The Legal Tender Act

[Recusant]

On February 25, 1862, the U.S. Congress passes the Legal Tender Act, authorizing the use of paper notes to pay the government’s bills. This ended the long-standing policy of using only gold or silver in transactions, and it allowed the government to finance the enormously costly Civil War long after its gold and silver reserves were depleted.

So should anyone here be surprised when again In 1862, in order to support the Civil War effort, Congress enacted the nation's first income tax law. It was a forerunner of our modern income tax in that it was based on the principles of graduated, or progressive taxation and it is still with us.

Legal Tender Act passed to help finance the Civil War | February 25, 1862 | HISTORY

On February 25, 1862, the U.S. Congress passes the Legal Tender Act, authorizing the use of paper notes to pay the government’s bills. This ended the long‑standing policy of using only gold or silver in transactions, and it allowed the government to finance the enormously costly Civil War long...

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[1bravo9]

Great info.

 

[Jfal]

I was under the impression that the Fed income tax didn't start until about 1910-1912? I'm not arguing anything, as I cannot remember, but I know I've repeatedly read about the income tax after 1900....I welcome being educated, however. Now I know enough to know that I don't know.

 

[shanneba]

From the WikiPedia:
To help pay for its war effort in the American Civil War, Congress imposed its first personal income tax in 1861. It was part of the Revenue Act of 1861 (3% of all incomes over US$800; rescinded in 1872). Congress also enacted the Revenue Act of 1862, which levied a 3% tax on incomes above $600, rising to 5% for incomes above $10,000. Rates were raised in 1864. This income tax was repealed in 1872.

A new income tax statute was enacted as part of the 1894 Tariff Act. At that time, the United States Constitution specified that Congress could impose a "direct" tax only if the law apportioned that tax among the states according to each state's census population.

In 1895, the United States Supreme Court ruled, in Pollock v. Farmers' Loan & Trust Co., that taxes on rents from real estate, on interest income from personal property and other income from personal property (which includes dividend income) were direct taxes on property and therefore had to be apportioned. Since the apportionment of income taxes is impractical, the Pollock rulings had the effect of prohibiting a federal tax on income from the property. Due to the political difficulties of taxing individual wages without taxing income from property, a federal income tax was impractical from the time of the Pollock decision until the time of ratification of the Sixteenth Amendment ratified in 1913.

History of taxation in the United States - Wikipedia

en.wikipedia.org