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Congress Creates an Income Tax for Civil War funds
The Commissioner of international revenue started to tax people %3 if the people's income was $800. It was later changed to 5% for incomes between $600 to $5,000. 10% was taxed on people's income greater than $5,000. Congress later repeals income tax after the war is over. -
Another Income Tax Established
Congress created another income tax of 2% on people's income that was greater than $4,000. Opponents did not like it because it took away their wealth and enterprising. -
Pollock vs Farmers Loan and Trust Company
Charles Pollock argues that the white states imposed tax was considered to be a direct tax. The Supreme court ruled in favor of Pollock and ruled the imposed tax unconstitutional. It was ruled that this tax was more of a direct tax than a presumed indirect one. -
Bill is Changed to Taxing the Population of each State
The federal income tax is imposed based on the population of each state rather than getting money directly from people. People with an income of $4,000 or more will pay the tax. It then ended up being 2% of the country. -
16 Amendment Passed
On July 2, 1909, the 16th amendment was passed. Later on, it would be ratified. During the Civil War, congress passed a revenue act in 1861. This included a personal tax on personal incomes to help pay the war expenses. -
16 Amendment Accepted
Congress ratified the 16th amendment. The amendment established congress's right to impose a federal income tax. This now had a formal way for the government to collect taxes. -
First Income Tax is Imposed Under the 16 Amendment
Once the 16 amendment was ratified, congress imposed a 1% tax on people's income greater than $3,000 and 6% on people's income more than $500,000. The taxes then only affected a small portion of the population. -
Highest Tax Rate of 77%
Congress raises additional taxes to help finance WWI. This increased the top rate of income tax to 77%, which is the highest in history. -
Government Institutes Withholding Taxes on Wages and Salaries
Congress inflicted an income tax on people with an average income. Many people back out of the situation because they haven't saved up to pay the taxes. The government creates a new system and made it mandatory to collect income taxes. Employers are allowed to deduct the tax employees have from their salaries before paying them. -
Tax People With Average Income Rate
To pay for all of the expenses of WWII, congress imposed a tax on people with an average income. Employees were required to deduct the tax from their pay. The money that was left over went back to the workers.