A short history of income tax

Before our modern economies, what could be regarded as a precursor of the income tax, or tithing - an offering of firstfruits – existed from ancient times.

The first taxes were based on social position, wealth, and ownership of the means of production, which was typically land and slaves.

Emperor Wang Mang of the Xin Dynasty instituted an income tax in the year 10 CE at 10 percent of profits, and applied to only skilled labor and professionals.  This was short lived however, as the emperor was overthrown in 23 CE and the policy was changed.

The Saladin tithe, introduced by Henry II in 1188, was one of the first recorded income taxes.  It was instituted to raise money for the Third Crusade, and demanded each layperson in England be taxed a 10th of their personal income and moveable property.

The inception date of the modern income tax is typically accepted as 1799, when it was enforced in Britain by William Pitt the Younger to pay for weapons and equipment in preparation for the Napoleonic wars.  Pitt hoped the tax would raise £10 million but receipts for 1799 totaled just over £6 million.

In Canada, the Income War Tax Act of 1917 was enacted to provide adequate funds to fight the First and Second World Wars.  This tax was replaced by the Income Tax Act, 1948.

The United States imposed its first personal income tax in 1861 as part of the Revenue Act of 1861 to help pay for the American Civil War, however, this tax was replaced by another income tax in 1862.