From Wikipedia, the free encyclopedia
The
Revenue Act of 1918
, 40 Stat. 1057, raised
income tax
rates
over those established the previous year
. The bottom
tax bracket
was expanded but raised from 2% to 6%.
The act simplified the tax structure created by the
1917 act
. Instead of applying a "like normal tax" and a "like additional tax" to the
1916 act
normal tax and additional tax it created a single tax structure with a Normal Tax and a Surtax.
The top rate was increased to 77%, and applied to income above $1,000,000. The top rate of the
War Revenue Act 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.
Income Tax for Individuals
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A Normal Tax and a Surtax were levied against the net income of individuals as shown in the following table.
Revenue Act of 1918
Income Tax on Individuals
40
Stat.
1062
[1]
|
Net Income
(dollars)
|
Normal Rate
for 1918
(percent)
|
Normal Rate
for 1919, 1920
(percent)
|
Surtax Rate
(percent)
|
Combined Rate
for 1918
(percent)
|
Combined Rate
for 1919, 1920
(percent)
|
0
|
6
|
4
|
0
|
6
|
4
|
4,000
|
12
|
8
|
0
|
12
|
8
|
5,000
|
12
|
8
|
1
|
13
|
9
|
6,000
|
12
|
8
|
2
|
14
|
10
|
8,000
|
12
|
8
|
3
|
15
|
11
|
10,000
|
12
|
8
|
4
|
16
|
12
|
12,000
|
12
|
8
|
5
|
17
|
13
|
14,000
|
12
|
8
|
6
|
18
|
14
|
16,000
|
12
|
8
|
7
|
19
|
15
|
18,000
|
12
|
8
|
8
|
20
|
16
|
20,000
|
12
|
8
|
9
|
21
|
17
|
22,000
|
12
|
8
|
10
|
22
|
18
|
24,000
|
12
|
8
|
11
|
23
|
19
|
26,000
|
12
|
8
|
12
|
24
|
20
|
28,000
|
12
|
8
|
13
|
25
|
21
|
30,000
|
12
|
8
|
14
|
26
|
22
|
32,000
|
12
|
8
|
15
|
27
|
23
|
34,000
|
12
|
8
|
16
|
28
|
24
|
36,000
|
12
|
8
|
17
|
29
|
25
|
38,000
|
12
|
8
|
18
|
30
|
26
|
40,000
|
12
|
8
|
19
|
31
|
27
|
42,000
|
12
|
8
|
20
|
32
|
28
|
44,000
|
12
|
8
|
21
|
33
|
29
|
46,000
|
12
|
8
|
22
|
34
|
30
|
48,000
|
12
|
8
|
23
|
35
|
31
|
50,000
|
12
|
8
|
24
|
36
|
32
|
52,000
|
12
|
8
|
25
|
37
|
33
|
54,000
|
12
|
8
|
26
|
38
|
34
|
56,000
|
12
|
8
|
27
|
39
|
35
|
58,000
|
12
|
8
|
28
|
40
|
36
|
60,000
|
12
|
8
|
29
|
41
|
37
|
62,000
|
12
|
8
|
30
|
42
|
38
|
64,000
|
12
|
8
|
31
|
43
|
39
|
66,000
|
12
|
8
|
32
|
44
|
40
|
68,000
|
12
|
8
|
33
|
45
|
41
|
70,000
|
12
|
8
|
34
|
46
|
42
|
72,000
|
12
|
8
|
35
|
47
|
43
|
74,000
|
12
|
8
|
36
|
48
|
44
|
76,000
|
12
|
8
|
37
|
49
|
45
|
78,000
|
12
|
8
|
38
|
50
|
46
|
80,000
|
12
|
8
|
39
|
51
|
47
|
82,000
|
12
|
8
|
40
|
52
|
48
|
84,000
|
12
|
8
|
41
|
53
|
49
|
86,000
|
12
|
8
|
42
|
54
|
50
|
88,000
|
12
|
8
|
43
|
55
|
51
|
90,000
|
12
|
8
|
44
|
56
|
52
|
92,000
|
12
|
8
|
45
|
57
|
53
|
94,000
|
12
|
8
|
46
|
58
|
54
|
96,000
|
12
|
8
|
47
|
59
|
55
|
98,000
|
12
|
8
|
48
|
60
|
56
|
100,000
|
12
|
8
|
52
|
64
|
60
|
150,000
|
12
|
8
|
56
|
68
|
64
|
200,000
|
12
|
8
|
60
|
72
|
68
|
300,000
|
12
|
8
|
63
|
75
|
71
|
500,000
|
12
|
8
|
64
|
76
|
72
|
1,000,000
|
12
|
8
|
65
|
77
|
73
|
- Exemption of
$1,000
for single filers and
$2,000
for married couples and head of family;
$200
exemption for each dependent under 18.
Inflation-adjusted numbers
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Corrected for inflation
by CPI:
1918 dollars
|
2005 dollars
|
$1,000,000
|
$12,933,775
|
$2,000,000
|
$25,867,550
|
Notes
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