Journal Article

A Historical Analysis of the Federal Income Tax

Abstract: Although income taxes have been the main source of U.S. government revenue for more than 100 years, tariffs once played a greater role in financing government activity. An analysis of U.S. fiscal receipts since 1789 suggests that the shift from tariff-based to income-based tax revenue was driven by three factors: a pressing need for more revenue during the first and second World Wars, a long-run shift in the composition of the U.S. labor force, and a widely held belief that reform was necessary.

Bibliographic Information

Provider: Federal Reserve Bank of Kansas City

Part of Series: Economic Bulletin

Publication Date: 2026-09-04

Pages: 4