A Historical Analysis of the Federal Income Tax

Stephen D. Vasiljevic
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Stephen D. Vasiljevic: https://www.kansascityfed.org/research-staff/stephen-vasiljevic/

Economic Bulletin, 2026, 4

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.

Date: 2026
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