From Chaplain Alan Farley
(Hon Chaplain, 290 Foundation (BVI) Inc)
ABRAHAM LINCOLN IMPOSES FIRST FEDERAL INCOME TAX:
Aug. 5, 1861
2 Kings 23:35, “And Jehoiakim gave the silver and the gold to Pharaoh; but he taxed the land to give the money according to the commandment of Pharaoh: he exacted the silver and the gold of the people of the land, of every one according to his taxation, to give it unto Pharaoh-nechoh.”
This week is tax week, or to be more accurate tomorrow, April 15 is commonly known as "income tax" day. As you struggle, fuss and even fume with filing your income tax return here is a little history that might interest you.
On August 5, 1861, in order to finance the "Civil War", President Abraham Lincoln signed the Revenue Act, imposing the first federal income tax in U.S. history. This was done to try to pay for his un-Constitutional war.
Before asking Congress to act, Lincoln sent letters to cabinet members Edward Bates, Gideon Welles and Salmon Chase requesting their views as to whether the president had the constitutional authority to “collect [such] duties.” The president also expressed concern about the potential need to replace revenue from ports along the South-eastern seaboard, which he feared might fall under Confederate control.
The Revenue Act defined income as gain “derived from any kind of property, or from any professional trade, employment, or vocation carried on in the United States or elsewhere or from any source whatever.”
In keeping with current levies, Congress based the tax on the principle of a graduated, or progressive, payment schedule. It imposed withholding at the source. Individuals earning between $800 and $10,000 a year paid taxes at the rate of 3 percent. The comparable minimum taxable income in 2009, after adjustments for inflation, would be about $19,000. Those with incomes of more than $10,000 paid taxes at a higher rate. Additional sales and excise taxes also made their debuts, as well as estate taxes.
In 1866, federal internal revenue collections reached their highest point in the nation’s 90-year history — more than $310 million, an amount not reached again until 1911.
After the end of the Civil War, Congress once again focused its taxation efforts on tobacco and distilled spirits in 1868. Congress finally repealed income taxes in 1872, although they were revived it in 1894. In 1895, however, the U.S. Supreme Court ruled the income tax to be unconstitutional. In 1909, Congress proposed the 16th Amendment, which set in place today’s federal income-tax system. It was ratified in 1913.