West Virginia passes first sales tax

America has always had a difficult relationship with taxes, going back to their rebellion against the British for their unfair levying. The early republic under the  Articles of Confederation had no power to levy taxes either, which led to enormous borrowing to finance the  Revolutionary War. Even after the constitution was written, a Union plan to raise  funds through taxes stalled in Congress, and a similar one for WW I met the same fate. It was up to the states — Pennsylvania had the earliest excise taxes, but they were just on tobacco and alcohol products. It was a neighboring state that signed into law the first across-the-board sales tax.

On this day, Mary 3, in 1921, the first sales tax law in the United States was passed by West Virginia, going into effect July 1.

By the 1930s most states followed West Virginia’s example in levying their own sales taxes. As costs were a lot lower at the time, taxes added fractions of pennies to the price and were paid for with specially-issued tokens. Illinois was the first to introduce tokens for a 3% sales taxes, but the state Supreme Court struck down the provision. Illinois re-issued them the next year anyway, followed by Ohio, California, and the other states. The tokens lasted through WW II before finally getting phased out.