How has the tax code evolved?

The Week (US) - - News 11 -

Our mod­ern tax sys­tem has its roots in the Civil War. To help fund the Union war ef­fort, Pres­i­dent Abra­ham Lin­coln signed the first fed­eral in­come tax into law in 1861, a tem­po­rary flat tax of 3 per­cent on an­nual in­comes above $800. The next year, Congress cre­ated what would be­come the In­ter­nal Rev­enue Ser­vice. The wartime in­come taxes were never meant to be per­ma­nent, and lapsed in 1872. When Congress passed an­other in­come tax in 1894, it was ruled un­con­sti­tu­tional by the Supreme Court in a 5-4 vote. A pro­gres­sive in­come tax be­came a cause célèbre among pro­gres­sive-era re­form­ers fight­ing the gap­ing in­equal­ity of the Gilded Age, lead­ing to the pas­sage in 1913 of a con­sti­tu­tional amend­ment—the 16th— le­gal­iz­ing fed­eral tax­a­tion. Congress im­posed the first per­ma­nent in­come tax the same year, with a top rate of 7 per­cent on an­nual in­comes above $500,000—about $12.5 mil­lion to­day.

Rea­gan sign­ing the 1986 bi­par­ti­san tax bill

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