e and never enough money to fret him, came into office with a national debt of nearly $75 million and Slocum 2 little to no inflow of customs duties, as well as an outflow of investments to foreign countries by investors who feared war. After attempts to raise money by selling bonds, doubling tariffs, increasing excise taxes, and creating license fees, it was realized that another form of tax was needed (Paul 7-8, Witte 67). The details of the tax, however, were not agreed on easily. The tax was originally proposed to tax land in each state, with revenue to be handed out according to population. The idea of this tax created a “congressional rebellion,” led by the South and West, because money from their land would go to states in the Northeast (Witte 68). The land tax shortly fell apart, and an income tax was proposed to the floor of the House of Representatives, enclosing “a tax of three percent on all incomes over $600 a year” (68). The Senate passed a bill asking for a five percent tax on all income over $1000 a year on the same day. The Conference Committee came up with a three percent tax on annual incomes over $800 and the first income tax was born (68). The tax was not progressive, and it was also not implemented. By 1862, the tax was altered by setting progressive rates “at three percent on incomes between $600 and $10,000; five percent between $10,000 and $50,000; and 7.5 percent over $50,000” (68). The progressive rates were not, however, set for “redistributing income from higher to lower income classes” or to distribute taxes “across the population in such a way as to cause the least hardship (Davies 21, 77). The progressive rates were set simply to raise more income (Witte 69). Slocum 3 The income tax, along with other efforts to raise revenue in wartime, were repealed almost immediately after Lee’s surrender at Appomattox Court House. The cries for income tax repeal came strongest from the Northeast, who as a region paid a much higher percentage into the tax than other parts of the country. The progressive structure was dropped for a flat tax in 1867, and the entire tax was repealed in 1872. Although disliked by Northeastern states and California, who voted 61-14 as a group in favor of repeal, the income tax, according to Randolph Paul, “produced needed revenue at a critical period of American history when other revenue-raising methods would have probably failed” (29). Paul also points out that tax revenue accounted for 25 percent of government expenditures in 1864 and 1865, compared to only ten percent in 1862, the first full year of the income tax (29). For more than twenty years, Congress turned to tariffs and excise taxes to again be the primary sources of government revenues. Cries for the return of the income tax continued inside and outside of government, but efforts were voted down by the Republican majority in Congress, saying that additional revenue was not needed due to already existing surpluses in the budget. Those surpluses not only existed, but they soared about $100 million per year in the 1880s (Witte 70). The success of the 1880s ended abruptly with the Panic of 1893, which was “caused by a run on gold and fears in the eastern financial community that the nation would go off the gold standard for the dollar” (70). The panic lowered government Slocum 4 revenues and soon eliminated existing surpluses. At the same time, the Democratic Party gained control of both the presidency and Congress for the first time in the post-Civil War era. Formal debates over the renewal of the income tax soon followed, and a flat tax of two percent on all income was approved (Witte 70-73). Although both parties almost unanimously approved the first income tax because, according to Susan B. Hansen, investments in the war-torn North were better protected if they were taxed than if they were lost in the war effort, many opponents gave their reasons for abolishing this tax. The new income tax w

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