What is the Revenue Act Of 1862
The Revenue Act of 1862 was passed by Congress to fund the Union in the American Civil War and created the Bureau of Internal Revenue. The Act revised the original 1861 act which established a flat income tax, creating a progressive tax of 3 percent on incomes between $600 and $10,000 and a 5 percent tax on incomes over $10,000. The Act also created the Office of the Commissioner of Internal Revenue, and levied excise taxes on many luxury and "sin" items, from playing cards to alcohol. It also increased government coffers by an estimated $340 million during the 10-year period it existed.
BREAKING DOWN Revenue Act Of 1862
The income tax rates of the Revenue Act of 1862 were later increased with the Revenue Act of 1864. The income tax was later repealed in 1872 and reintroduced in 2013 with ratification of the 16th Amendment. Excise taxes evolved to pertain primarily to alcohol and tobacco sales. The Bureau of Internal Revenue is known today as the Internal Revenue Service (IRS). The name was changed to emphasize a greater focus on serving the public rather than merely collecting taxes. According to the IRS Data Book, in 2017 the agency collected over $2 trillion in revenue and processed more than 224 million tax returns.