History of United States Federal Income Tax
I almost have my taxes done for this year. The forms are complete in the online tax software, but I have been putting off hitting the magic submit button, due to the fact that I am going to owe good old Uncle Sam this year.
Since I have not filed, it is hard to get taxes out of my head at nightly. So tonight I thought it would be fun to research the history of the US Federal Income tax. Below are a few interesting points that I found from Wikipedia’s article on “Income tax in the United States”:
The U.S. income tax was first proposed during the War of 1812, but was defeated.
Income taxes were enacted at various times until 1894, but were not imposed after 1895 until the 16th Amendment was ratified in 1913.
In 1913 the tax rate was 1% on taxable net income above $3,000 ($4,000 for married couples), less deductions and exemptions. It rose to a rate of 7% on incomes above $500,000.
During World War I the top rate rose to 77%; after the war, the top rate was scaled down to a low of 25%.
During the Great Depression and World War II, the top income tax rate rose again. In the Internal Revenue Code of 1939, the top rate was 75%. The top rate reached 94% during the war and remained at 91% until 1964.
The Tax Reform Act of 1986 reduced the top rate to 28%, at the same time raising the bottom rate from 11% to 15% (in fact 15% and 28% became the only two tax brackets).
During the 1990s the top rate rose again, standing at 39.6% by the end of the decade.
The top rate was cut to 35% and the bottom rate was cut to 10% by the Economic Growth and Tax Relief Reconciliation Act of 2001 (EGTRRA).
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