Paying for the Civil War: The First U. S. Income Tax

   So you think you have trouble with federal taxes, come April 17, 2012?

   Nothing’s new: Both Yankees and Southerners had to pay income taxes to finance the Civil War. If you had lived in the loyal states or in the portion of the Confederacy occupied by the Union Army before the Civil War ended or during Reconstruction the first years after the war you would have paid Uncle Sam your taxes.

   Financing the Civil War was no easy matter.  The U. S. Congress in 1861 passed legislation setting up the first income tax in the country’s history, and the tax law went into effect in 1862. Yankees had to pay the tax to support the war and other federal government debts throughout the war.  The Confederate government in 1863 also resorted to income taxes. The Confederacy came up with a graduated income tax. Wages up to $1,000 were exempted. There was a 1% tax on the first $1,500 above the exemption, and then 2% on all additional income.

   The U. S. Congress began taxing conquered Southern territory residents before the war ended in 1865. The Rebs ought to bear the cost of the War Against the Rebellion, the legislators felt. Already added to taxpayers’ misery south of the Mason-Dixon line were various Confederate government laws trying to collect taxes from residents of these Southern states still held by the South.  The Confederate tax effort was more hit-or-miss than the federal governments, however. Collections were never enough to support the Southern war effort, nor was the sale of Confederate bonds enough to keep the financial wolf away from the door during the war.

   The U. S. tax effort was much more thorough. Those taxed paid 5 per cent of their incomes if they had income less than $800 yearly. If they made above $800, they paid 10 per cent.  Some sources give a lower rate of taxation, however. Also the tax efforts were rife with special taxes on specific items or businesses. If you had a gold watch, that was taxable, as was silver plate, carriages, a piano, etc.

   Hotel keepers had to pay up, the tax depending upon the size and quality of their hotels. Whisky sellers, too, were taxed, as were more mundane jobs. There was even a specific category for jugglers who entertained the public.

   The Fed tax collectors also hit upon the idea of making their assessments public.  Your neighbors could look you up on your district’s tax lists to see if you were paying what you owed, as determined by the federal assessors.

   “These lists were organized  alphabetically according to surname and recorded the value, assessment, or enumeration of taxable income or items and the amount of the tax due,” according to a good explanation of the tax program explaining Ancestry.com’s “U.S. IRS Tax Assessment Lists, 1862-1918.”

   An excellent article is in the National Archives’ Prologue Magazine, in the Winter, 1986, issue, No. 4, by Cynthia Fox. You can read this article online at the following link: http://www.archives.gov/publications/prologue/1986/winter/civil-war-tax-records.html. This article also discusses tax records available in portions of the 19th Century and early 20th Century.

   The federal income taxes were probably even more disliked than the nation’s  taxes are taxes now. Taxing citizens was a new thing in 1862.  We’ve had a long time to get used to it, although there were periods in the 19th and early 20th centuries when there were no individual federal income taxes.

   But the tax chore to citizens, both North and South, is the genealogist’s and historian’s gain. While not everyone was taxed, a great many of a community’s residents were. The tax assessment records furnish us with much valuable information about the occupations, income and worth of various residents and business operations. This information is especially valuable because much of it comes between census years. If you lose track of your relatives between federal or state censuses, you may stand a good chance of finding them in the Assessment Lists. The availability of these records is not uniform through the states and territories. The easiest online source to use is Ancestry.com’s the federal government’s IRS assessment lists found on the Web site. Many libraries offer free access to Ancestry.com, or you can subscribe on a yearly basis. Access to Confederate financial records is less organized. Various state archives may have some records.

   Information included in the federal records is the tax collection district, name of collector, date of the tax list, instructions for the tax form, the name of the person or business being taxed, their address, the taxable period, amount reported by the collector, assessment remarks, article taxed and the taxpayer’s occupation. Businesses were also assessed.

Local historians and genealogists will find it very interesting to find such data readily available. The original tax data is available at the National Archives in its microfilm records. Some libraries also stock the National Archives microfilms for researchers. And Ancestry.com is to be commended for making much of the tax information available on its website.

So take a break from figuring your own federal income tax and see what your relatives had to pay about 150 years ago!

Here’s an example from the assessment form for taxing Clarke County, GA residents in the years immediately after the Civil War:



  

Ann
1/10/2014 10:56:42 pm

Thank you for great article explaining the Civil War Income Tax. I discovered a relative who was taxed for producing cider brandy! I had no idea the country had an income tax prior to the 1930s!

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Ann
1/23/2014 04:51:42 am

Ann: Thanks so much for your comment! It's a great feeling to know you helped someone find useful and/or interesting info. I do appreciate your comment. al hester

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