The Revenue Act of 1861 and 1862 passed during the Civil War established the first effective income tax for the country. Its passage helped the splintering United States raise money to fund the forthcoming war effort but afterward support for the law dropped off quickly. By 1870, five years after the war had ended many demanded its repeal. The following was printed in the 23 April 1870 edition of The Cecil Whig.
“Dispatches from Washington say: Prospects are brightening for the entire abolition of the tax on incomes. Numerous petitions are being received from every section of the country, protesting against this tax as most oppressive, and they are beginning to have an effect on Congress, and when the matter comes up in the House this tax will be stricken out unless the Ways and Means Committee are able to offer stronger arguments in favor of its continuance than have yet been advanced.”
“This war tax seems to have no friends, save, perhaps, Secretary Boutwell. Who strongly urges its continuance, on the ground that it is the most equitable tax assessed. How the Secretary becomes possessed of this opinion it is difficult to imagine. It is almost entirely at the option of the assessed, whether his return is correct or otherwise. Many, to ease their consciences of making false returns, keep no accounts of their profits and gains in business, and by such sophistry, think they avoid the crime of perjury in making a false return, because they are willfully ignorant of their crime. Not one-half the income is assessed and collected, which the law contemplates, and the miserly and dishonest, the enemies to the Government, manage in many ways to avoid paying their just amount of tax. while thee strictly conscientious, and careful business man, pays on every cent which the tax is justly due. A more unequal tax than the income tax does not exist among the numerous taxes levied by the Government. The tax upon small incomes is particularly oppressive and odious. For a man to be called upon to pay five per cent on income which he has spent in support of his family, after having contributed to the revenues of Government by a tax on every article employed in his business, is considered, and justly so, oppressive and partial, in view of the well established fact that the half is not collected by this tax, which the makers of the law expected and intended.”
“The income tax was established as a war measure, and as such was acquiesced in cheerfully, and when the time appointed for it to expire has arrived, it is not a matter of surprise that any efforts to re-enact the Income law should he met with universal complaint and condemnation. If the law is continued at all, it should exempt at least two thousand dollars, and tax large incomes, whose fortunate possessors are able to pay the tax without feeling the consequences. as a curtailment of the necessaries of life. In the heat and struggle of rebellion, such sacrifices were willingly borne by every loyal man. and it was but just that every disloyal man should be made to bear them; but the expenses of Government have been reduced, and are brought still lower each succeeding year by the present Administration, and the income tax should be one of the branches of taxation speedily lopped off.”
Of course, the income tax would not be stricken until 1872 and by that time constituted roughly twenty percent of the federal government’s income. Unsurprisingly, a new income tax was proposed in the Wilson-Gormin Tariff of 1894. This ultimate sparked a constitutional dispute and in 1909 the proposal of the 16th amendment. Ratified in 1913, the 16th amendment clarified congress’ power to collect taxes on incomes and paved the way for our current income tax laws.
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