|The Tax Collector. Pieter Brueghel the Younger, 1640|
The Tax Man ComethIn 1861 Congress levied a flat tax of 3% on annual incomes over $800 (roughly $20,600 today). This tax was ostensibly to fund the Civil War and is considered to be the first federal income tax in the United States.
In 1862 it was replaced by a graduated tax of 3-5% on incomes over $600 and a termination date of 1866.
By 1877 the Socialist Labor Party was demanding a graduated income tax and by 1892 the Populist Party had jumped on board. By 1908 it was part of the Democratic Party platform.
February, 1913In 1909 Senate Joint Resolution No. 40, submitted by Nelson Aldrich a Republican from Rhode Island was passed and the 16th amendment to the Constitution of the United States was submitted to the states.
On February 3, 1913 Delaware became the 36th state to ratify the amendment and it became part of the Constitution and the law of the land.
DissentersThe legislatures of Connecticut, Utah, Virginia, and curiously Aldrich's Rhode Island rejected it. Pennsylvania and Florida never even considered it.
1%- 7%In 1913 the bottom marginal tax rate was 1% and the top rate was 7%. For 2012 the bottom marginal rate is 10% and the top rate is 35%.
For 2013 that top rate jumps to 39.6%. Happy Birthday