Life before the Federal Income Tax

Robert P. Murphy of the Pacific Research Institute has a good article out on the insidious origins and history of the federal income tax:

As Tax Day approaches, Americans rummage for misplaced receipts and dread any letters from the Internal Revenue Service. Most Americans remain unaware that for almost a century America got along just fine with no federal income tax at all.

To help fund the Civil War, the federal government introduced its first federal income tax as part of the Revenue Act of 1861. This tax was very modest by modern standards, imposing a flat rate of 3 percent on all incomes above $800. This tax was rescinded in 1872, and in 1895 the U.S. Supreme Court ruled that federal taxation of income derived from property had to be apportioned among the states.

For all practical purposes, it would take a constitutional amendment before the federal government could once again lay claim to the income of individual citizens. The opportunity came soon enough.

Read the rest here.

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