<P> The first individual income tax return Form 1040 under the 1913 law was four pages long . In 1915, some Congressmen complained about the complexity of the form . In 1921, Congress considered but did not enact replacement of the income tax with a national sales tax . </P> <P> By the 1920s, many states had adopted income taxes on individuals and corporations . Many of the state taxes were simply based on the federal definitions . The states generally taxed residents on all of their income, including income earned in other states, as well as income of nonresidents earned in the state . This led to a long line of Supreme Court cases limiting the ability of states to tax income of nonresidents . </P> <P> The states had also come to rely heavily on retail sales taxes . However, as of the beginning of World War II, only two cities (New York and New Orleans) had local sales taxes . </P> <P> The Federal Estate Tax was introduced in 1916, and Gift Tax in 1924 . Unlike many inheritance taxes, the Gift and Estate taxes were imposed on the transferor rather than the recipient . Many states adopted either inheritance taxes or estate and gift taxes, often computed as the amount allowed as a deduction for federal purposes . These taxes remained under 1% of government revenues through the 1990s . </P>

Who sets the amount imports may be taxed