The first income tax was enacted in 1894; however, the Supreme Court decided that the tax was unconstitutional. At that time, direct taxes could be imposed only if levied in proportion to each state's population. Afterwards, Congress relied on a series of excise taxes to provide funds to operate the government and pay war expenses. In 1913, the 16th Amendment to the Constitution was passed, allowing Congress to impose an income tax directly on business and personal income without regard to proportionality. Congress passed the first constitutional income tax in 1913. The initial income tax rates were progressive (and they still are today), ranging from 1 to 7%.

In 1954, the Internal Revenue Code was substantially reorganized and revised. Major changes were also made in 1969. The base for our current Code is the Internal Revenue Code of 1986. In between the major revisions, the Code is amended annually. Any amendments are incorporated into the Code by their effective dates.
Source(s):
Department of the Treasury, Fact SHeets: Taxes, http://www.treas.gov/education/fact-sheets/taxes/ustax.shtml
The high and low tax rates from 1913 to 1998 can be seen at National Taxpayers Union, http://www.ntu.org/main/page.php?PageID=19

Permalink | Report