When and how did personal income tax start?

Discussion in 'Taxes and Accounting' started by Ialwayslearn, Jul 24, 2007.

  1. I've heard different things, but have never looked that far into it.

    Anyone know?
  2. around 1900....passed as a 2% tax or something like that.
  3. nkhoi

    nkhoi Moderator

  4. from wikipedia

    The United States imposes an income tax on individuals, corporations, trusts, and certain estates. This tax is imposed on the income event, such as the receipt of wages. Another example of an income event is the realization of a gain on the disposition of property; that is, the appreciation on the value of property is not taxed until that property is sold (i.e., when the gain is "realized").

    The U.S. income tax was first proposed during the War of 1812, but was defeated.[4] In July 1861, the Congress passed a 3% tax on all net income above $600 a year (about USD 10,000 today). Income taxes were enacted at various times until 1894, but were not imposed after 1895 after an 1894 tax act was found to be unconstitutional. In response, the 16th Amendment was ratified in 1913.[4] Ratification has been unsuccessfully disputed by some tax protestors claiming, among other things, that slight errors in punctuation in the various instruments ratified by the several states invalidates the ratification. Tax protestors have also made other arguments about the validity of the U.S. income tax, without success (see Tax protester arguments).

    The 2007 federal income tax rates are between 10% and 35%, depending on income and family status; people with low incomes pay no tax.
  5. Also from wiki (to the OP: it's really easy to use):

    A true income tax was first implemented in Britain by William Pitt the Younger in his budget of December 1798 to pay for weapons and equipment in preparation for the Napoleonic wars. Pitt's new graduated income tax began at a levy of 2d in the pound (0.8333%) on incomes over £60 and increased up to a maximum of 2s (2.5%) on incomes of over £200. Pitt hoped that the new income tax would raise £10 million but actual receipts for 1799 totalled just over £6 million (see UK income tax history for more information).[3] The first United States income tax was imposed in July 1861, 3% of all incomes over 600 dollars (later rescinded in 1872).


    It was only meant to be a temporary measure. But once people got used to it they "forgot" to repeal it.
  6. PointOne

    I had heard something similiar.

    Great info guys!!