According to early history of United States, the government was supported by
internal taxes on distilled spirits, carriages, refined sugar, tobacco and snuff,
property sold at auction, corporate bonds, and slaves. The high cost of the
War of 1812 brought about the nation’s first sales taxes on gold, silverware,
jewelry, and watches. In 1817, however, Congress did away with all internal
taxes, relying on tariffs on imported goods to provide sufficient funds for
running the government.
In 1862, in order to support the Civil War effort, Congress enacted the nation’s
first income tax law. It was a forerunner of our modern income tax.
The Act of 1862 established the office of Commissioner of Internal Revenue who
was given the power to assess, levy, and collect taxes, and the right to enforce
the tax laws through seizure of property and income and through prosecution.
