The history of income taxation in the United States
President Lincoln first introduced income tax during the Civil War
Income tax is the most important revenue stream for the federal government, which allows it to function every year.
The history of income tax in the United States has a deep meaning originating from the Civil War before it was reintroduced later, just before the U.S. entered World War I.
The Internal Revenue Service is the main agency responsible for collecting personal income tax revenue and has been around for over a century.
When was the first known tax season in the US?
The earliest known form of taxes in human history takes back to over 4,000 years ago in Mesopotamia, where citizens paid tribute, or taxes, to the ruling government through livestock or other valuables from the ancient world. However, in the United States, taxes date back to the earliest founding of the nation and is one of the essential reasons for the start of the American Revolution.
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Since the founding of the United States, the Constitution has given the Legislative Branch the right to tax citizens to raise money for certain programs and programs works; however, the scope of taxation was different until the creation of the income tax. During the American Civil War, President Lincoln introduced an income tax in order to raise funds for the war effort.
However, the income tax was formally introduced in 1913 under President Wilson. Throughout the 1920s and 1930s, many of the federal taxes we pay in today's current tax season were introduced, such as the estate, gift, and Social Security taxes.
Why were taxes created?
Throughout the years, the U.S. government has accrued more power and influence over the everyday lives of its citizens through welfare, education, military and medical programs. Therefore, additional revenue became necessary at the dawn of the 20th century for the government to continue its operations for the foreseeable future.
After Lincoln's initial income tax was repealed, Congress attempted to bring back the law by instituting a flat rate federal income tax for the entire country, but the Supreme Court rejected the measure in 1894, because it did not take into the population differences of each state. However, after Congress passed the 16th Amendment, allowing the government to tax citizens' annual personal income, they began requiring Americans to fulfill this duty after it was ratified in 1913.
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Income taxes are essential to the federal government in modern times as its primary source of revenue. Income tax accounts for approximately 80% of all revenue the federal government generates every year.
When was the IRS started?
The IRS is the chief federal government agency responsible for collecting taxes from U.S. citizens and enforcing the tax code. The head of the agency answers directly to the president.
Lincoln originally created the agency in 1862 under the name the Office of the Commissioner of Internal Revenue. However, in 1918 the agency formally changed its name to its modern label, the Internal Revenue Service.