Brief History of Income Taxes in the United States

“In this world, nothing can be said to be certain except death and taxes.” It’s that time of the year again… Tax Day! The United States didn’t always have federal income taxes, so why do we have them today? Ross Marchand of the Taxpayers Protection Alliance breaks down a brief history of income taxes in the United States.

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Free the People publishes opinion-based articles from contributing writers. The opinions and ideas expressed do not always reflect the opinions and ideas that Free the People endorses. We believe in free speech, and in providing a platform for open dialog. Feel free to leave a comment!

Matt Kibbe

Matt Kibbe is President at Free the People, an educational foundation using video storytelling to turn on the next generation to the values of personal liberty and peaceful cooperation. He is also co-founder and partner at Fight the Power Productions, a video and strategic communications company. Kibbe is the host of BlazeTV’s Kibbe on Liberty, a popular podcast that insists that you think for yourself.

Dubbed “the scribe” by the New York Daily News, Kibbe is the author three books, most recently the #2 New York Times bestseller Don’t Hurt People and Don’t Take Their Stuff: A Libertarian Manifesto.

He was senior advisor for a Rand Paul Presidential Super PAC in 2016, and later co-founded AlternativePAC to promote libertarian values.

In 2004 Kibbe founded FreedomWorks, a national grassroots advocacy organization, and served as President until his departure in 2015. Steve Forbes said: “Kibbe has been to FreedomWorks what Steve Jobs was to Apple.”

An economist by training, Kibbe did graduate work at George Mason University and received his B.A. from Grove City College. He serves at the whim of his awesome wife Terry, and their three objectivist cats, Roark, Ragnar and Rearden. Kibbe is a fanatical DeadHead, drinker of craft beer and whisky, and collector of obscure books on Austrian economics.

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  • Our current tax system is, as most are regressive. I have done some reading on the subject and although the Flat tax sounds good it will quickly just turn into what we have now. I find that a lot of research into the FairTax has been done and many economists are now saying it would do great things for our economy, it would also un-tax the poor, end many special interests and tax criminals as well as be completely transparent. I now favor the FairTax above all others.

    • Scott, be very wary of embracing the “Fair Tax.” Some of the same deceptive arguments that were used to support the 1913 income tax are being recycled in support of the Fair Tax. Even its name is deceitful, for it isn’t fair. No tax is fair. Taxation is theft, it is identical to the felony crime of extortion, and the Fair Tax will be extorted just as the income tax is.

    • Why don’t you just call the so-called Fair Tax a Sales tax so people won’t have to look it up? And a regressive tax would mean that people who earn less would pay more. Our system doesn’t work that way.

  • The door was opened in America for an income tax in 1794 with the passage of the Carriage Tax, a tax collected directly from the owners of carriages and thus a direct tax subject to apportioning pursuant to two clauses of the Constitution (Art 1, Sec. 2, Clause 3, Art. I, Sec. 9, Clause 4). The majority Federalist Congress didn’t bother to apportion the tax, calling it an excise tax levied on the use of the carriage rather than on the owner, who was nevertheless required to pay. By this simple act of palpable deceit, the twin apportionment requirements were essentially abrogated. Alexander Hamilton orchestrated the chicanery that turned a direct tax into an excis. As Washington’s Secretary of the Treasury, Hamilton proposed the tax and steered it through Congress After he retired to the most powerful lawyer in private practice in America, Hamilton was hired to represented the United States when the tax was challenged as unconstitutional.

    The case known as Hylton v. United States, 3 U.S. 171 (1796), became the first case in which the Supreme Court was asked to determine whether an act of Congress was constitutional. In what was surely the most egregious decision of the Supreme Court until in the Dred Scott it concluded that slaves were property, not people, the Court in Hylton agreed with Hamilton’s argument that the palpably direct Carriage tax was an excise tax not subject to apportionment.

    Subsequently, several direct taxes masquerading as excises were passed by Congress, and the Lincoln’t 1862 Income Tax–direct because taken directly from taxpayers–sailed through Congress as an excise tax without challenge in the courts. Wars have a way of subverting rights on the grounds of necessities.

    If anyone would like to know more about the Hylton case, read the majority opinion Pollock v. Farmers’ Loan & Trust Company, 157 U.S. 429 (1895), affirmed on rehearing, 158 U.S. 601 (1895 ), in which the Supreme Court ruled that the unapportioned income taxes on interest, dividends and rents imposed by the Income Tax Act of 1894 were, in effect, direct taxes, and were unconstitutional because they violated the provision that direct taxes be apportioned. This rare courageous decision by the Court was eventually abrogated when the Progressive Movement successful adopted the 16th Amendment{

    “The Congress shall have power to lay and collect taxes on incomes, from whatever source derived, without apportionment among the several States, and without regard to any census or enumeration.”

    With that Americans’ best defense against excessive taxation, the apportionment requirement, was all but permanently abolished.

  • Background checks only punish those who have something to hide. We need to know if the people who want to come in are ok with CAPITALISM and the CONSTITUTION .. and our BILL OF RIGHTS. if they’re not .. WE DO NOT WANT THEM HERE. not that we do not accept differences of opinions. We just can not have what the DNC party is PUSHING in our government or we are STAGNATED and nothing gets done. PLUS those who BREAK THE LAW obviously do not respect our LAWS and we certainly do not need those people here. EQUAL JUSTICE under the LAW is the way our democracy works. EVERYONE WORKS is our CAPITALIST FORM OF ECONOMICS… and a GOVERNMENT that is BY THE PEOPLE, FOR THE PEOPLE and OF THE PEOPLE is our DEMOCRACY.. I think we will find if people who are use to the SOCIALIST/COMMUNIST LIFESTYLE come into this country they do not want to return. AS IT DOES NOT WORK otherwise we as taxpayers would not be sending money to their countries. LETS GET REAL… we are currently improving the tax structure.. NEED TO REMEMBER it took 30 YEARS for the POLITICIANS to screw things up.. lets have atleast 8 good years to repair it. It will get there but OBSTRUCTION by MARXISTS like the leader of the DNC PARTY are a HUGE risk to OUR DEMOCRACY and we need people LIKE CORTEZ who is economically ignorant and OMAR who is a RACIST to leave as we do not need to have them spending our money as they ARE GREAT AT ONLY ONE THING.. making themselves rich off the backs of the MIDDLE CLASS TAXPAYERS.. SOCIALISM of any FORM does not WORK.. and BEING A GENIUS in ECONOMICS I can answer why that WILL NEVER WORK.. because in the words of MILTON FRIEDMAN ..social programs benefit only the rich never the poor.. also here is the economic wheel in which this country operates. Private sector sales and service income.. MINUS government payroll and spending EQUALS the GDP..which is the amount of money in your pockets… NO matter where you work inside the government if you get a check from the CITY, STATE OR FEDERAL GOVERNMENT you are a DRAIN on the ECONOMY… and do not contribute to the GDP as you are PAID FOR with taxes FROM the private sector. INSURANCE needed to be fixed we have now done that in the PRIVATE SECTOR and it will remain in the PRIVATE SECTOR as that is WHERE WE MAKE MONEY for the GDP… and it is good, it is full coverage, and covers pre existing conditions. RNC PARTY has the SOLUTION.. it is NOT TAKING YOUR FREEDOM away .. so lets not do that. HE IS ALIVE… happy EASTER.. he has risen.. READ HIS BOOK.. you will be changed.

  • Matt,

    Ross is incorrect in his initial premise that an income tax was passed in 1913 allowing for a direct income tax. This negates all that follows. The Income Tax is an excise and has been held to be so by numerous Supreme Court cases, the most notable being the Brushaber case.

    The Sixteenth Amendment did not create any new type of tax but rather explained the existing tax structure that was already in existence. A “Direct” tax must still be apportioned even unto this day. An “Indirect” (excise) tax, is one that we can avoid by not participating in the activity for which the tax would apply.

    Tax Avoidance is “Good business sense” (Judge Learned Hand – SCOTUS).

    Hope this helps.


    • Charley, Just because SCOTUS says it is an excise tax cannot make it one. Don’t forget, SCOTUS also found that slaves were not persons! In its meaning at the time of the Constitutions adoption, a direct tax was any tax collected DIRECTLY from the taxpayer by the government’s tax collector, such as the income tax. An indirect tax was one levied on a product or service and collected from the purveyor (or importer) but passed on to the ultimate taxpayer INDIRECTLY by adding it into the price. The ultimate payer–the consumer–was not required by the state to pay the tax, while in effect paying it in the price,. And of course the consumer could avoid the tax by declining to purchase the taxed product or service–unless such as a necessity of life.

      Tax avoidance is good business sense; tax resistance is good moral sense.

      Hope this helps your understanding.

  • If it is morally wrong to take people’s property by force then how can any taxation be justified? Taxation is theft and making more convenient for the victim doesn’t change that.

  • Knowing that we volunteer by our fear; how can we recoup all the money collected throu the years
    If you can please advise .

  • I was surprised to learn there was an income tax during the Civil War. I studied econ but I may have missed something. Unfortunately Mr. Kibbe said nothing about cutting spending which is a necessary precursor to cutting taxes. I consider taxation to be theft. Ayn Rand wrote about some ways to finance the government voluntarily. But that’s a long way down the road.

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