Revenue Act of 1918
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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
[edit]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 | |||||
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
[edit]Corrected for inflation by CPI:
1918 dollars | 2005 dollars |
---|---|
$1,000,000 | $12,933,775 |
$2,000,000 | $25,867,550 |
Notes
[edit]- ^ Facsimile from Statutes at Large