The Internal Revenue Act of 1864, 13 Stat. 223 (June 30, 1864), increased the income tax

Income tax

An income tax is a tax levied on the income of individuals or businesses . Various income tax systems exist, with varying degrees of tax incidence. Income taxation can be progressive, proportional, or regressive. When the tax is levied on the income of companies, it is often called a corporate...

 rates established by the Internal Revenue Act of 1862. The measure was signed into law by President Abraham Lincoln

Abraham Lincoln

Abraham Lincoln was the 16th President of the United States, serving from March 1861 until his assassination in April 1865. He successfully led his country through a great constitutional, military and moral crisis – the American Civil War – preserving the Union, while ending slavery, and...

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Provisions

Section 116 of the Act imposed the tax on "the gains, profits, and income of every person residing in the United States, or of any citizen of the United States residing abroad, whether derived from any kind of property, rents, interest, dividends, or salaries, or from any profession, trade, employment, or vocation, carried on in the United States or elsewhere, or from any other source whatever [ . . . ]"

The measure created a third tax bracket

Tax bracket

Tax brackets are the divisions at which tax rates change in a progressive tax system . Essentially, they are the cutoff values for taxable income — income past a certain point will be taxed at a higher rate.-Example:Imagine that there are three tax brackets: 10%, 20%, and 30%...

 and increased taxes overall from the rates set in 1862. Tax brackets under the Act were as follows:

• 0%: under $600 (under $13,260 in 2008 dollars or the about the same as the average of $13,425 in combined personal exemption + standard deduction for single and married taxpayers in the year 2008)
• 5%: from $600 to 5,000 (from $13,260 to $110,496 in 2008 dollars)
• 7.5%: from $5,000 to $10,000 (from $110,496 to $220,993 in 2008 dollars)
• 10%: $10,000 and above ($220,993 and above in 2008 dollars)

In addition to raising income tax rates, the act established stamp taxes on such items as matches and photographs.

This act was allowed to expire as the populace mainly viewed it as an emergency measure for war-time situations. The Act ultimately expired in 1873 in the face of increased deficit spending. Congress readdressed reform of the tax law in 1893, eventually passing the Wilson-Gorman Tariff Act

Wilson-Gorman Tariff Act

The Revenue Act or Wilson-Gorman Tariff of 1894 slightly reduced the United States tariff rates from the numbers set in the 1890 McKinley tariff and imposed a 2% income tax. It is named for William L. Wilson, Representative from West Virginia, chair of the U.S. House Ways and Means Committee, and...

 of 1894.

Interpretation

In Springer v. United States

Springer v. United States

Springer v. United States, 102 U.S. 586 , was a case in which the United States Supreme Court upheld the Federal income tax imposed under the Revenue Act of 1864.- Background :...

, 102 U.S. 586 (1881), the Supreme Court upheld the Federal income tax

Income tax

An income tax is a tax levied on the income of individuals or businesses . Various income tax systems exist, with varying degrees of tax incidence. Income taxation can be progressive, proportional, or regressive. When the tax is levied on the income of companies, it is often called a corporate...

 imposed under the Revenue Act of 1864. The opinion was authored by Associate Justice of the U.S. Supreme Court Noah Haynes Swayne

Noah Haynes Swayne

Noah Haynes Swayne was an American jurist and politician. He was the first Republican appointed as a justice to the United States Supreme Court.-Birth and early life:...

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