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In
addition to an income tax to support the Civil War, the
wartime Congress passed dozens of tariffs and excise taxes
on a variety of goods and services. You may have noticed
the postage-type stamps on the backs of cartes
de visites, for example. These revenue stamps
were placed on an item to verify that the required taxes
had been collected and paid by the customer. While
the income tax was eliminated after the war, these “nuisance” taxes
were not, surviving long after the Civil War was over.
It was another war, World War I, which prompted the overhaul
of Mr. Lincoln’s tax system.
The Sixteenth Amendment
was ratified in February of 1913. At just 30 words, it is the briefest
Constitutional Amendment with the exception of the Bill of
Rights. It states “The Congress shall
have power to lay and collect taxes on incomes, from whatever
source derived, without apportionment among the several States,
and without regard to any census or enumeration.”
Eight
months after it was ratified, President Woodrow Wilson signed
the Underwood-Simmons tariff bill, enacting the first of
many income tax laws to follow. The
bill eliminated many of the “nuisance” taxes from
the Civil War era, and even reduced the original income tax
rate. The new income tax, with a rate of
one percent on incomes between $3,000 and $20,000, less deductions
and exemptions, and graduated surtaxes up to six percent
on higher incomes, applied to barely one percent of the population.
On January 5, 1914,
the Department of the Treasury unveiled the new Form 1040
to the awaiting public. People
who could were anxious to file, to show both their patriotism
and that they were among the elite who earned enough to qualify
to pay income taxes. The
deadline for filing the form with the local tax collector’s
office was less than two months away, March 1, 1914. With
just over 350,000 1040s filed in the first year, the Bureau
of Internal Revenue audited 100 percent of the returns.
In
case you wanted to know, last year’s statistics show:
113.7
Million individual
income tax returns were filed;
there
were 2.5 Billion hits on the IRS.GOV web page;
the
U.S. Treasury collected $1.86 Trillion.
This
article was adapted from “Background of the 1913 Form
1040,” written in 1995 by former IRS historian Shelley
Davis.
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Learning Links
Example of a Revenue
Stamp issued during the Civil War.
George S. Boutwell,
appointed by President Lincoln as the first Commissioner
of Internal Revenue. He later served on
the Impeachment Committee during the Andrew Johnson
trial.
Visit the Museum
of United States Essays and Proofs for more "masterpieces
of engraving"-- images and information about U.S. postage
and revenue stamps.
Visit the new IRS.GOV web
site. You even get to say if you like it. Congress
might not listen, but the kinder, gentler IRS will!
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