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br />Tax Law and Accounting
Sue Abraham
University of Phoenix
Tax Law and Accounting
The word tax did not become a household name until the late 1800 when congress created
the nation first income tax law. Prior to this law the government used tariff and imported
goods to help support the economy. However, in order to bring in more revenue to help
cover the costs of the civil war the government had to make necessary reforms and
re-establish tax law. The Revenue Act of 1862 (July 1, 1862, Ch 119, 12 Stat. 432), signed
into law by President Abraham Lincoln, is the stepping stone to the modern income tax
statutes of today. It is based on principles of graduated, or progressive, taxation and of
withholding income at the source (History of the Income Tax in the United States, 2000,
*ƒ‚¶2). During this time the government collected over 300 million dollars, the highest in
the nation history.
It was not until 1913 that income tax became a part of the United States Constitution under
the 16th Amendment. This statute became known as the Revenue Act of 1913 (October 3,
1916, Ch 16, 38 Stat. 116). Congress was allowed to tax income on individuals and
corporations and within ten years the internal revenue collected over $5.4 billion dollars
(et al., 2000, *ƒ‚¶5). Since then there have been several tax reform acts implemented to
help reduce the tax burden on individuals and reduce the tax rate. President Ronald Reagan
imposed one of the largest tax reductions in history with the Tax Reform Act of 1986
