100:, an event facilitated by over-expansion of the domestic economy and a European financial meltdown. In the three years preceding the Civil War, the Federal Government incurred a budget deficit exceeding $ 40 million. Coupled with the threat of secession, the Federal deficit placed the US government under considerable financial strain. In 1860, the US Treasury paid between 8 and 12 percent interest on government bonds in order to raise additional funds and meet public expenditures. In December 1861, the US Treasury attempted to sell five million dollars of interest-bearing notes at 12 percent but found itself able to dispose of only four million dollars worth. The Treasury's struggles illustrate the precarious nature of the US government's financial state. As the nation edged closer to war, the need to mobilize a volunteer force placed an additional financial burden upon the Federal government. While treasury notes with enticing interest rates allowed the US government to raise revenue quickly, they also established a need for additional revenue streams with which to pay off interest.
144:, declared that, "This bill is a most unpleasant one. But we perceive no way in which we can avoid it and sustain the government. The rebels, who are now destroying or attempting to destroy this Government, have thrust upon the country many disagreeable things." His sentiment reflected the view that the income and property taxes levied by the bill were necessary evils. The bill was eventually passed by Congress and signed into law by President Lincoln. Despite its sweeping reform, the ineffective enforcement mechanism coupled with a 3% flat tax rate failed to yield the desired revenue.
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income of at least $ 800; as such, the tax enjoyed relatively widespread support among legislators. The act granted
President Lincoln the power to appoint one principal assessor and one principal collector per state/territory; these officials were charged with enforcing income tax provisions. However, another portion of the bill stipulated that each state may collect and pay its own portion of the direct tax levied upon each state in its own way. Lacking an effective enforcement mechanism, the income tax provision was repealed in 1862 and replaced with a more expansive bill in the
941:
136:, Congress drafted the Revenue Act of 1861 in a relatively short time-frame. While the legislation effectively introduced import tariffs, property taxes, and a flat rate income tax of 3% on those making above $ 800, it lacked a comprehensive enforcement mechanism. In Congress, the bill provoked considerable debate:
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Income Tax: The
Revenue Act of 1861 levied a 3% flat rate income tax on those with an annual income at or exceeding $ 800 (which was 5.6 times the 1861 nominal gross domestic product per capita of $ 144.31; the corresponding income in 2021 is $ 384K). In 1861, only 3% of the population had an annual
177:
formation on July 1, 1862. The property tax drew criticism from representatives of rural states: by taxing real estate and excluding other forms of personal property, the tax, they argued placed an undue burden upon large, sparsely populated states and territories in the West and
Southwest. Though
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inquiring whether the president had constitutional authority to collect duties ranging from an import tariff to a property tax. Documents housed at the
Library of Congress indicate that Lincoln was concerned with the Federal government's ability to collect tariffs from ports along the Southeastern
83:
of 3% on annual incomes beyond $ 600 (which was 3.4 times the 1862 nominal gross domestic product per capita of $ 177.69; the corresponding income in 2021 is $ 234K) and 5% on incomes above $ 10,000 (which is 56 times the 1862 nominal gross domestic product per capita; corresponding to $ 3.9M of
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military incurred extraordinary expenditures as they trained and armed a martial force. President
Lincoln noted that, "One of the greatest perplexities of the government, is to avoid receiving troops faster than it can provide for them. In a word, the people will save their government, if the
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Property Tax: The
Revenue Act of 1861 instituted a tax on real estate, levied in proportion to each state's population. While the act's enforcement mechanism was limited, it formally established a system of tax districts, assessors, and collectors, laying the groundwork for the
119:
On July 4, 1861, President
Lincoln opened a special session of Congress with the explicit purpose of addressing the Civil War from a legislative standpoint. One of the primary concerns facing Congress was the question of funding: given a surfeit of volunteers, the
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government itself, will do its part" To raise revenue by approximately $ 50 million, legislators adopted a three-pronged approach consisting of an increase in certain import tariffs, a newly instituted property tax, and the first personal income tax.
157:, coffee, liquor, and various fruits and herbs. The majority of imports were taxed on a per unit basis while certain imports, often those with more volatile pricing such as hides, citrus fruit, silk, and gunpowder were taxed
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densely populated states such as New York were assessed at a higher rate due to a large population, a greater proportion of wealth in such states was invested in personal property other than real estate.
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In March 1861, President
Lincoln began to explore the federal government's ability to wage war against the South from a logistical standpoint. He sent letters to cabinet members including
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Act to provide increased
Revenue from Imports, to pay Interest on the Public Debt, and for other Purposes. 37th Congress, 1st Session, Ch. 45, 12 Stat. 292 [Revenue Act of 1861]
45:
of every person residing in the United States, whether such income is derived from any kind of property, or from any profession, trade, employment, or vocation carried on in the
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income in 2021) or those living outside the U.S., and perhaps more significantly it was explicitly temporary, specifying termination of income tax in "
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Import Tariff: The
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of 3% on incomes above $ 800 ($ 27,129 in 2023). The Revenue Act of 1861 was signed into law by
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Revenue Act of 1861, sec. 49, 12 Stat. 292, at 309 (August 5, 1861).
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Dingley, Nelson (1899). "The Sources of National Revenue".
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Dingley, Nelson (1899). "The Sources of National Revenue".
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US legislation establishing the first national income tax
360:Nisbet, Jack; Nisbet, Claire (September 14, 2011).
116:seaboard, noting the imminent threat of secession.
49:or elsewhere, or from any other source whatever".
306:. Archived from the original on October 15, 2011.
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384:Dunbar, C. F. (1889). "The Direct Tax of 1861".
210:"This Month in Business History: Income Tax Day"
427:Revenue Act of 1861, sec. 8–13, (Aug. 5, 1861).
418:Revenue Act of 1861, sec. 1–4, (Aug. 5, 1861).
37:). The Act, motivated by the need to fund the
26:Act of August 5, 1861, Chap. XLV, 12 Stat. 292
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245:"U.S. Senate: Revenue Act: Featured Document"
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439:The North American Review
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134:Senate Finance Committee
132:of Maine, chair of the
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71:) was repealed by the
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52:The tax imposed was a
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21:Revenue Act of 1861
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140:, chairman of the
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367:HistoryLink
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1116:1948: GATT
937:2018 (BBA)
922:2015 (BBA)
887:2010 (ACA)
627:1940 (2nd)
254:2015-06-02
221:2015-06-02
195:References
159:ad valorem
122:Union Army
31:income tax
1156:1994: WTO
787:1986 Code
687:1954 Code
617:1939 Code
155:brimstone
56:, with a
39:Civil War
512:Internal
451:25119157
312:cite web
285:25119157
169:of 1861.
54:flat tax
1126:1974/75
987:Tariffs
757:Gas Tax
514:Revenue
406:1879642
92:History
75:. (See
35:Sec. 49
877:Crisis
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190:scale.
111:, and
77:Sec.89
43:income
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318:link
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