Revenue Act of 1918

From Wikipedia, the free encyclopedia

The Revenue Act of 1918, 40 Stat. 1057, raised income tax rates once again. 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 hiked 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.

[edit] Income Tax for Individuals

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)
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

[edit] Inflation-adjusted numbers

Corrected for inflation by CPI:

1918 dollars	2005 dollars
$1,000,000	$12,933,775
$2,000,000	$25,867,550

[edit] Notes

1. ^ Facsimile from Statutes at Large

v • d • e Tax Acts of the United States Internal Revenue 1861 · 1862 · 1864 · 1913 · 1916 · 1917 · 1918 · 1921 · 1924 · 1926 · 1928 · 1932 · 1934 · 1935 · 1936 · 1940 · 1940 · 1941 · 1942 · 1943 · 1943 · 1944 · 1945 · 1948 · 1950 · 1950 · 1951 · 1954 · 1954 Code · 1962 · 1964 · 1968 · 1969 · 1971 · 1975 · 1976 · 1977 · 1978 · 1981 · 1982 · 1986 · 1986 Code · 1990 · 1993 · 1996 · 1997 · 1998 Reform · 1998 Bill of Rights · 2001 · 2002 · 2003 · 2006 Tariffs 1789: Hamilton I · 1790: Hamilton II · 1792: Hamilton III · 1816: Dallas · 1824: Sectional · 1828: "Abominations" · 1832 · 1833: Compromise · 1842: Black · 1846: Walker · 1857 · 1861: Morrill · 1872 · 1875 · 1883: Mongrel · 1890: McKinley · 1894: Wilson-Gorman · 1897: Dingley · 1909: Payne-Aldrich · 1913: Underwood · 1921: Emergency · 1922: Fordney-McCumber · 1930: Smoot-Hawley · 1934: Reciprocal · 1948: GATT · 1962 · 1974/75 · 1979 · 1984 · 1988 · 1989: Canada FT · 1993: NAFTA · 1994: WTO · 2002: Steel