Fighting the Civil War cost us a fortune. We ended up going into serious debt – equal to 100% of the country’s GDP at the time. Since there were relatively few taxes back then, Abraham Lincoln imposed the first federal income tax. Although the official version didn’t arrive until 1913, this less formal version allowed the government to pay off those war debts by taking money directly from the pockets of its citizens. Those revenues were not great in the beginning, but when the industrial revolution hit, they got big. And have stayed big ever since.