Civil War History Programs with the Resident Associates Program
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As American As … Income Tax

The Smithsonian Associates Civil War E-Mail Newsletter, Volume 4, Number 4

In addition to an income tax to support the Civil War, the wartime Congress passed dozens of tariffs and excise taxes on a variety of goods and services. You may have noticed the postage-type stamps on the backs of cartes de visites, for example. These revenue stamps were placed on an item to verify that the required taxes had been collected and paid by the customer. While the income tax was eliminated after the war, these “nuisance” taxes were not, surviving long after the Civil War was over. It was another war, World War I, which prompted the overhaul of Mr. Lincoln’s tax system.

The Sixteenth Amendment was ratified in February of 1913.At just 30 words, it is the briefest Constitutional Amendment with the exception of the Bill of Rights.It states “The Congress shall have power to lay and collect taxes on incomes, from whatever source derived, without apportionment among the several States, and without regard to any census or enumeration.”

Eight months after it was ratified, President Woodrow Wilson signed the Underwood-Simmons tariff bill, enacting the first of many income tax laws to follow.The bill eliminated many of the “nuisance” taxes from the Civil War era, and even reduced the original income tax rate.The new income tax, with a rate of one percent on incomes between $3,000 and $20,000, less deductions and exemptions, and graduated surtaxes up to six percent on higher incomes, applied to barely one percent of the population.

On January 5, 1914, the Department of the Treasury unveiled the new Form 1040 to the awaiting public.People who could were anxious to file, to show both their patriotism and that they were among the elite who earned enough to qualify to pay income taxes.The deadline for filing the form with the local tax collector’s office was less than two months away, March 1, 1914.With just over 350,000 1040s filed in the first year, the Bureau of Internal Revenue audited 100 percent of the returns.