1904: Bureau of Internal Revenue Created
The Bureau of Internal Revenue, which would later become the Internal Revenue Service in 1953 to emphasize its “service” aspect, was created under the secretary of finance. It had about 70 employees. In comparison, the IRS now employs about 1,900 at the national office, 115,000 in total, making it the largest federal bureaucracy.
1913: 16th Amendment Ratified
With the passage of the 16th Amendment, Congress was given authority to tax on income. The average income that year was $1,296, and tax rates were between 1 percent and 6 percent. In five years, the highest tax rate would reach 77 percent.
1918: President Wilson Gives "Politics Is Adjourned" Speech for Higher Taxes
The speech addressed to Congress pleaded for increased taxes on income, estate, and corporate excess profits to continue to fund World War I, which was in its fourth (and last) year. Taxes, however, were already sky-high: In 1917, the federal budget was almost as much as the total sum of annual budgets for the 125 years prior.
1932-1936: Great Depression Taxes
Two tax increases during the heart of the Great Depression—one in 1932 and one in 1936—set new highs in tax rate history. The Revenue Act of 1932 became the largest peacetime tax increase in the nation’s history, pushing top tax rates up to 63 percent while simultaneously reducing exemptions. In 1935, with the passage of the Wealth Tax Act, the top tax rate reached about 75 percent.
Selections from
thebigmoney.com |
