History of Accounting:
The Internal Revenue Service
Not until the turn of the century, did the Internal Revenue Service (IRS) and the profession of accounting pair together in the lives of the average citizen, but after 1913, the need for an accounting professional became a necessity for a few of the citizenry; Post WWII brought the need for accounting to all individuals lives, with the implementation of the individual tax return, on a federal and state level.
In the beginning, the tax return was a toss between the lawyers and the accountants. As it was a legally required document, the lawyers sought to control the industry, but thanks to the fact that there was more need for accounting input than legal input, the accountants won out, and have flourished since.
Not until recently has there been the exceeding need for qualified accountants, but with the complexity of the Internal Revenue Code, and the growth of corporate America, the need for accountants has seen a tremendous amount of growth. So much so, that over the next 25-30 years, the accounting field should grow second only to the healthcare field.
During the 1930s, Franklin Roosevelt passed the New Deal, and America pulled itself out of the Great Depression. The onset of the Second World War brought much prosperity to the nation, and the Internal Revenue Service made sure they began to collect their fair share. During the Clinton administration, the implementation of earned income credits, child tax credits, and the decreased taxation of personal capital gains, increased the need for a personal accountant. And during Bush's administration, the passage of tax incentives for small business, as well as corporate business, further increased accounting needs. As our government programs have grown, so has our tax liability, and so has the need for a good accountant.
During the first few years, the average American was only taxed at a rate of 1% on earnings above $10,000 per year. Not very many of the citizenry had to even file a return, but as the need for revenue continued to grow, the rate of taxation, as well as the lowering of the earnings on which you were liable for tax began, so that today, your tax liability begins at levels that exceed only a few thousand dollars, and your rate of taxation is 10%. What does this mean to accountants? Almost every American today is required to file a tax return and the complexity of the calculations and liability requires some knowledge of tax accounting.
As the Internal Revenue Service began to receive more individual returns, the need for auditors and a better auditing process became an increasingly important issue. Only in the last few years, has the Internal Revenue Service implemented the necessary changes to accommodate the greater need for auditing, and auditors. Guess who those auditors are? They're tax accountants and tax attorneys. The Internal Revenue Service, the growth of corporate America, and the Accounting profession will forever be tied in their complementary existence, for one cannot function without the other.
Information is for educational and informational purposes only and is not be interpreted as financial or legal advice. This does not represent a recommendation to buy, sell, or hold any security. Please consult your financial advisor.