IRS was established by the republicans.
American Civil War (1861–65)
George S. Boutwell was the first Commissioner of Internal Revenue under President Abraham Lincoln.
In July 1862, during the Civil War, President Lincoln and Congress created the office of Commissioner of Internal Revenue and enacted an income tax to pay war expenses (see Revenue Act of 1862). The position of Commissioner exists today as the head of the Internal Revenue Service.
The Revenue Act of 1862 was passed as an emergency and temporary war-time tax. It copied a relatively new British system of income taxation, instead of trade and property taxation. The first income tax was passed in 1861:
* The initial rate was 3% on income over $800, which exempted most wage-earners.
* In 1862 the rate was 3% on income between $600 and $10,000, and 5% on income over $10,000.
* In 1864 the rate was 5% on income between $600 and $5,000; 7.5% on income $5,000–$10,000; and 10% on income $10,000 and above.
By the end of the war, 10% of Union households had paid some form of income tax, and the Union raised 21% of its war revenue through income taxes.