First American Income Tax Created to Help Pay for Civil War

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Revenue Act of 1861: In order to help pay for the Civil War, the U.S government creates the first American income tax. All income over $800 ($20,693 in 2011 dollars) is taxed at a flat rate of 3%.

Section 49 states:

"There shall be levied, collected, and paid, upon the annual income of every person residing in the United States, whether such income is derived from any kind of property, or from any profession, trade, employment, or vocation carried on in the United States or elsewhere, or from any other source whatever, if such annual income exceeds the sum of eight hundred dollars, a tax of three per centum on the amount of such excess of such income above eight hundred dollars... "
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