Theodor de Bry’s 1590 engraving of Secoton, from John White’s watercolors. Public domain.
To pay for the war, Congress put a tax on income and built an office to collect it.
A poor household under the cutoff owed no income tax and still paid through higher prices and taxes on goods.
A professional or shop owner above the line owed a slice of yearly earnings, a federal tax the country had not collected before.
People with large incomes owed a higher rate, and many of them treated the tax as a wartime measure that would not last.
An 1861 revenue act had sketched a flat income tax and almost nobody collected it.
The Revenue Act of July 1, 1862, created the Commissioner of Internal Revenue and laid 3 percent on incomes above 600 dollars and 5 percent above 10,000 dollars.
The tax was collected through the war, and Congress let it lapse in the 1870s.
Revenue Act of 1862, 12 Stat. 432; Harry Edwin Smith, The United States Federal Internal Tax History from 1861 to 1871 (1914)