Editing Income tax (section)

==History==
[[File:Top marginal income tax rate, OWID.svg|thumb|Top marginal tax rate of the income tax (i.e. the maximum rate of taxation applied to the highest part of income)]]
The concept of taxing income is a modern innovation and presupposes several things: a [[money]] [[economy]], reasonably accurate [[Financial accountancy|accounts]], a common understanding of receipts, expenses and [[Profit (accounting)|profits]], and an orderly society with reliable records.

For most of the history of [[civilization]], these preconditions did not exist, and taxes were based on other factors. Taxes on [[wealth]], social position, and ownership of the [[means of production]] (typically [[Real property|land]] and [[slaves]]) were all common. Practices such as [[tithe|tithing]], or an offering of [[First Fruits|first fruits]], existed from ancient times, and can be regarded as a precursor of the income tax, but they lacked precision and certainly were not based on a concept of net increase.

===Early examples===
In 9 CE, Emperor [[Wang Mang]] of the [[Xin dynasty]] (9 to 23 CE) established the first income [[Taxation in premodern China|tax]] through a 10% tax of net earnings from wild herb and fruit collection, fishing, shepherding, and various nonagricultural activities and forms of trading.<ref name=":02">{{Cite book |last=Lin |first=Shuanglin |title=China's Public Finance: Reforms, Challenges, and Options |date= |publisher=[[Cambridge University Press]] |year=2022 |isbn=978-1-009-09902-8 |edition= |location=New York, NY}}</ref>{{Rp|page=97}} People were obligated to report their taxes to the government and officials would audit these reports.<ref name=":02" />{{Rp|page=97}} The penalty for evading this tax was one year of hard labor and confiscation of the entirety of a person's property.<ref name=":02" />{{Rp|page=97}} Because it caused popular discontent, this income tax was abolished in 22 CE.<ref name=":02" />{{Rp|page=97}}

In the early days of the [[Roman Republic]], public taxes consisted of modest assessments on owned wealth and property. The tax rate under normal circumstances was 1% and sometimes would climb as high as 3% in situations such as war. These modest taxes were levied against land, homes and other real estate, slaves, animals, personal items and monetary wealth. The more a person had in property, the more tax they paid. Taxes were collected from individuals.<ref>{{cite web |url=http://www.unrv.com/economy/roman-taxes.php |title=Roman Taxes |website=UNRV.com |access-date=April 12, 2014}}</ref>

One of the first recorded taxes on income was the [[Saladin tithe]] introduced by [[Henry II of England|Henry II]] in 1188 to raise money for the [[Third Crusade]].<ref>{{cite web |url=http://www.medievalsourcesbibliography.org/sources/1159550365 |title=Saladin Tithe |website=Online Medieval Sources Bibliography}}</ref> The tithe demanded that each layperson in [[Kingdom of England|England and Wales]] be taxed one tenth of their personal income and moveable property.<ref>{{cite book|title=Income tax in common law jurisdictions: from the origins to 1820, Volume 1|last=Harris|first=Peter|year=2006|page=34|publisher=Cambridge University Press |isbn=9780521870832|url=https://books.google.com/books?id=HYvfTdbdkg4C&pg=PA34}}</ref>

In 1641, Portugal introduced a personal income tax called the ''décima''.<ref>{{cite book|title=An Economic History of Portugal, 1143-2010|last1=Freire Costa|first1=Leonor|last2=Lains|first2=Pedro|last3=Münch Miranda|first3=Susana|year=2016|page=8|publisher=Cambridge University Press |isbn=9781107035546|url= http://www.cambridge.org/9781107035546|url-access=subscription}}</ref>

===Modern era===

==== United Kingdom ====
{{See also|Taxation in the United Kingdom#Income tax|Taxation in the United Kingdom#Modern Rules}}[[File:The_stratagem_alias_the_French_bug-a-bo_or_Iohn_Bull_turn%27d_scrub_%28BM_1868,0808.6811%29.jpg|thumb|upright=0.9|right|[[William Pitt the Younger]] introduced a progressive income tax in 1798.]]
The inception date of the modern income tax is typically accepted as 1799,<ref>{{cite book|title=Income tax in common law jurisdictions: from the origins to 1820, Volume 1|last=Harris|first=Peter|year=2006|page=1|publisher=Cambridge University Press |isbn=9780521870832|url=https://books.google.com/books?id=HYvfTdbdkg4C&pg=PA1}}</ref> at the suggestion of [[Henry Beeke]], the future [[Dean of Bristol]].<ref>{{cite book|last=Urban|first=Sylvanus|author-link=Edward Cave|title=The Gentleman's Magazine|volume=VII (162)|series=New Series|year=1837|pages=546–47|url=https://books.google.com/books?id=I-QIAAAAIAAJ&pg=PA546}}</ref>
This income tax was introduced into [[Kingdom of Great Britain|Great Britain]] by [[Prime Minister]] [[William Pitt the Younger]] in his budget of December 1798, to pay for weapons and equipment for the [[French Revolutionary War]].<ref name=":02" />{{Rp|page=97}} Pitt's new graduated (progressive) income tax began at a levy of 2 [[old pence]] in the [[Pound Sterling|pound]] ({{frac|1|120}}) on incomes over £60 (equivalent to £{{formatnum:{{Inflation|UK-GDP|60|1798|r=-2}}}} in {{Inflation/year|UK-GDP}}),{{Inflation/fn|UK}} and increased up to a maximum of 2 [[shilling]]s in the pound (10%) on incomes of over £200. Pitt hoped that the new income tax would raise £10 million a year, but actual receipts for 1799 totalled only a little over £6 million.<ref name="first">{{cite web|url=http://www.hmrc.gov.uk/history/taxhis1.htm |title=A tax to beat Napoleon |publisher=HM Revenue & Customs |access-date=January 24, 2007 |url-status=dead |archive-url=https://web.archive.org/web/20100724033906/http://www.hmrc.gov.uk/history/taxhis1.htm |archive-date=July 24, 2010 }}</ref>

Pitt's income tax was levied from 1799 to 1802, when it was abolished by [[Henry Addington]] during the [[Peace of Amiens]]. Addington had taken over as [[prime minister]] in 1801, after Pitt's resignation over [[Catholic Emancipation]]. The income tax was reintroduced by Addington in 1803 when hostilities with France recommenced, but it was again abolished in 1816, one year after the [[Battle of Waterloo]]. Opponents of the tax, who thought it should only be used to finance wars, wanted all records of the tax destroyed along with its repeal. Records were publicly burned by the [[Chancellor of the Exchequer]], but copies were retained in the basement of the tax court.<ref>{{cite book |last=Adams |first=Charles |date=1998 |title=Those Dirty Rotten Taxes: the tax revolts that built America |url=https://archive.org/details/thosedirtyrotten00char/mode/2up |location=New York |publisher=The Free Press |isbn=0-684-84394-3}}</ref>

[[File:Punch- Income Tax 1907.jpg|thumb|left|''[[Punch (magazine)|Punch]]'' cartoon (1907); illustrates the unpopularity amongst Punch readers of a proposed 1907 income tax by the Labour Party in the United Kingdom.|upright]]
In the [[United Kingdom of Great Britain and Ireland]], income tax was reintroduced by [[Robert Peel|Sir Robert Peel]] by the [[Income Tax Act 1842]]. Peel, as a [[Conservative Party (UK)|Conservative]], had opposed income tax in the [[1841 United Kingdom general election|1841 general election]], but a growing budget deficit required a new source of funds. The new income tax, based on Addington's model, was imposed on incomes above £150 (equivalent to £{{formatnum:{{Inflation|UK-GDP|150|1842|r=0}}}} in {{Inflation/year|UK-GDP}}).{{Inflation/fn|UK-GDP}} Although this measure was initially intended to be temporary, it soon became a fixture of the British taxation system.

A committee was formed in 1851 under [[Joseph Hume]] to investigate the matter, but failed to reach a clear recommendation. Despite the vociferous objection, [[William Ewart Gladstone|William Gladstone]], [[Chancellor of the Exchequer]] from 1852, kept the progressive income tax, and extended it to cover the costs of the [[Crimean War]]. By the 1860s, the progressive tax had become a grudgingly accepted element of the United Kingdom fiscal system.<ref>{{cite book|url=https://books.google.com/books?id=TECRHKm4WYQC|title=Anglo-American Corporate Taxation: Tracing the Common Roots of Divergent Approaches|last=Bank|first=Steven A.|year=2011|publisher=Cambridge University Press|pages=28–29|isbn=9781139502597}}</ref>

====United States====
{{main|History of taxation in the United States}}

The [[Union (American Civil War)|US federal government]] imposed the first personal income tax on [[Revenue Act of 1861|August 5, 1861]], to help pay for its war effort in the [[American Civil War]] (3% of all incomes over US$800) (equivalent to ${{formatnum:{{Inflation|US-GDP|800|1861|r=-2}}}} in {{Inflation/year|US-GDP}}).<ref name="Stat 1861">Revenue Act of 1861, sec. 49, ch. 45, 12 Stat. 292, 309 (August 5, 1861).</ref><ref>{{cite journal |last=Pollack |first=Sheldon D. |date=2014 |title= The First National Income Tax, 1861–1872 |journal=The Tax Lawyer |volume=67 |issue=2 |pages=311–330 |jstor=24247751}}</ref>{{Inflation/fn|US-GDP}} This tax was repealed and replaced by another income tax in 1862.<ref>Sections 49, 51, and part of 50 repealed by Revenue Act of 1862, sec. 89, ch. 119, 12 Stat. 432, 473 (July 1, 1862); income taxes imposed under Revenue Act of 1862, section 86 (pertaining to salaries of officers, or payments to "persons in the civil, military, naval, or other employment or service of the United States&nbsp;...") and section 90 (pertaining to "the annual gains, profits, or income of every person residing in the United States, whether derived from any kind of property, rents, interest, dividends, salaries, or from any profession, trade, employment or vocation carried on in the United States or elsewhere, or from any other source whatever&nbsp;...").</ref><ref>{{cite web|url=https://www.loc.gov/law/help/statutes-at-large/38th-congress/session-1/c38s1ch173.pdf|title=THIRTY-EIGHTH CONGRESS. SESS.. I. C. 173. 1864|website=Library of Congress|access-date=November 7, 2018|archive-date=November 13, 2018|archive-url=https://web.archive.org/web/20181113081507/https://www.loc.gov/law/help/statutes-at-large/38th-congress/session-1/c38s1ch173.pdf|url-status=dead}}</ref> It was only in 1894 that the first peacetime income tax was passed through the [[Wilson-Gorman tariff]]. The rate was 2% on income over $4000 (equivalent to ${{formatnum:{{Inflation|US-GDP|4000|1894|r=-3}}}} in {{Inflation/year|US-GDP}}), which meant fewer than 10% of households would pay any. The purpose of the income tax was to make up for revenue that would be lost by tariff reductions.<ref>{{Cite journal |jstor = 1883633|title = The New Income Tax|journal = The Quarterly Journal of Economics|volume = 9|issue = 1|pages = 26–46|last1 = Dunbar|first1 = Charles F.|year = 1894|doi = 10.2307/1883633}}</ref> The US Supreme Court ruled the income tax [[Pollock v. Farmers' Loan & Trust Co.|unconstitutional]], the 10th amendment forbidding any powers not expressed in the US Constitution, and there being no power to impose any other than a direct tax by apportionment.

In 1913, the [[Sixteenth Amendment to the United States Constitution]] cleared the unconstitutionality obstacle which previously had not allowed for the implementation of a federal income tax before 1913 in the United States. In fiscal year 1918, annual internal revenue collections for the first time passed the billion-dollar mark, rising to $5.4 billion by 1920.<ref name="firstUS">{{cite web | url= https://mises.org/story/1597 | title=The Origin of the Income Tax | publisher=[[Ludwig von Mises Institute]] | last=Young | first=Adam | date=September 7, 2004 | access-date =January 24, 2007}}</ref> The amount of income collected via income tax has varied dramatically, from 1% for the lowest bracket in the early days of US income tax to taxation rates of over 90% for the highest bracket during [[World War II]].