Did you know President Abraham Lincoln, one of America’s most beloved leaders, also enacted one of the least liked obligations – the Income Tax?
1862 – President Abraham Lincoln signs a revenue-producing measure to help pay for expenses caused by the Civil War. The law creates the nation’s first income tax. Incomes between $600-10,000 Tax 3%. Incomes between $10,000 – above pay 5%.
1872 – Income tax is repealed.
1894 – Wilson Tariff Act revives the income tax and an income tax division within the Bureau of Internal Revenue is created.
1913 – States ratify the 16th Amendment, which says: “Congress shall have the power to lay and collect taxes on income, from whatever source derived, without apportionment among the several states, and without regard to any census or enumeration”.
Later, Congress will adopt: Net Personal Income under $20,000 – 1% Tax, Net Personal Income more than $500,000 – 7% Tax.
It also repealed a previous corporate tax and the first 1040 Form was introduced.
1917 – There is a 67% Tax rate! The War Revenue Act of 1917 raised the top tax bracket to 67% to help und World War I.
1919 – Tax rate is at 73%! The states ratify the 18th Amendment, barring the manufacture, sale or transport of intoxicating beverages. Congress passes the Volstead Act, which gives the internal revenue commissioner the primary responsibility to enforce Prohibition.
1923 – The tax rate goes down to 56%!