Until 1913, customs duties (tariffs) and excise taxes were the primary sources of federal revenue.Buenker, John D. 1981. "The Ratification of the Sixteenth Amendment". The Cato Journal. 1:1. PDF. During the War of 1812, Secretary of the Treasury Alexander J. Dallas made the first public proposal for an income tax, but it was never implemented.Baack, Bennet T. and Edward John Ray. 1985. "Special Interests and the Adoption of the Income Tax in the United States". The Journal of Economic History V. 45, No. 3. pp. 607-625. The Congress did introduce an income tax to fund the Civil War through the Revenue Act of 1861. It levied a flat tax of three percent on annual income above $800. This act was replaced the following year with the Revenue Act of 1862, which levied a graduated tax of three to five percent on income above $600 and specified a termination of income taxation in 1866. The Civil War income taxes, which expired in 1872, proved to be both highly lucrative and drawing mostly from the more industrialized states, with New York, Pennsylvania, and Massachusetts generating about 60 percent of the total revenue that was collected.Baack and Ray, p. 608. During the two decades following the expiration of the Civil War income tax, the Greenback movement, the Labor Reform Party, the Populist Party, the Democratic Party and many others called for a graduated income tax.
Until 1913, customs duties (tariffs) and excise taxes were the primary sources of federal revenue.Buenker, John D. 1981. "The Ratification of the Sixteenth Amendment". The Cato Journal. 1:1. PDF. During the War of 1812, Secretary of the Treasury Alexander J. Dallas made the first public proposal for an income tax, but it was never implemented.Baack, Bennet T. and Edward John Ray. 1985. "Special Interests and the Adoption of the Income Tax in the United States". The Journal of Economic History V 45, No. 3. pp. 607-625. The Congress did introduce an income tax to fund the Civil War through the Revenue Act of 1861. It levied a flat tax of three percent on annual income above $800. This act was replaced the following year with the Revenue Act of 1862, which levied a graduated tax of three to five percent on income above $600 and specified a termination of income taxation in 1866. The Civil War income taxes, which expired in 1872, proved to be both highly lucrative and drawing mostly from the more industrialized states, with New York, Pennsylvania, and Massachusetts generating about 60 percent of the total revenue that was collected.Baack and Ray, p. 608. During the two decades following the expiration of the Civil War income tax, the Gree.nback movement, the Labor Reform Party, the Populist Party, the Democratic Party and many others called for a graduated income tax.