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Origin of the Tax-Acts of 1861, 1870 and 1894—Act of 1861: in Favor,

Representative Jacob H. Ela (N. Y.); Opposed, Representative Dennis McCarthy ['N. Y.]-Act of 1870: in Favor, Senator John Sherman [0.]; Opposed, Senator Roscoe Conkling (N. Y.]-Act of 1894: in Favor, Representative Benton McMillin [Tenn.), Representative Uriel S. Hall [Mo.); Opposed, Representative W. Bourke Cockran [N. Y.]-Proposed Single Tax Substitute for Income Tax (1894): in Favor, James G. Maguire (Cal.], Tom L. Johnson [0.]-Income Tax (1894) Is Declared Unconstitutional by Supreme Court-Nelson W. Aldrich [R. I.] Reports in the Senate from the Committee on Finance a Joint Resolution Proposing the Submission to the States of a Constitutional Amendment Providing for an Income Tax-Debate: Speakers of Varying Views, Anselm J. McLaurin (Miss.), Norris Brown (Neb.), William J. Stone (Mo.), Joseph W. Bailey (Tex.], Joseph M. Dixon (Mont.), Weldon B. Heyburn (Ida.), Hernando D. Money (Miss.), Porter J. McCumber (N. D.), Albert J. Beveridge (Ind.]–Senate Passes Joint ResolutionDebate in the House on the Resolution: in Favor, Sereno E. Payne [N. Y.], Champ Clark (Mo.], Ollie M. James [Ky.), Gen. J. Warren Keifer [0.), Adam Byrd (Miss.), Richmond P. Hobson (Ala.); Opposed, Samuel W. McCall (Mass.), Ebenezer J. Hill (Ct.]-Robert L. Henry [Tex.] Offers an Amendment to Joint Resolution to the Effect That Proposed Constitutional Amendment Be Submitted to the Conventions of the States Instead of the Legislatures—His Amendment Is Ruled Out of Order-Bill Is Passed by House, and Becomes Effective Without the Signature of the President.


HORTLY after the outbreak of the Civil War, while

the vexing question of raising revenue to supply

a deficiency of $20,000,000 was before Congress, James R. Simmons (R. I.] advocated in the Senate “a moderate tax on all incomes exceeding $1,000.” This tax, he declared, was well adapted to the purpose of providing the necessary money without public distress. It was heartily endorsed in both Houses as a fair and equitable measure,

Accordingly, on August 5, 1861, a provision was inserted in an internal revenue bill by which a general tax of three per cent. was laid on annual incomes, $800 being exempted from taxation in each case. Foreign residents, however, paid five per cent. upon incomes, and all owners, whether at home or abroad, of Government securities paid only one and one-half per cent. upon the interest from these.

ACT OF 1870.

When, in June, 1870, a bill to reduce internal revenue came before the House Dennis McCarthy [N. Y.] moved to strike out the income tax clause.

This tax is unequal, perjury-provoking, and crime-encouraging, because it is at war with the right of a person to keep private and regulate his business affairs and financial matters. The people demand that it shall not be renewed, but left to die a natural death and pass away into the future as pass away all the evils growing out of the Civil War.

Jacob H. Ela [N. Y.] opposed the motion.

I believe the income tax as at present paid is one of the most just taxes laid, and affects no person who has not received a net income above the amount required for the reasonable support of a family, while most other national taxes, except those from succession and legacies, come from people who are struggling to get the means of support.

Mr. McCarthy's motion was defeated by a vote of 60 to 124.

On June 3 various amendments proposed were voted upon. The minimum amount of income was fixed at $2,000. It was also agreed that the statements of incomes be kept secret from all but the Internal Revenue Department. Substitutes for the measure, namely, a tax on Government bonds, and a tax on corporations, to be deducted from interest and dividends before payment, were voted down.

When the bill came before the Senate, Roscoe Conkling [N. Y.] opposed the income tax feature.

This tax breeds more jealousy, more discontent, more invidious and odious discrimination, and more demoralization, I undertake to say, than any other tax enforced by law.

John Sherman [O.] replied to Mr. Conkling.

The Senator says this tax is unequal, that rogues escape and honest men pay. Is not that so with all taxes in all the

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Executioner, C. DELANO Associate Sherman: "Well, well, Uncle Sam does stand a good deal of pressure. Executioner, keep piling the weights on"

From the collection in the New York Public Library

States? Was there ever a tax that was fairly assessed and honestly collected in all respects!

But, sir, there never was so just a tax levied as the income tax. Why? The income tax is simply an assessment upon a man according to his ability to pay.

The Senate greatly modified the income tax provision, limiting the operation of the tax to two years, and reducing the rate to two and one-half per cent. .

The house refusing to concur in all the Senate amendments, a conference committee was appointed. The committee in their report advised virtually the adoption of the Senate amendments in regard to the income tax. Both Houses concurred in the report, and the bill was signed by President Ulysses S. Grant on July 14, 1870.

ACT OF 1894.


On January 29, 1894, Benton McMillin (Tenn.], from the Committee on Ways and Means, offered in the House an amendment to the Wilson tariff bill, laying a two per cent. tax on incomes over $4,000 a year. In supporting his amendment he presented the following arguments:

1. An income tax would remove part of the great burden resting upon the consumer and place it upon accumulated wealth.

2. It was not unjust to tax wealth for the support of a government from which it receives protection.

The argument that an income tax is productive of perjury was not pertinent—to carry out this reasoning would be to advocate removing from our statute books every law that is enacted against crime.

4. A method was proposed by which the income tax was made less inquisitorial than customs and internal revenue taxes.

5. The amendment was so constructed that the income tax could not operate as a tax upon thrift. Each citizen was exempted from taxation to the extent of $4,000, and every income exceeding that amount was taxed at a uniform rate.

6. The adoption of an income tax would remove much of the discontent among the laboring classes.

Other speakers advanced various arguments in favor of an income tax. Uriel S. Hall [Mo.] said that one of its best features was the constant change in the amount of revenue collected under it.


Without an income tax the only method at your command for producing the proper flexibility of revenue to meet the flexible demands of the Government, without disturbing the business interests of the country, is to change your tariff schedule every two years.

Another argument presented by Mr. Hall was that the income tax would reach a certain class of men living outside of the cities who had their property invested in choses in action, which were not taxable under the laws of most of the States.

W. Bourke Cockran [N. Y.] spoke against the amendment. It was opposed, he said, to the principles of the Democratic party.

This is not a tax upon the men who have enjoyed any special benefit from the Government; it is a tax upon the men who have made the best use of the benefits which are common to all. The vast majority of the persons affected by this tax have never received any special benefit from the Government, but have been injured by the inequality of tariff laws.

Sir, I protest against this betrayal of our ancient principles. I protest against this treason to our faith, to our platform, to our traditions, to our heroes. I protest against partial laws, whether they be intended to favor the few or the many. I demand for all men the same equality before the law which they enjoy in the sight of God.

On January 31 James G. Maguire [Cal.] proposed as a substitute for the income tax that a direct tax of $31,311,125 be annually laid on the land values, exclusive of improvements (the single tax), in the United States, and apportioned to the States and Territories and District of Columbia, these values to be assessed at the full market rates.

The immediate purpose of my amendment is to provide a method better than the general income tax for $31,000,000 to meet a portion of the deficiency expected to arise under the Wilson tariff bill. The income tax, proposed by the gentleman from Tennessee Mr. McMillin)can nearly all be shifted from the immediate payers to the shoulders of the poor, or comparatively poor, who consume the products of the industries out of which the incomes arise, or who borrow the money upon which incomes, in the form of interest, are paid.

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