Lincoln Needs Some Extra Cash: Federal Income Tax

 On August 5, 1861, President Abraham Lincoln imposed the first federal income tax on American citizens when he signed the Revenue Act. The Northern states were strapped for cash and Lincoln needed more money to continue their war against the Southern states. This was Lincoln and Congress’s solution to their money woes by imposing a 3 percent tax on all incomes over $800 ($16,000 by today’s standards). The new income tax went into effect the following year.

Before the income tax, the federal government earned its revenues on import taxes called “tariffs.” The first thing Lincoln and the Republican Party did after his inauguration was to pass the Morrill Tariff Act in 1861, which raised the tax on specific manufactured goods from 30 to 250 percent. The agrarian states in the south and western farmers in the North relied heavily on manufactured goods and felt that this new tax was an abuse of the federal government’s powers. As we know, in response to this abuse the South went so far as to secede from the union of states.

The North lost revenues when the South they seceded, which accounted for around 80 percent of the federal revenues. We then can understand why the North would start a war to force the South back into the union. This fact is also evident in Lincoln’s response to the question of why the North should not let the south go:

“Let the South Go? Let the South go! Where then shall we get our revenues!” (Semmes, 1987)

This begs the question, what were the thoughts and opinions of our citizens in the individual states prior to the new income tax? The New York Herald published the following on September 1, 1862 (the day the income tax came into effect):

“To-day begins a new era of this country. Beyond a few local and state taxes, which were felt by none but owners of real estate, this country has never been taxed before. We have jogged along quietly and comfortably, and have amused ourselves greatly by laughing at the over taxed people of England, where a man is taxed from the cradle to the grave; where light, heat and water are taxed, and where not only every rich man, but even the poorest peasant, is obliged to pay largely to the privilege of bad government….” (Crocker III, 2008)

It would appear that the states in the union prior to income tax were far greater off than the states today with all the fraud, waste, and abuse in our federal government. In fact, we now appear to be on par with the poor English people as described by the New York Herald.

Why would so many people in the Union accept such a change in taxes? The Herald did go on to praise the newly proposed income tax:

“The effect of the tax will be to deepen public sentiment. The people will be less ready to excuse the mistakes of our government and our generals…The war will be better conducted, for every man, having to pay his money towards carrying on the war, will insist and assist that it shall be properly prosecuted and speedily and gloriously conducted.”

It would appear that, like with many things, the people have been duped by the media. This is not a new phenomenon, but something that has been going on for many years. There is no evidence that income taxes have “deepen public sentiment” one bit in America. It is also difficult for the tax payer today to even know where their money is being spent to “insist and assist that it shall be properly prosecuted.”  

I say it is time that we stop paying for Mr. Lincoln’s war and put the federal government back on the short leash they had before 1862. It is clear that they have proven irresponsible with our hard earned money. It is time that we stop paying into the incompetent big government system. 

Works Cited

Crocker III, H. W. (2008). The Politically Incorrect Guide to the Civil War. Washington D.C.: Regnery Publishing, Inc.

Semmes, R. (1987). Memoirs of Service Afloat. Secaucus, NJ: The Blue and Gray Press.