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
Hall income tax and 1960, the court rejected proposals for a general personal income tax. However, in 1981, 1991, and 1999, three different Tennessee Attorneys General issued opinions that a general income tax would not violate the state constitution. In December 2004, a commission established to study the state's tax structure said the Hall income tax was regressive, anti-competitive, and "unfairly selective." However, the Institute on Taxation and Economic Policy (ITEP) said the Hall Tax is actually the only major progressive tax levied in Tennessee—amounting to 0.4 percent of income for high-income taxpayers compared to 0.0–0.1 percent for less affluent Tennesseans. The Tennessee