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
A Normal Tax and a Surtax were levied against the net income of individuals as shown in the following table.
A flat tax is a tax with a single rate on the taxable amount, after accounting for any deductions or exemptions from the tax base. It is not necessarily a fully proportional tax. Implementations are often progressive due to exemptions, or regressive in case of a maximum taxable amount. There are various tax systems that are labeled "flat tax" even though they are significantly different. The defining characteristic is the existence of only one tax rate other than zero, as opposed to multiple non-zero rates that vary depending on the amount subject to taxation.
A progressive tax is a tax in which the tax rate increases as the taxable amount increases. The term progressive refers to the way the tax rate progresses from low to high, with the result that a taxpayer's average tax rate is less than the person's marginal tax rate. The term can be applied to individual taxes or to a tax system as a whole. Progressive taxes are imposed in an attempt to reduce the tax incidence of people with a lower ability to pay, as such taxes shift the incidence increasingly to those with a higher ability-to-pay. The opposite of a progressive tax is a regressive tax, such as a sales tax, where the poor pay a larger proportion of their income compared to the rich.
In the United Kingdom, taxation may involve payments to at least three different levels of government: central government, devolved governments and local government. Central government revenues come primarily from income tax, National Insurance contributions, value added tax, corporation tax and fuel duty. Local government revenues come primarily from grants from central government funds, business rates in England, Council Tax and increasingly from fees and charges such as those for on-street parking. In the fiscal year 2014–15, total government revenue was forecast to be £648 billion, or 37.7 per cent of GDP, with net taxes and National Insurance contributions standing at £606 billion.
The United States Revenue Act of 1926, 44 Stat. 9, reduced inheritance and personal income taxes, cancelled many excise imposts, eliminated the gift tax and ended public access to federal income tax returns.
The Revenue Act of 1932 raised United States tax rates across the board, with the rate on top incomes rising from 25 percent to 63 percent. The estate tax was doubled and corporate taxes were raised by almost 15 percent.
The Revenue Act of 1913, also known as the Underwood Tariff or the Underwood-Simmons Act, re-established a federal income tax in the United States and substantially lowered tariff rates. The act was sponsored by Representative Oscar Underwood, passed by the 63rd United States Congress, and signed into law by President Woodrow Wilson.
The United States Revenue Act of 1942, Pub. L. 753, Ch. 619, 56 Stat. 798, increased individual income tax rates, increased corporate tax rates, and reduced the personal exemption amount from $1,500 to $1,200. The exemption amount for each dependent was reduced from $400 to $350.
The Revenue Act of 1940 permanently increased individual income tax rates in the United States, permanently increased corporate tax rates from 19% to 33% and temporarily increased most excise tax rates to 30-50%. The personal exemption fell from $2,500 to $2,000.
The Revenue Act of 1941 permanently extended the temporary individual, corporate, and excise tax increases of 1940, increased the excess profits tax by 10 percentage points and increased corporate tax rates 6-7 percentage points.
The United States Revenue Act of 1916, raised the lowest income tax rate from 1% to 2% and raised the top rate to 15% on taxpayers with incomes above $2 million. Previously, the top rate had been 7% on income above $500,000. The Act also instituted the federal estate tax.
The United States War Revenue Act of 1917 greatly increased federal income tax rates while simultaneously lowering exemptions.
The United States Revenue Act of 1921 was the first Republican tax reduction following their landslide victory in the 1920 federal elections. New Secretary of the Treasury Andrew Mellon argued that significant tax reduction was necessary in order to spur economic expansion and restore prosperity.
The United States Revenue Act of 1924, also known as the Mellon tax bill cut federal tax rates for 1924 income. The bottom rate, on income under $4,000, fell from 1.5% to 1.125%.
Income taxes in Canada constitute the majority of the annual revenues of the Government of Canada, and of the governments of the Provinces of Canada. In the fiscal year ending March 31, 2018, the federal government collected just over three times more revenue from personal income taxes than it did from corporate income taxes.
In the United States, individuals and corporations pay a tax on the net total of all their capital gains. The tax rate depends on both the investor's tax bracket and the amount of time the investment was held. Short-term capital gains are taxed at the investor's ordinary income tax rate and are defined as investments held for a year or less before being sold. Long-term capital gains, on dispositions of assets held for more than one year, are taxed at a lower rate.
The history of taxation in the United States begins with the colonial protest against British taxation policy in the 1760s, leading to the American Revolution. The independent nation collected taxes on imports ("tariffs"), whiskey, and on glass windows. States and localities collected poll taxes on voters and property taxes on land and commercial buildings. In addition, there were the state and federal excise taxes. State and federal inheritance taxes began after 1900, while the states began collecting sales taxes in the 1930s. The United States imposed income taxes briefly during the Civil War and the 1890s. In 1913, the 16th Amendment was ratified, however, the United States Constitution Article 1, Section 9 defines a direct tax. The Sixteenth Amendment to the United States Constitution did not create a new tax.
The Revenue Act of 1936, 49 Stat. 1648, established an "undistributed profits tax" on corporations in the United States.
The Revenue Act of 1934 raised United States individual income tax rates marginally on higher incomes. The top individual income tax rate remained at 63 percent.
Qualified dividends, as defined by the United States Internal Revenue Code, are ordinary dividends that meet specific criteria to be taxed at the lower long-term capital gains tax rate rather than at higher tax rate for an individual's ordinary income. The rates on qualified dividends range from 0 to 23.8%. The category of qualified dividend was created in the Jobs and Growth Tax Relief Reconciliation Act of 2003 – previously, there was no distinction and all dividends were either untaxed or taxed together at the same rate.
The 1985 Canadian federal budget for fiscal year 1985-1986 was presented by Minister of Finance Michael Wilson in the House of Commons of Canada on 23 May 1985. This is the first federal budget under the premiership of Brian Mulroney, and generally increased taxes.
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