The Revenue Act of 1913, known by several names, most notably the Underwood-Simmons Act, levied the first income tax after the ratification of the 16th Amendment to the Constitution. There have been numerous challenges to this Amendment, all lost or dismissed for being legally frivilious. The Act was passed to make up for revenue lost when the tariffs on imported goods. A large number of goods used by the average American were then imported without tariff. The Underwood-Simmons measure vastly increased the free list, adding woolens, iron, steel, farm machinery and many raw materials and foodstuffs. The average rate was approximately 26 percent. The income tax had an exemption of $3000 for individuals and $4000 for married couples. Less than one percent of the population had enough income to have to pay the tax. In todays dollars one would have to make $88,100 to even pay a single dollar in tax. It was a progressive tax and rates were 1% up to $20,000 and increased in increments up to 7% for those over $500,000. The real intention of the income tax was to shift a large portion of the tax burden from the average citizen, in the form of tariffs, to the high income earner. It was highly successful in doing that. Over the last 100 years continuous amendments and additions to the law have shifted more and more of the burden back to the lower and middle classes. Between 1970 and 1986 the upper rate was lowered from 70% to 28%, and in 1986, under the Reagan Administration, the lowest rate was raised from 11% to 15%. The highest rate is currently 39.6%, the lowest rate remains at $15%. The standard deduction for those filing single is $6,100, head of household $8,950 and married filing jointly is $12,200. Personal exemption is $3,950 and $1,000 for each dependent.
Posted on: Fri, 07 Mar 2014 14:46:57 +0000