"direct cause of increased income inequality that began in the 1980s. These figures also correspond to an analysis of effective tax rates from 1979–2005 by the Congressional Budget Office. Congress re-adopted the income tax in 1913, levying a 1% tax on net personal incomes above $3,000, with a 6% surtax on incomes above $500,000. By 1918, the top rate of the income tax was increased to 77% (on income over $1,000,000) to finance World War I. The top marginal tax rate was reduced to 58% in 1922, to 25% in 1925, and finally to 24% in 1929. In 1932 the"
"of 1917 had taxed all income above $2,000,000 at a 67% rate. The act was applicable to incomes for 1918. For 1919 and 1920 the top normal tax rate was reduced from 12 percent to 8%. This reduced the top marginal tax rate that combined normal tax and surtax from 77% to 73%. Even in 1918, only 5% of the population paid federal income taxes (up from 1% in 1913), and yet the income tax funded one-third of the cost of World War I. A Normal Tax and a Surtax were levied against the net income of individuals as shown"
"individuals as shown in the following table. Corrected for inflation by CPI: War Revenue Act of 1917 The United States War Revenue Act of 1917 greatly increased federal income tax rates while simultaneously lowering exemptions. The 2% bracket had previously applied to income below $20,000. That amount was lowered to $2,000. The top bracket (on income above $2 million) was raised from 15% to 67%. The act was applicable to incomes for 1917. In addition to the Normal Tax and an Additional Tax levied against the net income of individuals in the Revenue Act of 1916 a ""like normal"" tax"
"and an Additional Tax were levied against the net income of individuals as shown in the following table. Corrected for inflation by CPI: Revenue Act of 1916 The United States Revenue Act of 1916, (ch. 463, , September 8, 1916) raised the lowest income tax rate from 1% to 2% and raised the top rate to 15% on taxpayers with incomes above $2 million. (Previously, the top rate had been 7% on income above $500,000.) The Act also instituted the federal estate tax. The entry of the United States into World War I greatly increased the need for revenue. An"
"War Revenue Act of 1917 The United States War Revenue Act of 1917 greatly increased federal income tax rates while simultaneously lowering exemptions. The 2% bracket had previously applied to income below $20,000. That amount was lowered to $2,000. The top bracket (on income above $2 million) was raised from 15% to 67%. The act was applicable to incomes for 1917. In addition to the Normal Tax and an Additional Tax levied against the net income of individuals in the Revenue Act of 1916 a ""like normal"" tax and a ""like additional"" tax were levied against the net income of"
"to reduce budget deficits and to support new programs such as Social Security. The US top marginal income tax rate went from 25% to 63% in 1932 and to 79% in 1936, while the bottom rate increased over tenfold, from .375% in 1929 to 4% in 1932. The concurrent massive drought resulted in the US Dust Bowl. The Austrian School asserted that the Great Depression was the result of a credit bust. Alan Greenspan wrote that the bank failures of the 1930s were sparked by Great Britain dropping the gold standard in 1931. This act ""tore asunder"" any remaining confidence"
"Revenue Act of 1916 The United States Revenue Act of 1916, (ch. 463, , September 8, 1916) raised the lowest income tax rate from 1% to 2% and raised the top rate to 15% on taxpayers with incomes above $2 million. (Previously, the top rate had been 7% on income above $500,000.) The Act also instituted the federal estate tax. The entry of the United States into World War I greatly increased the need for revenue. An excess profits tax was introduced and the modern estate tax was imposed. The act was applicable to incomes for 1916. A Normal Tax"
"it was 32.2%. This effective rate on high incomes held steadily until the first few years of the Clinton presidency when it increased to a peak high of 41%. However, it fell back down to the low 30s by his second term in the White House. This percentage reduction in the effective marginal income tax rate for the wealthiest Americans, 9%, is not a very large decrease in their tax burden, according to Noah, especially in comparison to the 20% drop in nominal rates from 1980 to 1981 and the 15% drop in nominal rates from 1986 to 1987. In"
"tax year 1963) to 77% (for tax year 1964) and 70% (for tax year 1965) for annual incomes of $1.4 million+. It was the first tax legislation to reduce the top end of the marginal income tax rate distribution since 1924. The top marginal income tax rate had been 91% since 1946 and had not been below 70% since 1936. The ""Bush Tax Cuts,"" which are the popularly known names of the Economic Growth and Tax Relief Reconciliation Act of 2001 and the Jobs and Growth Tax Relief Reconciliation Act of 2003 passed during President George W. Bush's first term,"
"employees to return to work. In the midst of the war, the federal budget soared from $1 billion in fiscal year 1916 to $19 billion fiscal year 1919. Seeking to avoid the high levels of inflation that had accompanied the heavy borrowing of the American Civil War, the Wilson administration sought to further increase taxes during the war. The War Revenue Act of 1917 raised the top tax rate to 67 percent, greatly increased the number of Americans paying the income tax (approximately 5.5 million Americans would pay the income tax in 1920), and levied an excess profits tax on"
"the need for the income tax on interest, dividends and rents to be apportioned among the states on the basis of population. Income taxes are required, however, to abide by the law of geographical uniformity. Congress enacted an income tax in October 1913 as part of the Revenue Act of 1913, levying a 1% tax on net personal incomes above $3,000, with a 6% surtax on incomes above $500,000. By 1918, the top rate of the income tax was increased to 77% (on income over $1,000,000, equivalent of $16,717,815 in 2018 dollars) to finance World War I. The average rate"
"top marginal tax rate was increased to 63% during the Great Depression and steadily increased. During World War II, Congress introduced payroll withholding and quarterly tax payments. In pursuit of equality (rather than revenue) President Franklin D. Roosevelt proposed a 100% tax on all incomes over $25,000. When Congress did not enact that proposal, Roosevelt issued an executive order attempting to achieve a similar result through a salary cap on certain salaries in connection with contracts between the private sector and the federal government. For tax years 1944 through 1951, the highest marginal tax rate for individuals was 91%, increasing"
"It also mitigates inflation by taking more money from the wealthiest consumers so their large level of consumption does not create demand-driven inflation. One argument against the view that tax policy increases income inequality is analysis of the overall share of wealth controlled by the top 1%. The Revenue Act of 1964 was the first bill of the Post-World War II era to reduce marginal income tax rates. This reform, which was proposed under John F. Kennedy but passed under Lyndon Johnson, reduced the top marginal income (annual income of $2.9 million+ adjusted for inflation) tax rate from 91% (for"
"by their labor, instead of earning for the community, undermined the initial principles of communism. In 1942, during World War II, US President Franklin D. Roosevelt proposed a maximum income of $25,000 during the war: This was proposed to be implemented by a 100% marginal tax on all income over $40,000 (after-tax income of $25,000). While this was not implemented, the Revenue Act of 1942 implemented an 88% marginal tax rate on income over $200,000, together with a 5% ""Victory Tax"" with post-war credits, hence temporarily yielding a 93% top tax rate (though 5% was subsequently returned in credits). After"
"reduced the top marginal income tax rate from 38.6% (annual income at $382,967+ adjusted for inflation) to 35%. These rates were continued under the Obama Administration and will extend through 2013. The number of income tax brackets declined during this time period as well but several years, particularly after 1992, saw an increase in the number of income tax brackets. In 1964, there were 26 income tax brackets. The number of brackets was reduced to 16 by 1981 and then collapsed into 13 brackets after passage of the Economic Recovery Tax Act of 1981. Five years later, the 13 income"
"period following World War II. Tax policy is the mechanism through which market results are redistributed, affecting after-tax inequality. The provisions of the United States Internal Revenue Code regarding income taxes and estate taxes have undergone significant changes under both Republican and Democratic administrations and Congresses since 1964. Since the Johnson Administration, the top marginal income tax rates have been reduced from 91% for the wealthiest Americans in 1963, to a low of 35% under George W Bush, rising recently to 39.6% (or in some cases 43.4%) in 2013 under the Obama Administration. Capital gains taxes have also decreased over"
"""The German mark collapsed when the chancellor put domestic politics ahead of sensible finance; the bank of England abandoned the gold standard after a subsequent speculative attack; and the U.S. Federal Reserve raised its discount rate dramatically in October 1931 to preserve the value of the dollar"". The Federal Reserve drove the American economy into an even deeper depression. In 1929 the Hoover administration responded to the economic crises by temporarily lowering income tax rates and the corporate tax rate. At the beginning of 1931, tax returns showed a tremendous decline in income due to the economic downturn. Income tax"
"rate from 33% to 30%. The basic rate was further cut in three subsequent budgets, to 29% in 1986 budget, 27% in 1987 and 25% in 1988. The top rate of income tax was cut to 40% in the 1988 budget. The investment income surcharge was abolished in 1985. Subsequent governments reduced the basic rate further, to the present level of 20% in 2007. Since 1976 (when it stood at 35%), the basic rate has been reduced by 15%, but this reduction has been largely offset by increases in national insurance contributions and value added tax. In 2010 a new"
"the top rate), until 1964 when the top marginal tax rate was lowered to 70%. Kennedy explicitly called for a top rate of 65 percent, but added that it should be set at 70 percent if certain deductions weren't phased out at the top of the income scale. The top marginal tax rate was lowered to 50% in 1982 and eventually to 28% in 1988. It slowly increased to 39.6% in 2000, then was reduced to 35% for the period 2003 through 2012. Corporate tax rates were lowered from 48% to 46% in 1981 (PL 97-34), then to 34% in"
"average tariff rate to 19.2%, in line with average rates of that day. Unemployment was at 8% in 1930 when the Smoot–Hawley tariff was passed, but the new law failed to lower it. The rate jumped to 16% in 1931, and 25% in 1932–33. There is some contention about whether this can necessarily be attributed to the tariff, however. It was not until World War II, during which ""the American economy expanded at an unprecedented rate"", that unemployment fell below 1930s levels. Imports during 1929 were only 4.2% of the United States' GNP and exports were only 5.0%. Monetarists, such"
"in the effective marginal income tax rate for the wealthiest Americans, 9%, is not a very large decrease in their tax burden, according to Noah, especially in comparison to the 20% drop in nominal rates from 1980 to 1981 and the 15% drop in nominal rates from 1986 to 1987. In addition to this small reduction on the income taxes of the wealthiest taxpayers in America, Noah discovered that the effective income tax burden for the bottom 20% of wage earners was 8% in 1979 and dropped to 6.4% under the Clinton Administration. This effective rate further dropped under the"
"The insurgency led to a fatal split down the middle in 1912 as the GOP lost its balance wheel. Woodrow Wilson made a drastic lowering of tariff rates a major priority for his presidency. The 1913 Underwood Tariff cut rates, but the coming of World War I in 1914 radically revised trade patterns. Reduced trade and, especially, the new revenues generated by the federal income tax (bolstered by the ratification of the Sixteenth Amendment in 1913) made tariffs much less important in terms of economic impact and political rhetoric. The Wilson administration desired a 'revamping' of the current banking system,"
"indirect taxation, reduced personal income tax rates during the 1980s. In the first budget after her election victory in 1979, the top rate was reduced from 83% to 60% and the basic rate from 33% to 30%. The basic rate was also cut for three successive budgets – to 29% in the 1986 budget, 27% in 1987 and to 25% in 1988. The top rate of income tax was cut to 40% in the 1988 budget. The investment income surcharge was abolished in 1985. Under the government of John Major the basic rate was reduced in stages to 23% by"
"to 92% for 1952 and 1953, and reverting to 91% for tax years 1954 through 1963. For the 1964 tax year, the top marginal tax rate for individuals was lowered to 77%, and then to 70% for tax years 1965 through 1981. In 1978 income brackets were adjusted for inflation, so fewer people were taxed at high rates. The top marginal tax rate was lowered to 50% for tax years 1982 through 1986. Reagan undid 40% of his 1981 tax cut, in 1983 he hiked gas and payroll taxes, and in 1984 he raised tax revenue by closing loopholes for"
"the income tax became the federal government's chief source of income and greatly exceeded tariff revenues. Less than 1% of the population then paid federal income tax. The Act was applicable to incomes for 1913, 1914, and 1915. A normal income tax and an additional tax were levied against the net income of individuals, as shown in the following table: There was an exemption of $3,000 for single filers and $4,000 for married couples. Therefore, the 1% bottom marginal rate applied only to the first $17,000 ($374,400 in 2010 dollars) of income for single filers or the first $16,000 ($352,300"
"high as 94% (after accounting for the excess profits tax) and instituted the first federal withholding tax. It also greatly increased the tax base; only four million Americans paid the federal income taxes before the war, while by the end of the war over 40 million Americans paid federal income taxes. In 1944, Roosevelt requested that Congress enact legislation which would tax all ""unreasonable"" profits, both corporate and individual, and thereby support his declared need for over $10 billion in revenue for the war and other government measures. Congress overrode Roosevelt's veto to pass a smaller revenue bill raising $2"
"a brief signing statement, praising only that the bill gave him some power to adjust rates. According to Trani and Wilson, the bill was ""ill-considered. It wrought havoc in international commerce and made the repayment of war debts more difficult."" Mellon ordered a study that demonstrated historically that, as income tax rates were increased, money was driven underground or abroad. He concluded that lower rates would increase tax revenues. Based on his advice, Harding's revenue bill cut taxes, starting in 1922. The top marginal rate was reduced annually in four stages from 73% in 1921 to 25% in 1925. Taxes"
"were an exception to this general rule and they saw their wealth and financial stability as one of their strongest warfighting assets. The income tax was therefore increased from 5.8% in 1913 to just over 30% in 5 years in 1918. The threshold was reduced in order for millions more people to be liable to pay the income tax. For the government another possible solution to finance war was for the government to increase its debt. It could thus transfer the war costs to future generations. The government can issued bonds that are bought by creditors, usually the Central Banks."
"rate was increased to 31% in a budget deal President George H. W. Bush made with the Congress. In 1993 the Clinton administration proposed and the Congress accepted (with no Republican support) an increase in the top marginal rate to 39.6% for the 1993 tax year, where it remained through tax year 2000. In 2001, President George W. Bush proposed and the Congress accepted an eventual lowering of the top marginal rate to 35%. However, this was done in stages: with a highest marginal rate of 39.1% for 2001, then 38.6% for 2002 and finally 35% for years 2003 through"
"income tax of 100% on income over $25,000, which Congress rescinded. The Revenue Act of 1942 instituted top tax rates as high as 94% (after accounting for the excess profits tax) and instituted the first federal withholding tax. It also greatly increased the tax base; only four million Americans paid the federal income taxes before the war, while by the end of the war over 40 million Americans paid federal income taxes. In 1944, Roosevelt requested that Congress enact legislation which would tax all ""unreasonable"" profits, both corporate and individual, and thereby support his declared need for over $10 billion"
"relative to GDP, while payroll tax revenues rose relative to GDP. Reagan's 1981 cut in the top regular tax rate on unearned income reduced the maximum capital gains rate to only 20% – its lowest level since the Hoover administration. The 1986 act set tax rates on capital gains at the same level as the rates on ordinary income like salaries and wages, with both topping out at 28%. Reagan significantly increased public expenditures, primarily the Department of Defense, which rose (in constant 2000 dollars) from $267.1 billion in 1980 (4.9% of GDP and 22.7% of public expenditure) to $393.1"
"October 1929. American stock prices continued to decline in fits and starts until they hit bottom in July 1932. In the first quarter of 1933, the banking system broke down: asset prices had collapsed, bank lending had largely ceased, a quarter of the American work force was unemployed, and real GDP per capita in 1933 was 29% below its 1929 value. The ensuing rapid recovery was interrupted by a major recession in 1937-38. The USA fully recovered by 1941, the eve of its entry in World War II, which gave rise to a boom as dramatic as the Depression that"
"as years in which protectionism increased in Europe. In fact, from a general point of view, the crisis was preceded in Europe by trade liberalisation. The weighted average of tariffs remained tendentially the same as in the years preceding the First World War: 24.6% in 1913, as against 24.9% in 1927. In 1928 and 1929, tariffs were lowered in almost all developed countries. So there was no particular protectionism at the time. In addition, the Smoot-Hawley Tariff Act was signed by Hoover on June 17, 1930, while the Wall Street crash took place in the fall of 1929. And the"