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 The U.S. government was supported by internal taxes on the following sectors.
Ypaistilled spirits
Ypxarriages
Ypefined sugar
YpTobacco and snuff
Yp¦roperty sold at auction
Ypxorporate bonds and
YpSlaves

To collect the high expenditure of the war of a, the government, for the first time,
imposed sales taxes on the following:
Ypëold
YpSilverware
Ypewelry and
Ypatches

The congress removed all internal taxes. Instead, it imposed taxes (tariff) on imported
goods. The main reason of this tariff imposing is to increase government income to meet
increasing government expenditures.

It is the xivil arb that led government to increase its income through imposing tax on a
wide range of income level. In fact, it was a fore-runner of the modern income tax in that

a
The ar of 1812 was a war fought between the United States of America and the British Empire- particularly and
the provinces of British North America, the antecedent of xanada. Lasting from 1812 to 1815, it was fought chiefly
on the Atlantic Ocean and on the land, coasts and waterways of North America.
b
The American xivil ar (1861±1865), also known as the war between the States was a civil war in the U.S.
Eleven Southern slave states declared their secession from the United States and formed the xonfederate Sates of
America, also known as "the xonfederacy". Led by efferson aavis, they fought against the United States
(the Union), which was supported by all the free states and the five border slave states. It remains the deadliest war
in American history, resulting in the deaths of 620,000 soldiers and an undetermined number of civilian casualties.
Ten percent of all Northern males 20±45 years of age died; as did 30 percent of all Southern white males aged 18±
40.
 it was based on the principles of graduated or progressive taxation and of withholding
income at the source. The tax sources for the government at that time were as follows.
YpIncome tax - Income from $600-$10,000 per year would pay 3%.
- Income > $10,000 per year would pay a higher rate.
YpSales taxes
YpExcise taxes
YpInheritance taxes
The  act created office of the xommissioner of Internal evenue. The commissioner
had power to address the following tax issues:
YpTo assess, levy, and collect taxes and
YpTo enforce the tax laws through seizure of property and income and through
prosecution. Excise taxes
It is important to note that, in 1866, internal tax collections reached their highest point in
the nation's 90-year history²more than $310 million and this figure remained the unique
highest until 1911.


In the year  the xongress again focused its taxation efforts on tobacco and distilled
spirits which was earlier imposed in 1791 and eliminated in 1817.

Eliminated in , the income tax was again imposed in 1894 and remained valid
through 1895. But in  the U.S. Supreme xourt ruled that the income tax was
unconstitutional because it was not apportioned among the states in conformity with the
U.S. xonstitution.

The 1895 ruling of the U.S. Supreme xourt (that income tax is unconstitutional) finally
led to the 16th Amendment to the U.S. xonstitution in . The amendment gave
xongress legal authority to tax income and resulted in a revenue law that taxed incomes
of both individuals and corporations. In fact, this amendment made the income tax a
permanent fixture in the U.S. tax system. In 1918, the internal annual revenue collection,
 for the first time in U.S. tax history, passed the billion-dollar mark and in 1920 the figure
reached $5.4 billion.

The withholding tax on wages was introduced in . At that time the number of
taxpayers also increased significantly. In 1945, the number of taxpayer rose up to 60
million and the tax collected was $43 billion.

In , xongress enacted the largest tax cut in U.S. history, approximately $750 billion
over six years. The tax reduction, however, was partially offset by two tax acts, in 1982
and 1984 that attempted to raise approximately $265 billion.

On Oct. 22, , ¦resident eagan signed into law the Tax eform Act of 1986. This is
one of the most far-reaching reforms of the United States tax system since the adoption of
the income tax. Some features of the act were:
áp The top tax rate on individual income was lowered from 50% to 28%, the
lowest it had been since 1916.
áp Tax preferences were eliminated to make up most of the revenue.
áp In an attempt to remain revenue neutral, the act called for a $120 billion
increase in business taxation and a corresponding decrease in individual
taxation over a five-year period.

The evenue econciliation Act of 1990 was signed into law on Nov. 5, . This Act
was signed with a view to increase revenue by taxing the wealthier people.

¦resident xlinton signed the evenue econciliation Act of 1993 into law on 10 August
. The predicted budget deficit from 1994 through 1998 was $496 billion. The
evenue econciliation Act of 1993 was signed mainly to meet this deficit.

¦resident xlinton signed another tax legislation in which cut taxes by $152 billion.
The main features of that Act were:
áp A cut in capital-gains for all individual taxpayers.
 áp Tax credit/incentive of $500 per child for education.

 
 !"#$%

!the Economic ërowth and Tax elief econciliation
Act of . The main contents of this Act were as follows:
áp This act offered the highest tax cut for the taxpayers since orld ar-II. It
was estimated to save taxpayers $1.3 trillion over ten years.
áp It created a new lowest tax rate of 10% for the first several thousand dollars
earned.
áp It reduced the tax rates from 28% to 25%; 31% to 28%; 36% to 33%; and
39.6% to 35%.
áp It increased the per child tax credit from $500 to $1000 in 10 years. 
áp †iddle-income couples owed the same tax as comparable singles.

The obs and ërowth Tax elief and econciliation Act of  was signed in 2003. It
accelerated the tax rate cuts that had been enacted in 2001, and temporarily reduced the
tax rate on capital gains and dividends to 15%. 

In , the U.S. was forced to eliminate a corporate tax provision that had been ruled
illegal by the orld Trade Organization. Along with that tax hike, xongress passed a
cornucopia of tax breaks, which for individuals included an option to deduct the payment
of whichever state taxes were higher, sales or income taxes.

Two tax bills signed in  and  extended through  the favorable rates on
capital gains and dividends that had been enacted in 2003, raised the exemption levels for
the Alternative †inimum Tax, and enacted new tax incentives designed to persuade
individuals to save more for retirement.