A federal income tax was first levied in the United States in 1862. Congress instituted the tax to meet the extraordinary expenses of the Civil War. The Revenue Act of 1862 levied a progressive tax on Americans, of 3% on incomes between 600 and 10,000 dollars, and 5% on incomes over 10,000 dollars (roughly $238,000 today).
Prior to the Civil War, the federal government relied primarily on tariffs (duties on goods imported into the US) to finance its activities. The use of the tariff protected the growth of nascent American manufactures, by making foreign goods more expensive relative to those made in the US. This arrangement allowed the government to operate without taxing citizens directly.
The cartoon above, published in Frank Leslie’s Illustrated Newspaper soon after the Revenue Act went into effect, captures its impact on American psyches. The tax is depicted as indecorously invasive. In the drawing, four federal tax collectors are snooping around inside the home of an American citizen named Scroggs. Caught in the act of arranging his hair, Scroggs faces interrogation armed only with a brush and comb. A tax commissioner in a high hat accosts him while fingering Scroggs’s pocket-watch. Another visitor peeks under his wife’s skirt, while still others scrutinize the couple’s clothes and look under their child’s bed. The caption: ‘Scroggs says he is ready and willing to pay any amount of tax, but he would like them to leave his wife’s crinoline and other domestic trifles alone.’
Did instituting the income tax create an antagonistic relationship between citizens and the government that had not existed before? What we do know is that in 1867, the Civil War at an end, the income tax was sharply reduced, and in 1872 it was eliminated. According to the Internal Revenue Service website, between 1868 and 1913, 90 percent of internal revenue was garnered through taxes on alcohol and tobacco. The income tax was re-instituted only in Woodrow Wilson’s era, following the ratification of the Sixteenth Amendment, which increased Congress’s discretion in levying income taxes directly on the citizenry.
Image: from this source.