Monday, November 3, 2008

Anniversary: Income Tax

On this day in 1913, the United States announced an income tax. The constitutionality of an income tax was long disputed until the 16th Amendment was ratified in 1913. The Revenue Act of 1913 that followed in October 1913 formally established an income tax (as it lowered tariffs) with a 1% tax on incomes above $3,000 and a 6% surtax on incomes above $500,000, collected from November 1. We've had a progressive tax system ever since. Here is a list of top marginal rates from 1913-2003 and a graph with top income level adjusted for inflation. A quick review begs the question, was Ronald Reagan a socialist?