Internal Revenue
the moneys collected under the internal revenue bucollected under the internal revenue bu- United States. The term includes most of the receipts from national taxes, except customs duties; but as commonly recept customs duties; but as commonly re- of the receipts from national taxes, exthe sale of public lands, patent fees, postal receipts, etc., which are really sources of internal revenue. tioned among the States only in propor- Taxes are apporternal revenue tax was by act of March tion to the population. The first in- 3, 1791, which provided for a tax on distilled spirits of domestic manufacture, 3, 1791, which provided for a tax on duced from domestic materials, and against those produced from foreign maduced from domestic materials, and to the Whisky Insurrection in 1791. In 1794 taxes were levied on carriages, at auction. In 1797 taxes were laid on tilled liquors, on snuff, sugar and sales In 1798 the first direct tax of its kind, stamped vellum, parchment and paper.
INTERNAL IMPROVEMENTS.
From the beginning of the United States Government till 1860, the question of a system of internal improvements carried on by the general Government was a party question. The Republican (Democratic-Republican), and after it the Democratic party as the party of strict construction, opposed such a system.
Improvements, the property in which remains in the general government, as lighthouses, etc., were not opposed, but improvements on rivers and roads, the benefit of which passes to the States, were the objects of attack. Most of the earlier States were on the sea-coast, and the improvement of their harbors was at first carried on by means of tonwas at first carried on by means of tonlevied with the consent of Congress (see Constitution, Article I, section 10, clause 3). This practice was, in isolated cases, tury; it was generally discontinued much INTERNAL REVENUE INTERNATIONAL LAW one of $2,000,000, was apportioned among its taxes. From these and other the States, and it was proposed that it should be levied on dwelling-houses, slaves and land. The tax of 1791 was levied to establish the principle of national taxation; that of 1794 from fear of hostilities with England; that of 1798 because of the threatened war with France. On Jefferson's accession to the presidency, and on his recommendation, all internal taxes were repealed in 1802, and no others were authorized till 1813.
Then the war with England necessitated an increased revenue and most of the old taxes were reimposed. These were to cease a year after the close of the war, for the maintenance of which they were levied; but they were afterward continued for a while for the payment of the national debt. In 1814 increased need of money led to an augmentation in the amount of these direct and other internal taxes, and to the first imposition of taxes on domestic manufactures other than sugar, snuff and spirits, such as iron, candles, hats, playing-cards, umbrellas, beer, ale, harness, boots, plate, household furniture, gold and silver watches, etc. The return of peace brought the abolition of direct taxes, excise duties and other internal taxes, and from 1818 to 1861 none of these were levied.
The Civil War forced a renewal of the internal revenue system, and in 1861 a direct tax of $20,000,000 was apportioned among the States, though it was not collected till a year later. On July 1, 1862, an exhaustive internal revenue act was passed, levying taxes on all sorts and kinds of articles too numerous to mention, on trades, incomes, sales, manufactures, legacies, etc. Th The bill was ill-considered and needed frequent modifications. More than 25 acts on the same subject were passed within the next six years. A few industries were taxed out of existence, but all were more or less disturbed. However, enormous revenues were raised and the people submitted without opposition to the necessities of the case. Extensive reductions were made after the war had ceased by various acts in 1866, 1867 and 1868.
Further reductions were made in 1872.
By the Revenue Act approved June 13, 1898, special taxes were levied to meet the expenses of the war with Spain.
At the declaration of war against Germany, in 1917, the necessity arose of increasing the revenue to a volume hitherto unprecedented. Congress passed new measures and increased the taxation under old laws. Among the new legislations was an income tax, an emergency revenue tax, and excess profsums sources there was received in 1918 the vast sum of $3,696,043,484 in internal revenue. This was further increased in 1919 to $3,840,230,994 These were derived chiefly from the income and profits tax, which in 1919 amounted to $2,600,783,902; the tax on distilled spirits and alcoholic beverages amounting to $483,050,854; the tax on tobacco and tobacco manufacture amounting to $209,391,000; and the tax on public utilities amounting to $237,839,572. The collection of these taxes, especially those on excess profits and on luxuries, resulted in considerable dissatisfaction. It was charged that the excess profits tax was largely responsible for the high cost of food and other commodities, and plans were made by the financial committee in the House and the Senate to modify or abolish entirely certain of these objectionable taxes in 1921.