Tariffs were the largest source of federal revenue from the 1790s to the eve of World War I, until they were surpassed by income taxes.
The first federal statutes imposing the legal obligation to pay a federal income tax were adopted by Congress in 1861 and 1862 to pay for the Civil War. This income tax was repealed in 1872, but a new income tax statute was enacted as part of the Wilson-Gorman Tariff Act in 1894.
The United States Constitution specified Congress could impose a direct tax only if it was apportioned among the states according to each state's census population. In its 1895 decision the Supreme Court held in the case of Pollock v. Farmers' Loan & Trust Co. that a tax on income from property (a tax on interest, dividends or rent) was a direct tax under the Constitution, and so had to be apportioned.
The apportionment requirement made income taxes on property practically impossible, and Congress did not want to limit the income tax solely to a tax on wages.
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News 40% of What You Pay for Beer Goes to Taxes
The next time you pour yourself a cold one, give yourself a pat on the back in the name of patriotism. On average, 40 percent of the price you paid for that beer is going straight to Uncle Sam and the state.
Lobbyists in Washington are pushing to