After discovering the Civil War tax lists available online (more about that here), I was inspired to read the legislation (The Revenue Act of 1864) and to write about the residents of Hunterdon who were listed in the tax levy of 1865. Since this is a time of remembrance of the Civil War, it seemed appropriate. The article will appear in the spring issue of “Hunterdon Historical Newsletter” published by the Hunterdon County Historical Society. Even though the editor graciously allowed me two full pages, I found myself frustrated by how much I had to leave out. Which is why blogs are so wonderful.
So many interesting things occurred to me as I was writing. For instance—
Tax Everything You Can Think Of
In my first paragraph, I mentioned that nearly everything was taxed. I did not have space to suggest that such an omnivorous style of taxation was a reflection on how desperate Congress was to meet the expenses of the war. How appalled people would be today if they were required to pay taxes on all the things that were taxed in 1865. People were taxed, for example, on their watches. Granted, there was no sales tax on watches. But a sales tax is a one-shot deal. In the 1860s, people had to pay a tax on their watches (and other items) every year. (The first tax act passed in 1862; the war taxes weren’t completely repealed until 1873.) Today that would be unthinkable. Could it be that people were more willing to let the government spend their money than they are today? Or did they accept the taxes as a means of ending the war? I cannot help but wonder if there was resistance to these taxes.
To add insult to injury, the government required taxpayers to put a value on the property that was subject to tax and submit their ‘returns’ to the assessors, who would then have the responsibility to determine if those returns were accurate. This legislation passed by the 38th Congress was quite complicated, especially for merchants and manufacturers. It must have provided many jobs, not only for collectors and assessors and their assistants, but for lawyers and others who might help taxpayers figure out how to put a value on their property. It appears they did not have the help of accountants since that occupation was not listed in the Revenue Act. (However, there was a fail-safe provision in the Act (Sec. 79) requiring that all trades or professions that produced an income over $1000 had to pay a license fee of $10.)
Considering how high the demand was for able-bodied men to fight the war, it seems unwise to pass laws requiring so many people to work behind government desks rather than on the battlefield. But then, without that revenue, the government could not support those men on the battlefield.
Financing the Debt
Another observation I made that could have been expanded on was that unlike today, the federal government relied on taxes to maintain solvency. As students of the Civil War know (and I cannot call myself one of them), the government thought it could manage the war by borrowing and by issuing paper money (the famous “greenbacks’). It was the insistence of the creditors that forced the government to turn to taxpayers to back up its bonds. (Could China intimidate Congress into raising taxes today? Definitely not—yet.) According to an article on revenue stamps, the Civil War cost the federal government $3 billion, which is mind-boggling when you consider that in 1850, the government was financed by customs duties that amounted to only $40 million.1 That amount increased to about $60 million by 1860, but in 1861, revenues dropped by $20 million, thanks to the secession of the southern states. Clearly, extraordinary measures were needed.
And so it is today. I do not know what extraordinary measures will be taken to get us out of the mess we’re in now, but it is helpful to know how we weathered difficult times in the past.
- “Financing The Civil War: The Office Of Internal Revenue And The Use Of Revenue Stamps,” by Gary Giroux, Texas A&M University, and Sharon Johns (Brigham Young University, April 2000). ↩