How did taxes lead to the revolution?

Answer 1

Between the years 1800 and 1860, arguments between the North and South grew more intense. One of the main quarrels was about taxes paid on goods brought into this country from foreign countries. This tax was called a tariff. Southerners felt these tariffs were unfair and aimed toward them because they imported a wider variety of goods than most Northern people. Taxes were also placed on many Southern goods that were shipped to foreign countries, an expense that was not always applied to Northern goods of equal value. An awkward economic structure allowed states and private transportation companies to do this, which also affected Southern banks that found themselves paying higher interest rates on loans made with banks in the North. The situation grew worse after several "panics", including one in 1857 that affected more Northern banks than Southern. Southern financiers found themselves burdened with high payments just to save Northern banks that had suffered financial losses through poor investment.

The first income tax was moderately progressive and ungraduated, imposing a 3 percent tax on annual incomes over $800 that exempted most wage earners. These taxes were not even collected until 1862, making alternative financing schemes like the Legal Tender Act critical in the interim. The Internal Revenue Act of 1862 expanded the progressive nature of the earlier act while adding graduations: It exempted the first $600, imposed a 3 percent rate on incomes between $600 and $10,000, and a 5 percent rate on those over $10,000. The act exempted businesses worth less than $600 from value added and receipts taxes. Taxes were withheld from the salaries of government employees as well as from dividends paid to corporations (the same method of collection later employed during World War II). In addition, the "sin" excise taxes imposed in the 1862 act were designed to fall most heavily on products purchased by the affluent. Thaddeus Stevens lauded the progressivity of the tax system