Imagine a world without income taxes. I’m sure a lot of us would love to do just that. I don’t know what the taxes are called in other nations, but suffice it to say that the name doesn’t mean a thing…it’s still a tax, and it still has to be paid. In the United States…for many years, there was no income tax, at least not until August 5, 1861, when President Lincoln imposes the first federal income tax to help pay for the Civil War costs. The tax started when President Lincoln and Congress agreed to impose a tax of 3% on annual incomes over $800.00. I’m sure that the people were as unhappy about that as we would be today about gun control. The whole thing seemed unfair and for many unconstitutional.
The constitutionality of a federal income tax, was something President Lincoln checked into thoroughly, and I’m sure that it was the last thing he wanted to do, because that kind of thing can be political suicide, and in this case…I have to wonder if it played a part in Lincoln’s assassination, although it was said that John Wilkes Booth killed him because he disagreed with his stance on slavery.
Sometime, around March of 1861, Lincoln began to look at the government’s ability to wage a war against the South, and found that it was lacking. He sent letters to cabinet members Edward Bates, Gideon Welles, and Salmon Chase. Lincoln wanted to get their opinions as to whether or not the president had the constitutional authority to “collect [such] duties.” According to the documents, and their interpretations, which are now housed in the Library of Congress…Lincoln was very concerned about maintaining federal authority over collecting revenue from ports along the southeastern seaboard…as they might fall under the control of the Confederacy.
The Revenue Act was broadly written to define 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.” The comparable minimum tax as of 2003 would have put the minimum taxable income at about $16,000. The Income Tax went into effect, and the Civil War was funded. Then in 1871, Congress repealed Lincoln’s tax law, but in 1909, they passed the 16th Amendment, which made Income Tax a permanent tax, and the one we use today. The 16th Amendment was ratified in 1913. Sometimes, I wish they hadn’t done that, but I suppose it is necessary, though maybe not always fair.