Was income tax supposed to be temporary? And what president started income tax? A tax attorney didn’t have much to do before the Civil War. President Abraham Lincoln signed into law the first income tax – The Revenue Act of 1862 – appointing George S. Boutwell to the office of Commissioner of Internal Revenue. The Act was passed as an emergency and temporary measure to help fund the war, and it was supposed to terminate in 1866.
The first income taxes were also higher for wealthier Americans. In 1862 the rate was 3% on income between $600 and $10,000, and 5% on income over $10,000. In 1864 the rate increased to 5% on income of $600-$5,000; 7.5% on income of $5,000-$10,000; and 10% on income of $10,000+.
In 1872, seven years after the war, lawmakers finally did allow the temporary Revenue Act to expire. However, the government continued to raise revenue through income taxes until the Supreme Court declared the Income Tax of 1894 unconstitutional. Then along came the 16th Amendment in 1913 which granted power to Congress to “lay and collect taxes on incomes, from whatever source derived.”
The IRS’ reputation for being understaffed dates way back to the beginning of the agency. They were supposedly still processing 1917 returns in 1919!