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The Whys of Taxes

Theme 2: Taxes in U.S. HistoryLesson 1: Evolution of Taxation in the Constitution


Illustration of a paper scroll representing the Articles of Confederation and a paper scroll representing the U.S. Constitution.
Before the U.S. Constitution was ratified in 1788, the federal government lacked the power to raise revenue directly. Even after the Constitution was ratified, federal revenues came mostly from tariffs and excise taxes. These taxes tend to be regressive, because people with lower incomes had to pay a higher percentage of their income than did people with higher incomes.

During the Civil War, the federal government required much more revenue than the tariffs and excise taxes could provide. A tax on income was established in 1862 but was abolished after the war. The ratification of the Sixteenth Amendment in 1913 gave Congress the right to levy and collect income taxes. Income taxes tend to be progressive because they tax a larger percentage of income from high-income groups than from low-income groups.

The goal of American lawmakers has always been to balance the need to raise revenue, the desire to be fair to taxpayers, and the desire to influence the way taxpayers save and spend their money.


quick check
What are the three goals of lawmakers when they create taxes?

tax trivia
Did You Know?
A tariff is a direct tax on imported and exported goods.

Test your tax trivia knowledge by answering the following multiple-choice question. Click on the correct answer. To assess your answer, click the Check My Answers button.
What is the origin of the word tariff?
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