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Eversole Law Firm, P.C. 1509 King Street Beaufort, SC 29902 (843) 379-3333 www.eversolelaw.com
Disclaimer: The content of this publication has been prepared by Eversole Law Firm, P.C. for informational purposes only and is not to be construed as legal advice. It does not create an attorney-client relationship with its readers and may not be used by you, the reader, as legal advice. You are encouraged to consult with us or another attorney about your circumstances to which the information in this document may apply.
What’s Inside
1. 2021 So Far 2. 5 Reasons to Diversify Your Banking Why Alysoun Loves Her Horses 3. Don’t Forget to Address Cryptocurrency in Your Estate Plan! Summer Vegetable Greek Salad 4. Do You Know Which President Imposed the Federal Income Tax?
Lincoln’s Law
The Revenue Act and the History of the Federal Income Tax
Even with the extended May deadline, we’re well past tax season, so why talk tax history now? As it turns out, it was in August way back in 1861 that the Revenue Act was passed, which imposed the first federal income tax. If you’re trying to recall your American history lessons, you may have already figured out that it was President Abraham Lincoln who signed this bill into law. A Look at the First Tax The Revenue Act called for a 3% income tax on Americans making over $800 a year. That’s almost $26,000 in today’s dollars. The tax was levied primarily to fund the Civil War. While federal income tax dollars are spent in myriad ways today, defense remains a major category. About 16% of taxes collected for the 2019 tax year were spent on U.S. military and defense. Changes Over Time About a decade after the Revenue Act was passed, it was repealed. While it was possible to coax income taxes out of Americans during wartime, there was significant opposition to taxation following the end of the Civil War. It wasn’t until the 16th Amendment was ratified in 1913 that the federal government once again got the power to tax
individuals on their income and to spend the money how government officials saw fit, rather than in proportion to state populations. Since then, taxes have been used in three main ways: mandatory spending on programs like
Social Security, Medicare, and
veterans’ benefits; discretionary spending on defense, education, transportation, and health; and finally, interest on the national debt. As the old saying goes, two things are certain: death and taxes. However begrudging Americans are about paying taxes these days, income tax has become a given.
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