The present tax system in the United States was established in 1913 with the passage of the Sixteenth Amendment to the Constitution. This amendment gave Congress the power to impose an income tax. When this tax was first established, only about 1 percent of the population had to pay income taxes. Since that time, tax laws have grown to become some of the most complex procedures that families must go through to fulfill their responsibilities as citizens.

Whether we like it or not, taxes are a fact of life. They are also a critical part of any financial plan. We include a discussion of taxes early in this series because taxes have an impact on nearly every part of your financial life: investing, saving, cash management, debt, home ownership, retirement planning, insurance, and estate planning. Since taxes are such a crucial financial element, they need to be understood and planned for to help you achieve your personal and family goals.

When you have completed this section, you should be able to do the following:

1. Understand what our leaders have said regarding taxes
2. Understand how tax planning can help you attain your personal goals
3. Understand the tax process
4. Understand strategies to minimize tax payments for a given level of income
5. Understand the major features of the U.S. tax system