http://www.ustreas.gov/education/fact-sheets/taxes/ustax.shtml
History of the U.S. Tax System
...
The Civil War
When the Civil War erupted, the Congress passed the
Revenue Act of 1861, which restored earlier excises taxes and
imposed a tax on personal incomes.
...
On July 1, 1862 the Congress passed new excise taxes on such items as playing cards, gunpowder, feathers, telegrams, iron, leather, pianos, yachts, billiard tables, drugs, patent medicines, and whiskey. Many legal documents were also taxed and license fees were collected for almost all professions and trades.
The 1862 law also
made important reforms to the Federal income tax that presaged important features of the current tax.
The need for Federal revenue declined sharply after the war and most taxes were repealed. By 1868, the main source of Government revenue derived from liquor and tobacco taxes.
The income tax was abolished in 1872. From 1868 to 1913, almost 90 percent of all revenue was collected from the remaining excises.
The 16th Amendment
Under the Constitution, Congress could impose direct taxes only if they were levied in proportion to each State's population. Thus, when a flat rate
Federal income tax was enacted in 1894, it was quickly challenged and
in 1895 the U.S. Supreme Court ruled it unconstitutional because it was a direct tax not apportioned according to the population of each state.
...
By
1913, 36 States had ratified the 16th Amendment to the Constitution. In October,
Congress passed a new income tax law with rates beginning at 1 percent and rising to 7 percent for taxpayers with income in excess of $500,000. Less than 1 percent of the population paid income tax at the time.
...
World War I and the 1920's
The entry of the United States into World War I greatly increased the need for revenue and Congress responded by passing the 1916 Revenue Act.
The 1916 Act raised the lowest tax rate from 1 percent to 2 percent and raised the top rate to 15 percent on taxpayers with incomes in excess of $1.5 million. The 1916 Act also imposed taxes on estates and excess business profits.
...
The Bush Tax Cut
...
The 2001 tax cut will provide additional strength to the economy in the coming years as more and more of its provisions are phased in, and indeed one argument for its enactment had always been as a form of insurance against an economic downturn. However, unbeknownst to the Bush Administration and the Congress, the economy was already in a downturn as the Act was being debated. Thankfully, the downturn was brief and shallow, but
it is already clear that the tax cuts that were enacted and went into effect in 2001 played a significant role in supporting the economy, shortening the duration of the downturn, and preparing the economy for a robust recovery.
...
By the way, the fact that Hitler's genocide when he was an adult did not change in his lifetime did not make his genocide legal until he died.
