Legal history of income tax in the United States Legal history of income tax in the United States Taxation of income in the United States has been practised since colonial times. Some southern states imposed their own taxes on income from property, both before and after Independence. The Constitution empowered the federal government to raise taxes at a uniform rate throughout the nation, and required that "direct taxes" be imposed only in proportion to the Census population of each state. Federal income tax was first introduced under the Revenue Act of 1861 to help pay for the Civil War. It was renewed in later years and reformed in 1894
Income tax in the United States made frequently to change tax laws, often with the backing of specific interest groups. Organizations making such proposals include Citizens for Tax Justice, Americans for Tax Reform, Americans for Tax Fairness, Citizens for an Alternative Tax System, Americans For Fair Taxation, and FreedomWorks. Various proposals have been put forth for tax simplification in Congress including the "Fair Tax Act" and various Flat tax plans. Proponents of a consumption tax argue that the income tax system creates perverse incentives by encouraging taxpayers to spend rather than save: a taxpayer is only taxed once on income spent immediately, while any interest earned