Prologue: Selected Articles
Winter 1986, Vol. 18, No. 4
Income Tax Records of the Civil War Years
By Cynthia G. Fox
Ask any adult American the significance of April 15th and the response will almost always be, "income tax."  April 15th is a magic date, the last date that can appear on the outside of the envelope we mail to some remote tax center run by the all-powerful Internal Revenue Service.  By and large, we American taxpayers are an honest lot.  We fill out our 1040 forms, make out the check, are grateful to have tax time over, and pray we don't get audited.
What else do we know about the income tax?  We were taught in school that the Constitution as originally written did not include permission for the federal government to levy direct taxes on individual citizens.  To correct this deficiency the sixteenth amendment was proposed and ratified on February 25, 1913, giving Congress the power to tax incomes "from whatever source derived."  Many people believe that this was the first income tax that Americans had to pay.  However, the first income tax was actually levied almost fifty-one years earlier by an act of Congress on July 1, 1862 (12 Stat. 432).  The records of that first income tax are a valuable source for family and local history.
The Civil War income tax was the first tax paid on individual incomes by residents of the United States.  It was a "progressive" tax in that it initially levied a tax of 3 percent on annual incomes over $600 but less than $10,000 and a tax of 5 percent on any income over $10,000.  In 1864 the rates increased and the ceiling dropped so that incomes between $600 and $5,000 were taxed at 5 percent, with a 10 percent rate on the excess over $5,000.  Passed as an emergency measure to finance the Union cause in the Civil War, the first income tax generated approximately $55 million in government revenues during the war.  Paying the taxes was viewed as part of the patriotic war effort, and the whole country was proud when the merchant prince A. T. Stewart paid $400,000 in taxes on an income of $4 million. 1
Taxes were levied on residents of all states and territories not in rebellion.  In the South, some states operated under reconstruction governments while the war went on.  Virginia, for example, the site of the Confederate capital, was largely controlled by federal forces, and northern and western Virginians were subject to the income tax from the beginning.  States that seceded were included in the tax base as soon as Union troops established control.  Georgians paid income taxes in 1865 even though their state was not officially readmitted to the Union until 1870.
The Civil War taxes were not immediately repealed at the end of the war but continued in force until 1872, when the Grant administration sponsored the repeal of most of the "emergency" taxes.  The tax on whiskey remained in force.  Between 1868 and 1881 the U.S. Supreme Court responded to challenges regarding the validity of the Civil War taxes on dividends, real estate, inheritances, and income tax by upholding the constitutionality of those taxes. 2  Fifteen years later the Populists attempted to revive the income tax and Congress passed a law providing for a new 2 percent tax on incomes over $4,000.  But the Supreme Court surprised the nation, reversing its earlier decision and declaring the law unconstitutional in 1895.  This ruling, declaring that an income tax is a direct tax and therefore unconstitutional, led to the ratification of the sixteenth amendment in 1913.
The Civil War income tax was only a small part of a very complicated system of federal duties, stamp taxes, and fees that the government collected from individuals and businesses.  David A. Wells, appointed chairman of the U.S. Revenue Commission in 1865, described the tax structure as being based on a principle "akin to that recommended to the traditionary Irishman on his visit to Donnybrook Fair, 'whenever you see a head, hit it.'"  Congress was guided, Wells wrote, by a similar principle, "whenever you find an article, a product, a trade, a profession, or a source of income, tax it!" 3  Wells believed that the universal system was based on nothing in past experience and would likely never be repeated.  In fact, the 1862 tax law served as the basis for the present internal revenue system, both in articles taxed and in organization for collecting taxes.
Congress passed the Internal Revenue Act on July 1, 1862, "to provide Internal Revenue to support the Government and to pay Interest on the Public Debt," but the taxes, including the income tax, were not actually levied until September 1, 1862.  Like tax legislation today, the 1862 law was extremely complicated.  Monthly specific (or fixed) and ad valorem (a percentage of the market value) duties were placed on articles and products ranging from ale to zinc.  Monthly taxes were levied on gross receipts of transportation companies; interest paid on bonds; surplus funds accumulated by financial institutions and insurance companies; gross receipts from auction sales; and sales of slaughtered cattle, hogs, and sheep.  Annual licenses were required for bankers, auctioneers, wholesale and retail dealers, pawnbrokers, distillers, brewers, brokers, tobacconists, jugglers ("Every person who performs by sleight of hand shall be regarded as a juggler under this act."), confectioners, horse dealers, livery stable keepers, cattle brokers, tallow-chandlers and soapmakers, coal- oil distillers, peddlers, apothecaries, photographers, lawyers, and physicians.  Hotels, inns, and taverns were classified according to the annual rent or estimated rent, from a first-class establishment with a yearly rental of $10,000 to an eighth-class hotel with a yearly rental of less than $100, and charged license fees of from $200 to $5 accordingly.  Eating houses paid $10 per year for a license, theaters $100, and circuses $50.  Bowling alleys and billiard rooms paid according to the number of alleys or tables belonging to or used in the building to be licensed.  Stamp duties were imposed on legal and business documents and on medicines, playing cards, and cosmetics. 4
The new Office of the Commissioner of Internal Revenue in the Treasury Department supervised the collection of taxes and duties and prepared regulations, instructions, directions, and forms used in assessing and collecting taxes.  President Abraham Lincoln issued a series of executive orders dividing all of the states and territories under Union control into collection districts.  The number of collection districts in a state or territory could be as few as one, as in the case of the Territory of New Mexico, but it could not exceed the number of its congressional representatives.  Subsequent executive orders altered collection districts in some of the states and territories either in number or in geographical coverage.  Lincoln also appointed a collector and an assessor for each district.  Local officials, or assistant assessors, compiled lists of taxpayers used by collectors to collect the taxes.
All persons, partnerships, firms, associations, and corporations submitted to the assistant assessor of their division a list showing the amount of their annual incomes, articles subject to special tax or duty, and the quantity of taxable goods made or sold.  The assistant assessors then compiled two alphabetical lists: (1) the names of persons or entities residing in the division who were liable for taxation and (2) the names of persons or entities residing outside the division who owned property in the division.  Under each name were recorded the value, assessment (or enumeration of taxable income or items), and the amount of duty or tax due.
Reflecting the government's need for money and the difficulty of collecting income taxes, the Internal Revenue Act of June 30, 1864 (13 Stat. 223), raised tax rates and put some teeth into the law.  This act made it the duty of any person liable to the annual tax (anyone with an income in excess of $600 or owners of certain luxury items) to file a list of income and taxable property with the assistant assessor in the division in which he or she resided on or before the first Monday in May.  Failure to file on time resulted in the assistant assessor estimating a taxpayer's worth plus a penalty of an additional 25 percent of the tax due.  A false or fraudulent list or statement resulted in having the assessor or assistant assessor estimate the true value and set the tax due accordingly.  In addition, the fine was 100 percent of the tax.  From this assessment, the tax form specifically stated, "there can be no appeal."  The assessment lists were turned over to the collector of internal revenue, who then posted a notice in each county within the district.  In the notice he specified a time and place when he would be collecting the taxes due.
Similar to the familiar 1040 tax form, taxpayers submitted their lists of income and property on a Form 24, entitled "Detailed Statement of Income, Gains, and Profits."  The Civil War tax form included spaces for reporting income and listing deductions.  "Proper deductions" from income derived from business or trade included rent, insurance, freight and expressage, wages of employees, and other expenses.  Rental income from lands and buildings was reported separately.  The only proper deduction from income derived from the rent of lands was repairs to fences, while rent from buildings could be reduced by the cost of repairs and insurance.  Farm income from the sale of livestock and produce was taxed after deductions for labor, repairs, the farmer's livestock costs, insurance, and interest on encumberances.  Profits from the sale of property; interest collected on debts, dividends on any stock, capital, and bank deposits; and interest on U.S. bonds or any other source were taxable.  Minors with incomes exceeding $600 were also liable through their guardians.  In case something had been missed, the form included spaces to enter all other income.
There were four supplementary deductions authorized: losses on real estate; interest paid; national, state, and local taxes; and rent paid for a homestead.  In addition, all salaries of officers or payments to persons in service in any branch of the U. S. government were free of tax.  The 1862 tax law had not exempted federal salaries, and the Treasury Department had deducted the amount of the tax from the paychecks of federal employees.  On February 16, 1863, Roger B. Taney, Chief Justice of the U.S. Supreme Court, wrote to Secretary of the Treasury Salmon P. Chase complaining that deductions from the salaries of federal judges constituted a violation of the constitutional doctrine of separation of powers.  The secretary of the treasury forwarded the letter to the attorney general.  As a result, all federal salaries were exempt from taxation in the 1864 revision.  In 1872 the administrator of the estate of Abraham Lincoln applied for a refund of taxes improperly assessed on Lincoln's salary as president of the United States.
Schedule A of Form 24 listed certain categories of personal property that were subject to an annual tax.  Carriages of any size and shape not used exclusively in farming or in transporting merchandise were taxed from $1 to $6 depending on their value.  Also based on value, gold watches were taxed either $1 or $2 and pianofortes or other parlor musical instruments were taxed at either $2 or $4.  Billiard tables not licensed carried an annual tax of $10.  Gold and silver plate were taxed by the Troy ounce at 50 cents and 5 cents respectively.  Yachts and pleasure and racing boats were taxed based on tonnage, between $5 for 10 tons or less and $100 for more than 110 tons.
An act of December 24, 1872, abolished the offices of assessors and assistant assessors.  On May 20, 1873, these offices were closed and the records relating to the Civil War taxes were shipped to the commissioner of internal revenue in Washington, D.C.  Following the 1895 Supreme Court decision that declared income taxes unconstitutional, Congress approved a joint resolution requiring that income tax returns be destroyed.  The secretary of the treasury appointed a committee to carry out the congressional instructions.  The commissioner of internal revenue delivered all of the individual tax returns and collectors' lists of income tax paid to the committee on May 5, 1896.  The records were then burned.  Because the assessors' lists contained information on business licenses and other taxes, they were retained.  Some of these original assessment lists survived and are now part of the holdings of the National Archives.
As part of an ongoing publications program, the assessment lists for the Civil War period are being converted to microfilm publications. 5  The records from 34 states and territories are currently available on microfilm.  Most of the publications reproduce the records for the period 1862 to 1866.  However, for some of the territories there were so few records that all of the assessment lists have been included.  The records for the Territory of Montana, for example, cover the period 1864-1872, and the records for the Territory of New Mexico date from 1862 to 1874, with a gap in the records in 1872.  The lists are not complete for all collection districts, and there may be significant gaps like the one in the New Mexico records.
The lists are bound into volumes, and they have been microfilmed in that order.  The lists are generally arranged by collection district, thereunder by divisions within the districts, and thereunder chronologically whenever possible.  In order to make the lists easier to use, descriptive pamphlets have been prepared that list counties included in each collection district.
The assessment lists are divided into three categories: annual, monthly, and special.  Entries in the annual and monthly lists are for taxes assessed and collected in those specific periods.  The special lists augment incomplete annual and monthly lists and include special taxes, such as a special income tax levied in October 1864.  In the descriptive pamphlets the three types of lists are identified by the symbols A (annual), M (monthly), and S (special).
These records can prove very useful to local historians, family historians, and researchers interested in specific industries within a geographic area.  The lists usually provide the names of the persons or business firms liable for taxes, their addresses (city lists often include street addresses), the taxable period, pertinent remarks on the assessment, the article or occupation taxed, and a notation of payment.  Besides detailing revenue raised by the general income tax, these various lists show levies against many diverse items such as inheritances and gold watches as well as larger tax liabilities against capital stock, circulating bank notes, and businesses subject to excise duties.
Using the tax lists to determine the degree of an individual's wealth is relatively easy since the Statistics Bureau of the Treasury Department published tables showing the average cost of provisions, consumer goods, board, and rent by state in 1869.  These publications also provide information on average wages generally paid by profession or skill. 6
Take, for example, Baltimore banker Thomas Splicer, Jr., of 82 McCulloh Street in the first division of the third Maryland collection district.  Splicer had a taxable income of $7,750 in 1865.  He owned two gold watches, one of which was valued at more than $100, and a pianoforte valued at between $100 and $200.
Splicer had also paid income tax on an inheritance of $2,700 during 1865. 7  Splicer must have been wealthy.  According to the Treasury Department tables the average rent on a six-room house in Maryland was $10 per month.  Consumer goods and food were also very reasonable in Maryland.  Extra fine flour sold for $8 per barrel, roasted coffee was 35 cents per pound, beef was 15 cents per pound, butter was 40 cents per pound, eggs were 22 cents per dozen, coal was $8.50 per ton, medium quality satinets were 50 cents per yard, and men's heavy boots could be had for $5.25 a pair.  In 1865 gold sold for $145 per ounce.
Some information in the assessment lists is not duplicated elsewhere.  For example, persons who had no fixed address may not be included in census records.  Some of these individuals— traveling retail dealers and peddlers, for example— were required to obtain licenses under the Civil War tax laws.  The assessment list that shows Abraham Lincoln's taxes for 1864, for example, includes the names of several retail dealers whose addresses are "long boats."  These river and canal merchants may not have been enumerated in the census.  Similarly, itinerant peddlers are listed on monthly and special lists showing payment for retail licenses.
Local business history is well documented in the assessment lists.  For example, the giant Anheuser-Busch Company, brewer of nearly one-third of all beer sold today in the United States, has its corporate headquarters at 721 Pestalozzi Street in St. Louis, Missouri.  The corporation dates from 1875, but the assessment lists for St. Louis show an E. Anheuser operating a brewery on Pestalozzi Street over a decade earlier.  By 1867 the lists show a G. Busch paying the brewer's license fee at the same address, while Anheuser appears to have gone into liquor importation and soapmaking.  Anheuser had a daughter who married Gus Busch, and the business remains a family-owned operation to this day.
Local historians should seriously consider the assessment lists as a source.  Take New Orleans under the Union occupation as an example.  By examining the annual license list for 1862 one can draw an image of life in that cosmopolitan city.  D. M. Hildreth's St. Louis Hotel between Chartres and Royal streets was a first-class place to stop while in the city.  For entertainment, one might attend the Varieties Theater on Gravier Street or visit E. B. Eastman's Exhibition at 1 Conti Alley.  For some quick cash, one might visit the pawnbroker C. Docteur at 145 Royal Street.
The assessment lists also provide information about professionals and tradespeople in the city.  There were numerous physicians in New Orleans, including one named Mrs. Smith. Perhaps not surprising during war time, there were a number of women engaging in retail business, running eating houses, and operating hotels, as well as one running an apothecary on Orleans Street.  On Bienville Street, two dentists had offices at #4 and #66 and between them, at #30, P. Giscion had his chocolate factory.  Along Chartres Street factories produced shoes and furniture.  The lists will even tell you which butcher occupied which booth at Treme Market.
These income tax records can also be used in conjunction with later tax records.  The National Archives in Washington has records relating primarily to corporate and business taxes dating to 1910 and corporate assessment lists for 1909 to 1915.  The corporation assessment lists are available on microfilm as publication M667.
Post-Civil War income tax records, 1867-1873, are available in the National Archives field branches.  Several of the field branches have additional records relating to post-Civil War taxes.  The Denver Branch, for example, has original monthly assessment lists created by district collectors in what are now the states of Arizona, Colorado, New Mexico, and Wyoming as late as 1917.  Some of these records document miscellaneous and regular revenue taxes, mostly those imposed on the retail sale of liquor and the manufacture of tobacco products.  They also concern taxes on brewers, oleomargarine sales, and, after 1899, telephone messages.  Because the assessment lists include the reported net income of firms, they can be used to augment statistical studies of corporate profits and to compare the growth of companies engaged in like activities.  Many other field branches have similar records.
The Civil War income tax records are not only a valuable source of information for biographical, genealogical, and local history research but should also be considered when conducting regional and area studies of business and industry or quantitative studies of demographics during the 1860s.  They can be used in conjunction with census records, later tax records, and state and local records to document the growth of industries, shifting patterns of wealth, migration patterns, and even the incidence of women in the work force.
Cynthia G. Fox is the Chief of the Military and Civil Records Unit of the National Archives and Records Administration. She received her Master of Arts in American History degree from East Carolina University.
1. Samuel Eliot Morison and Henry Steele Commager, The Growth of the American Republic, Vol. 1 (1962), p. 748.
2. Pacific Insurance Company v. Soule (7 Wallace 433); Veazie Bank v. Femno (8 Wallace 533); Scholy v. Rezv (23 Wallace 331); and Springer v. U.S. (102 U.S. 586).
3. Herbert Ronald Ferleger, David A. Wells and the American Revenue System, 1865-1870 (1942), p. 44.
4. For a full discussion of the law see Charles F. Estee, comp., The Excise Tax Law Approved July 1, 1862; and all Amendments (1863).
5. The Internal Revenue assessment lists, 1862-1874, for the following states and territories are currently available as microfilm publications:
- M754, Alabama, 1865-1866, 6 rolls;
- M755, Arkansas, 1865-1866, 2 rolls;
- M756, California, 1862-1866, 3 rolls;
- M757, Colorado, 1862-1866, 3 rolls;
- M758, Connecticut, 1862-1866, 23 rolls;
- M759, Delaware, 1862-1866, 8 rolls;
- M760, District of Columbia, 1862-1866, 8 rolls;
- M761, Florida, 1865-1866, 1 roll;
- M762, Georgia, 1865-1866, 8 rolls;
- M763, Idaho, 1865-1866, 1 roll;
- M764, Illinois, 1862-1866, 63 rolls;
- M765, Indiana, 1862-1866, 42 rolls;
- M766, Iowa, 1862-1866, 16 rolls;
- M767, Kansas, 1862-1866, 3 rolls;
- M768, Kentucky, 1862-1866, 24 rolls;
- M769, Louisiana, 1863-1866, 10 rolls;
- M770, Maine, 1862-1866, 15 rolls;
- M771, Maryland, 1862-1866, 21 rolls;
- M773, Michigan, 1862-1866, 15 rolls;
- M775, Mississippi, 1865-1866, 3 rolls;
- M776, Missouri, 1862-66, 22 rolls;
- M777, Montana, 1864-1872, 1 roll;
- M779, Nevada, 1863-1866, 2 rolls;
- M780, New Hampshire, 1862-1866, 10 rolls;
- M603, New Jersey, 1862-1866, rolls 1-17 (with New York);
- M782, New Mexico, 1862-1870, 1 roll;
- M603, New York, 1862- 1866, rolls 18-218 (with New Jersey);
- M784, North Carolina, 1864-1866, 2 rolls;
- M787, Pennsylvania, 1864-1866, 107 rolls;
- M788, Rhode Island, 1862-1866, 10 rolls;
- M789, South Carolina, 1864-1866, 2 rolls;
- M791, Texas, 1865- 1866, 2 rolls;
- M792, Vermont, 1862-1866, 7 rolls;
- M793, Virginia, 1862-1866, 6 rolls;
- M795, West Virginia, 1862- 1866, 4 rolls.
6. There are two publications that are particularly useful. The first is Cost of Labor and Subsistence in the United States for 1869 as Compared with Previous Years, compiled by Edward Young and published in 1870. The second is entitled Special Report on Immigration, also compiled by Edward Young. This second report, published in 1871, was designed to provide cost-of-living information to newly arrived immigrants. It also includes information on the types of jobs available in the southern and western states.
7. Thomas Splicer, Sr., died March 12, 1864, leaving his son mortgaged real estate. Splicer sold his father's property to pay the debt. His share of the profits was $2,700.
|Articles published in Prologue do not necessarily represent the views of NARA or of any other agency of the United States Government.|