100 Years of Federal Income Tax

Bruce Bartlett notes that today is the 100th anniversary of enactment of the Federal Income Tax.\

The new tax applied only to those with very high incomes. There was a personal exemption of $3,000 for individuals (equivalent to $71,000 today) and $4,000 for married couples (about $94,500 today) but none for dependents. Additionally, all interest and state and local taxes were deductible. . . . It was estimated that only 425,000 people in a population of more than 97 million would owe any income tax.

It is important to remember that until World War II, the income tax was paid only by a very small number of people – fewer than four million people in a population of more than 130 million in 1939. By 1943, however, the number of taxpayers had increased more than 10-fold.

Today, the income tax of 1913 is still with us and is likely always to be despite quixotic efforts to abolish it. We will be wishing it many happy anniversaries to come.

(Hat tip: Paul Caron)