when did federal income tax came into being
Income tax The US federal government imposed the first personal income tax, on August 5, 1861, to help pay for its war effort in the American Civil War - (3% of all incomes over US$800) (equivalent to $21,800 in 2017).[11][verification needed] This tax was repealed and replaced by another income tax in 1862.[12][verification needed] It was only in 1894 that the first peacetime income tax was passed through the Wilson-Gorman tariff. The rate was 2% on income over $4000 (equivalent to $113,000 in 2017), which meant fewer than 10% of households would pay any. The purpose of the income tax was to make up for revenue that would be lost by tariff reductions.[13] The US Supreme Court ruled the income tax unconstitutional, the 10th amendment forbidding any powers not expressed in the US Constitution, and there being no power to impose any other than a direct tax by apportionment.
United States federal budget During FY2016, the federal government collected approximately $3.27 trillion in tax revenue, up $18B (billion) or 1% versus FY2015. Primary receipt categories included individual income taxes ($1,546B or 47% of total receipts), Social Security/Social Insurance taxes ($1,115B or 34%), and corporate taxes ($300B or 10%). Other revenue types included excise, estate and gift taxes.[1] FY 2016 revenues were 17.8% of gross domestic product (GDP), versus 18.2% in FY 2015. Tax revenues averaged approximately 17.4% GDP over the 1980-2015 period, generally ranging plus or minus 2% from that level.[1] Tax revenues are significantly affected by the economy. Recessions typically reduce government tax collections as economic activity slows. For example, tax revenues declined from $2.5 trillion in 2008 to $2.1 trillion in 2009, and remained at that level in 2010. From 2008 to 2009, individual income taxes declined 20%, while corporate taxes declined 50%. At 14.6% of GDP, the 2009 and 2010 collections were the lowest level of the past 50 years.[1]