The history of income taxes in the United States goes back to the Civil War, when Abraham Lincoln signed into law the nation's first-ever tax on personal income to help pay for the Union war effort. After it was repealed a decade later, Congress tried again in 1894, enacting a flat rate federal income tax.
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The first income tax in the United States came about with the Revenue Act of 1861. A flat 3% tax on income above $800 was used to fund the Civil War and repealed 11 years later. In 1894, a new flat federal income tax was ruled unconstitutional by the U.S. Supreme Court.
The origin of the income tax on individuals is generally cited as the passage of the 16th Amendment, passed by Congress on July 2, 1909, and ratified February 3, 1913; however, its history actually goes back even further.
The tax code has seven income/tax brackets, with the lowest tax rate being 10 percent. The highest earners pay 37 percent.
The American Taxpayer Relief Act of 2012 increased the highest income tax rate to 39.6 percent. The Patient Protection and Affordable Care Act added an additional 3.8 percent on to this making the maximum federal income tax rate 43.4 percent.
The first federal income tax was created in 1861 during the Civil War as a mechanism to finance the war effort. In addition, Congress passed the Internal Revenue Act in 1862 which created the Bureau of Internal Revenue, a predecessor to the modern day IRS.
Tax experts usually advise people to file their taxes as soon as they can — it's the fastest way to get a refund and to know if you owe the IRS. It can also reduce your risk of fraud.
Here are five ways to make your tax time easier and maybe just a little fun:
A so-called 'Cowards' Tax (otherwise known as a Scutage Tax) was levied by King Henry I of England, which allowed knights to opt out of fighting wars by paying a fee. King John levied so much money through this tax, that the Magna Carta of 1215 was instigated to limit the monarch's power.
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If you continue avoid paying your tax bill, the unpaid amount could come out of future tax refunds if you're owed any. Beyond that, the IRS can place a lien on your property and assets. The lien could later become a levy, which means the IRS will seize your property to pay your bill.
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