History of the Income Tax

Taxes are a compulsory contribution individuals and/or businesses must make to the government. The primary purpose of a tax is to fund governmental activity, however, the purposes of governmental activities may be broadly defined. Along with funding the necessities of government, the purpose of taxation frequently expands to include economic and social objectives. Taxes may be used as a method for developing a strong, vibrant economy by fostering or limiting certain businesses, or they may be used as a means of redistributing wealth and encouraging social reform. Taxes have been a part of society from the time the first governments developed. Payment of animal skins to a chief, who could use the animal skins to buy weapons which he would use to supply warriors who would defend the village, was a type of primitive tax. Taxes have been used by governments to pay for public works, fund wars, control economies through tariffs on imports and exports, and, sadly, fill the coffers of rulers at the expense of the ruled. Some of the oldest records of civilization tell of taxes. The following examples are by no means complete but indicate how long taxes have been a part of people's economic lives: 2000 BC, clay records discovered in Iraq tell of onerous taxes. 1400 BC, Egyptian records detail subjects paying taxes to their Pharaoh. 600 BC, the first graduated income tax was in use in Greece. 300 BC, the Ptolemy dynasty of Egypt instituted various taxes, including tariffs on imports, poll taxes on salt, legal documents, sales and rental of goods, fees for grazing cattle on state land, and a tax on produce. 125 BC, tax collection in the Roman Empire is a well established system. 1050 AD, the story of Lady Godiva highlights a tax protest in England. 1427, income and property taxes are instituted in Florence, Italy. 1450, in Mexico taxes could be paid to the Aztec government in the form of exotic feathers. 1643, a faculty tax is adopted in New Plymouth, Massachusetts. A precursor of income taxes, a faculty tax was applied to a person's "faculties," his or her ability to earn income from property, trade, or a skill. In time most of the colonies were to establish faculty taxes. 1793, the first general income tax is established in France.