Today, August 5, 1861: First Federal Income Tax

Before I say anything else, I have to say that I owe Democrats an apology. I always accused them of creating the federal income tax that burdens all of us every April 15. Yet, it seems that it was Republicans who instituted the first federal income tax and it was Republicans behind the passage and ratification of the 16th Amendment which instituted a federal income tax.

On this day, August 5, 1861, President Abraham Lincoln signed the Revenue Act passed by Congress. The Revenue Act of 1861 instituted the first federal tax on the income of the American people.

In early 1861, most northerners and members of Congress believed that the Civil War would not last more than a year, if that. Lincoln’s Treasury Secretary Salmon P. Chase had the task of finding the money to pay for what some referred to as Mr. Lincoln’s War. Chase told Lincoln and Congress that the war would cost them about $320 million. In his report, Chase stated that he could scrape up $300 million through various means but that it would be left up to Congress to come up with the other $20 million needed for the war effort.

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The task of finding the remaining $20 million fell to the House Ways and Means Committee. After a couple months of deliberation, the committee ended up drafting a tax bill that called for the taxation of personal and corporate incomes. According to the bill, anyone earning between $800 to $10,000 a year would pay a 3% federal income tax. That would be the equivalent to anyone in 2015 earning between $21,600 to $270,000 a year. Incomes over $10,000 would be taxed at 5%.

The bill defined income as any gain or profit:

“…derived from any kind of property, or from any professional trade, employment, or vocation carried on in the United States or elsewhere or from any source whatever.”

The bill easily passed the Republican controlled House and Senate. On this day, August 5, 1861, President Lincoln signed the Revenue Act into law, establishing the first federal income tax.

The Revenue Act of 1861 was repealed by Congress in 1871.

In 1909, Congress passed the 16th Amendment which established a permanent federal income tax.

In 1913, the 16th Amendment was ratified and added to the US Constitution. Again, the 16th Amendment was passed by a Republican controlled Congress under the administrations of Presidents Teddy Roosevelt and William Howard Taft, both Republicans.


Sources for the above: Lincoln Imposes First Federal Income Tax; History of the US Income Tax; Lincoln Imposes First Federal Income Tax: Aug. 5, 1861; Tax History Museum: 1861-1865; The First National Income Tax, 1861–1872; 16th Amendment to the U.S. Constitution: Federal Income Tax (1913); Amendments 11-27 to the U.S. Constitution; Inflation Calculator


Dave Jolly

R.L. David Jolly holds a B.S. in Wildlife Biology and an M.S. in Biology – Population Genetics. He has worked in a number of fields, giving him a broad perspective on life, business, economics and politics. He is a very conservative Christian, husband, father and grandfather who cares deeply for his Savior, family and the future of our troubled nation.

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