Financial Resource: Beginner Investing to Financial Independence!

The federal income tax return has not always been a part of the American taxation system. Early in our nation’s history, the income tax returns was used only in times of war or national crisis to generate needed revenue.

In 1862, Congress passed the first state tax return law to ease the burden of Civil War debts. This early tax was a progressive tax. It applied only to people who made more than $600, ensuring that the tax was based on citizens’ ability to pay. The government relied on voluntary compliance with the income tax. Before it was repealed in 1872, this efile tax return for federal taxes provided nearly a quarter of the war revenue.

By the twentieth century, the American economy had grown as a result of industrialization. The federal government supported more people and programs than ever. A small part of the population became very wealthy, but many more people remained poor. Congress again proposed a federal tax return online to increase revenue and ease the burden of regressive taxes. The Sixteenth Amendment, ratified in 1913, allows the federal government to tax citizens’ incomes directly.

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