The brand-new Internal Revenue Service was solicitous, helping taxpayers understand and pay something they’d never encountered before.
By the 1920s, when Republicans dominated Congress, resentment among the upper classes against the progressive tax was growing, and – partly as a cost-cutting move – lawmakers eliminated this taxpayer assistance. Still, tax filing was simple enough so most people.