the first income tax was imposed in united states in 1861.
the first income tax was imposed in united states in 1861.
when was the first income tax imposed in united states?
1861
an income tax is neither a poll tax nor a capitation, as the amount of tax will vary from person to person, depending on each person's income. until a united states supreme court decision in 1895, all income taxes were deemed to be excises (i.e., indirect taxes). the revenue act of 1861 established the first income tax in the united states, to pay for the cost of the american civil war. this income tax was abolished after the war, in 1872. another income tax statute in 1894 was overturned in "pollock v. farmers' loan & trust co." in 1895, where the supreme court held that income taxes on income from property, such as rent income, interest income, and dividend income (however excepting income taxes on income from "occupations and labor" if only for the reason of not having been challenged in the case, "we have considered the act only in respect of the tax on income derived from real estate, and from invested personal property") were to be treated as direct taxes. because the statute in question had not apportioned income taxes on income from property by population, the statute was ruled unconstitutional. finally, ratification of the sixteenth amendment to the united states constitution in 1913 made possible modern income taxes, by limiting the sixteenth amendment income tax to the class of indirect excises (i.e. excises, duties, and imposts) – thus requiring no apportionment,
poll tax
on july 3, 2007, the court ruled (1) that the taxpayer's compensation was received on account of a non-physical injury or sickness; (2) that gross income under section 61 of the internal revenue code does include compensatory damages for non-physical injuries, even if the award is not an "accession to wealth," (3) that the income tax imposed on an award for non-physical injuries is an indirect tax, regardless of whether the recovery is restoration of "human capital," and therefore the tax does not violate the constitutional requirement of article i, section 9, that capitations or other direct taxes must be laid among the states only in proportion to the population; (4) that the income tax imposed on an award for non-physical injuries does not violate the constitutional requirement of article i, section 8, that all duties, imposts and excises be uniform throughout the united states; (5) that under the doctrine of sovereign immunity, the internal revenue service may not be sued in its own name. the court stated: "[a]lthough the 'congress cannot make a thing income which is not so in fact,' [ . . . ] it can "label" a thing income and tax it, so long as it acts within its constitutional authority, which includes not only the sixteenth amendment but also article i, sections 8 and 9." citing "commissioner v. banks," the court noted that "the power of the congress to tax income 'extends broadly to all economic gains.'" the court ruled that ms. murphy was not entitled to the tax refund she claimed, and that the personal injury award she received was "within the reach of the congressional power to tax under article i, section 8 of the constitution"—even if the award was "not income within the meaning of the sixteenth amendment".
murphy v. irs