During World War I, Congress passed the 1916 Revenue Act, and then the War Revenue Act of 1917. The top marginal income tax rate jumped dramatically from 15% in 1916 to 67% in 1917 to 77% in 1918.
Significance:
- Significant increase in Income Tax rates in order to fund the war.
- Massive expansion in the Federal Governments taxation power
- Rates continued to escalate during the War
- Revenue went from $ in 1917 to $3.6 Billion in 1918.
- Increased the Governments knowledge of private financial affairs
- Paved way for Modern tax system, replacing Tariffs and Excise with Income as the top source of revenue
- Introduction of Corporate Excess Profit tax
- Marginal Tax Rates increased, limits were lowered, exemptions reduced, and Progressive nature all increased dramatically
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