August 5

This Day in History

Presidential

Aug 5, 1861:

Lincoln imposes first federal income tax

On this day in 1861, Lincoln imposes the first federal income tax by signing the Revenue Act. Strapped for cash with which to pursue the Civil War, Lincoln and Congress agreed to impose a 3 percent tax on annual incomes over $800.

As early as March 1861, Lincoln had begun to take stock of the federal government's ability to wage war against the South. He sent letters to cabinet members Edward Bates, Gideon Welles and Salmon Chase requesting their opinions as to whether or not the president had the constitutional authority to "collect [such] duties." According to documents housed and interpreted by the Library of Congress, Lincoln was particularly concerned about maintaining federal authority over collecting revenue from ports along the southeastern seaboard, which he worried, might fall under the control of the Confederacy.

The Revenue Act's language was broadly written to define income as gain "derived from any kind of property, or from any professional trade, employment, or vocation carried on in the United States or elsewhere or from any source whatever." According to the U.S. Treasury Department, the comparable minimum taxable income in 2003, after adjustments for inflation, would have been approximately $16,000.

Congress repealed Lincoln's tax law in 1871, but in 1909 passed the 16th Amendment, which set in place the federal income-tax system used today. Congress ratified the 16th Amendment in 1913.

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This Week in History, Aug 5 - Aug 11

Aug 05, 1861
Lincoln imposes first federal income tax
Aug 06, 1965
Johnson signs Voting Rights Act
Aug 07, 1990
Bush orders Operation Desert Shield
Aug 08, 1974
Nixon resigns
Aug 09, 1974
Ford is inaugurated
Aug 10, 1874
Herbert Hoover is born
Aug 11, 1984
Reagan jokes about bombing Russia

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