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Income Tax at 100: What Were They Thinking?


  • The hundredth anniversary of a continuous income tax
  • The government was furloughed for 16 days
  • Typhoon Haiyan devastated the Philippines

By now you probably remember the events better than we do!


  • The United States wasn’t even in the top ten countries with the highest income tax!  Number one was Aruba with a top marginal rate of 58.95%
  • England’s Queen Elizabeth II celebrated her diamond jubilee, becoming only the second English monarch to reign for 60 years
  • MasterCard and Visa announced a security breach involving 10 million compromised credit card numbers


  • In 2011, the IRS collected more than $2.4 trillion from some 234 million tax returns (including corporate, individual, and employment returns).  The IRS also sent out approximately $416 billion in refunds
  • Space Shuttle Atlantis completed the final mission in the shuttle program
  • Osama bin Laden was killed
  • Unrest led to leadership changes in Egypt, Libya, and Yemen


  • An earthquake in Haiti killed over 200,000 people, and for many displaced persons life is still not back to “normal”
  • Airspace over most of Europe was temporarily closed due to ash from the eruption of Icelandic volcano Eyjafjalljokull
  • The first Youth Olympic Games were held in Singapore


  • Barack Obama took office as the 44th President of the United States
  • Congress passed a major stimulus bill, with nearly $300 billion in tax relief
  • The Statue of Liberty’s crown reopened to the public for the first time since the attack on the World Trade Center


  • Six big tax laws passed in 2008:  the Economic Stimulus Act; Heroes Earnings Assistance and Relief Tax Act; Housing Assistance Tax Act; Emergency Economic Stabilization Act; Worker, Retiree and Employer Recovery Act; and Heartland, Habitat, Harvest and Horticulture Act
  • Many of the world’s stock exchanges saw the worst declines in history
  • Bill Gates stepped down as chairman of Microsoft


  • The IRS reported that 99,316,995 taxpayers (approximately one in three Americans) called, wrote, or walked into an IRS office for help in 2007
  • The IRS estimated that, in 2007, Americans who didn’t pay their taxes collectively owed more than $345 billion
  • England and Australia prohibited smoking indoors in public places


  • The largest tax evasion case in U.S. history is that of telecommunications executive Walter Anderson, who pleaded guilty to a $200 million tax fraud in 2006
  • Congress passed three major and several minor tax-related laws this year, making more than 500 changes to the tax code
  • Fidel Castro handed over power in Cuba to his brother, Raul


  • Congress used the tax code to encourage energy savings
  • YouTube was launched
  • Angela Merkel became chancellor of Germany
  • The first solo around-the-world flight with no stops for refueling


  • The American Jobs Creation Act gave ordinary taxpayers, as well as businesses of all sizes, tax relief
  • A decommissioned British frigate was sunk off the coast of Cornwall as an artificial reef
  • The world’s tallest skyscraper, Taipei 101, was officially opened.  Here’s an interesting tidbit:  TAIPEI is mnemonic for Technology, Art, Innovation, People, Environment, and Identity. 101 represents the concept of striving for beyond perfection


  • The Jobs and Growth Tax Relief Reconciliation Act lowered taxes on capital gains and dividends, accelerated marginal tax rate cuts, brought marriage penalty relief, increased the child tax credit, and extended the bonus depreciation
  • The space shuttle Columbia disintegrated during reentry into the Earth’s atmosphere
  • This year marked the end of Saddam Hussein’s regime in Iraq


  • The Job Creation and Worker Assistance Act brought business tax relief, including a 5-year net operating loss carryback
  • Tax rates dropped, now ranging from 10% to 38.6%
  • Twelve European Union member states adopted the Euro as their currency


  • The new millenium officially began
  • George W. Bush was inaugurated as America’s 43rd president
  • The Tax Relief Act created more than 400 changes.  Tax rates were lowered, the estate tax was repealed, contribution limits on 401(k)s and IRAs were increased
  • September 11 – terrorists attacked the United States


  • Tax rates ranged from 15% to 39.6%
  • Y2K – the anticipated computer disaster that never happened
  • The dot com bubble burst and caused the stock market to crash


  • The Euro was introduced as a trading currency
  • Melissa, the first successful mass mailing worm, infected multitudes of email programs worldwide


  • Of the 4.8 million corporate tax returns filed this year, more than 90% were from companies with assets of less than $1 million
  • Culprits indicted in the Oklahoma City bombing were sentenced to jail terms


  • The Taxpayer Relief Act brought more than 800 changes to the tax code.  The child tax credit, Roth IRAs, capital gains reductions, and breaks for higher education were enacted
  • Great Britain transferred its colony of Hong Kong back to the Chinese
  • Tennis star Steffi Graf’s father was jailed in Germany for tax evasion
  • Deaths of Princess Diana and Mother Teresa


  • In a 1996 survey, public finance economists were asked to estimate what percentage of the corporate income tax in the United States was ultimately borne by owners of capital.   Answers varied, but the average response was 41%.  In their professional opinion then, more than half the tax burden is eventually shifted from owners to workers or other groups
  • The tax percentages did not change, but the income level taxed increased to $40,100 on the low end and $263,750 at the top
  • America’s most decorated gymnast, Shannon Miller, won Olympic gold


  • Carolina Panthers beat Jacksonville Jaguars in their first exhibition game
  • U.S. shuttle Atlantis docked with Russian space station Mir for the first time
  • Tax rates were 15% on income over $39,000, up to 39.6% on income over $256,500


  • Baseball player Darryl Strawberry and his agent were indicted on tax evasion charges
  • Tax rates were 15% on income over $38,000, up to 39.6% on income over $250,000
  • The governments of the United States and France signed a new Convention “for the avoidance of double taxation and the prevention of fiscal evasion”


  • Leadership of the United States passed to Bill Clinton
  • The Revenue Reconciliation Act of 1993 had a goal of reducing the federal deficit that would otherwise accumulate in fiscal years 1994 through 1998
  • Tim Berners-Lee and CERN provided web technology for free, enabling the rapid growth of the World Wide Web


  • Taxpayers who owed money with their tax returns were permitted to file electronically
  • Leona Helmsley was jailed for tax evasion


  • The United States and its allies attacked Iraq for occupying Kuwait
  • Tim Berners-Lee introduced a method for linking hypertext to the Internet
  • The Soviet Union was dissolved


  • Riots broke out in England as citizens protested the “poll tax”
  • East and West Germany united
  • Russian satellites declared independence


  • George H.W. Bush took over from Ronald Reagan
  • The Berlin Wall was torn down
  • Two solar flares significantly affected Canada, causing the entire province of Quebec to suffer a blackout in the spring, and affecting microchips that led to a halt of trading on Toronto’s stock market in the summer
  • Voyager 2 discovered three more moons of Neptune
  • Chinese students demanded more political freedom in Tiananmen Square, Beijing; the government responded by declaring martial law and ultimately killing many


  • Income tax rates increased for lower-income taxpayers – up from 11% to 15%
  • The federal deficit was about $155 billion
  • Winter Olympics in Calgary, Canada; Summer Olympics in Seoul, Korea


  • Another change to the tax rates:  taxpayers at the lower end paid 11% on income over $3,000, while those at the high end paid 38.5% on income over $90,000
  • President Reagan and General Secretary Gorbachev signed the INF Treaty, eliminating their intermediate-range and shorter-range missiles


  • President Reagan signed into law the Tax Reform Act of 1986, one of the most far-reaching reforms of the United States tax system since the adoption of the income tax.   The top tax rate on individual income was lowered from 50% to 28%
  • The new tax act (above) was the start of what later appeared to be a yearly tradition of new tax acts
  • In the 5 weeks surrounding year-end 1986, after enactment of the tax reform bill which raised the effective corporate tax rate, 225,000 companies elected Subchapter S status.  (Compare this with 75,000 for all of 1985!)


  • Federal income tax laws filled about 3,000 pages
  • Spacelab’s first “real” (not test) flight
  • Cherry Coke was introduced; it was also the year of the short-lived “New Coke”
  • The price of first class postage in the U.S. increased to 22 cents, up from 20 cents


  • The Reagan Tax Reform Act was the most complex bill ever, requiring more than 180 technical corrections
  • The first American woman to walk in space was Dr. Kathryn Sullivan
  • India’s prime minister, Indira Gandhi, was assassinated


  • Tax rates dropped again, with the low end now down to 11%
  • Thieves stole 6,800 gold bars from London’s Heathrow Airport, most of which has never been recovered
  • The Walt Disney World Very Merry Christmas Parade was broadcast live from the Magic Kingdom for the first time


  • The tax rates dropped, now ranting from 12% to 50%
  • In Italy, Sophia Loren was jailed for tax evasion


  • Ronald Reagan took over leadership of the United States
  • Congress enacted the largest tax cut in U.S. history
  • Space Shuttle Columbia left the planet on its maiden voyage


  • Post-It Notes were introduced
  • 125,000 Cubans left their homeland for the United States in the Mariel boatlift
  • Jimmy Carter broke diplomatic relations with Iran due to the hostage crisis


  • Margaret Thatcher became prime minister of the United Kingdom
  • Mother Teresa was awarded the Nobel Peace Prize
  • U.S. tax rates held steady, ranging from 14% to 70%; however, the income level at which the highest marginal rate was charged changed to $212,000, up from $200,000


  • Menachem Begin, Anwar Sadat and Jimmy Carter signed the Camp David accord
  • Spain adopted a democratic constitution
  • Fluorocarbons were banned in aerosol sprays


  • Jimmy Carter took over from Gerald Ford
  • The first Apple computer was released
  • The original Star Wars movie was released


  • The United States celebrated its bicentennial
  • The generation-skipping transfer tax was introduced
  • Apple Computer was founded


  • The Earned Income Tax Credit was approved by Congress
  • Microsoft was founded


  • President Nixon resigned and Gerald Ford took over the running of a country with high inflation, a depressed economy, and chronic energy shortages
  • Charles de Gaulle Airport opened in Paris
  • Sicily’s Mount Etna erupted


  • Britain joined the European Economic Community
  • The U.S. Senate established the Select Committee on Presidential Campaign Activities to investigate the events surrounding Watergate
  • Talking of taxes . . . 1973 was the 200th anniversary of the Boston Tea Party


  • Richard Nixon became the first U.S. president to visit China
  • The Stone Mountain relief carving of Jefferson Davis, Robert E. Lee, and Stonewall Jackson was completed
  • It was a memorable Olympics this year; who can forget Olga Korbut, Mark Spitz, and the terrorist attack on the Israeli athletes?


  • Cigarette advertisements were banned on American television
  • The Aswan Dam in Egypt was opened
  • A decimal coinage system was adopted in the United Kingdom
  • Walt Disney World opened in Florida


  • Income tax rates were still set at 14% on the low end, but the highest marginal rate dropped to 71.75%
  • The USSR made the first successful unmanned spacecraft landing on Venus


  • The Tax Reform Act passed, delivering major amendments to the 1954 overhaul
  • Richard Nixon was installed as the nation’s 37th president
  • Neil Armstrong and Edwin Aldrin Jr. became the first men to walk on the moon


  • On the low end, income tax rates remained at 14%, but the highest marginal rate increased to 75.25%
  • Martin Luther King Jr. was assassinated
  • Robert F. Kennedy was assassinated


  • Tax rates had been ranging from 14% to 70% for several years, but 1967 was the last year
  • The world’s first ATM machine was installed in London, England
  • Dr. Christaan Barnard performed the first human heart transplant


  • Corporate income tax provided about 23% of the United States’ federal revenues
  • Canadian residents received the first color television transmission
  • Richard Walker discovered Saturn’s moon, Epimetheus


  • U.S. tax rates dipped again, now ranging from 14% to 70%
  • The Maple Leaf became the official flag of Canada
  •  Cosmonaut Alexsei Leonov became the first person to walk in space
  • The United States sent troops to Vietnam


  • U.S. income tax rates dropped from 16% on the low end, to a high of 77% for the top bracket
  • The U.S. report, “Smoking and Health,” connected smoking to lung cancer


  • President John F. Kennedy was assassinated; Lyndon B. Johnson took over at the helm
  • Winston Churchill became the first honorary U.S. citizen
  • Meanwhile, over in England, crooks got away with $7.3 million in the Great Train Robbery
  • In Iran, Ayatollah Khomeini was arrested after a state of siege was declared
  • Push button phones were introduced


  • Cuban missile crisis
  • U.S. Navy SEALS were established
  • John Glenn became the first American to orbit Earth


  • John F. Kennedy was installed as the United States’ 35th president
  • The U.S. broke diplomatic relations with Cuba
  • Yuri Gagarin became the first person to orbit Earth


  • Income taxes held steady, from a low bracket of 20% to a high range of 91%
  • The Family Circus comic strip debuted
  • Cuba nationalized U.S. businesses and the U.S. imposed an embargo on goods exported to Cuba


  • After overthrowing Batista, Fidel Castro took over leadership of Cuba
  • The first color  photograph of the Earth was taken from space


  • Elvis Presley joined the U.S. Army
  • President Eisenhower signed a bill approving Alaskan statehood
  • After 26 years, the cost of a U.S. first class postage stamp increased by a penny to 4 cents
  • The United Kingdom installed traffic meters and the first stretch of motorway (not in the same place!)


  • Saturday mail service was temporarily suspended in the United States due to lack of funds (sound familiar?)
  • A Patrick & Robinson team member was born on a tax deadline


  • “In God We Trust” was authorized as the United States’ motto
  • Television was first broadcast in Australia


  • President Eisenhower raised the minimum wage from 75 cents to $1
  • Ray Kroc started the McDonalds hamburger chain
  • Disneyland opened in California
  • Elvis Presley made his first television appearance


The IRS was busy!

  • The tax deadline day was pushed to April 15th for individuals
  • There was a  major overhaul of the Internal Revenue Code, with 3,000 (yes, three thousand) changes to the tax rules
  • The first successful kidney transplant was performed


  • Renowned general Dwight D. Eisenhower moved into the Oval Office
  • Dr. Jonas Salk announced the successful testing of a vaccine to combat polio
  • Edmund Hillary and Tenzing Norgay reached the summit of Mount Everest
  • Fidel Castro was jailed for his attempted coup in Cuba


  • Tax rates were up:  22.2% on the low end, to a top rate of 92%
  • Queen Elizabeth II ascended the throne of Great Britian
  • National Secretaries’ Week/Day (now Administrative Professionals’ Week/Day) was first celebrated
  • Agatha Christie’s “Mousetrap” opened at the theater in London.  (It’s still running!)


  • The 22nd amendment to the U.S. Constitution limited presidents to two terms of office
  •  Color television was first broadcast; unfortunately, most people had black and white sets
  • “I Love Lucy” debuted on CBS


  • India gained independence from Britain
  • Peter Hodgson started marketing Silly Putty in plastic eggs
  • Mother Teresa founded the Missionaries of Charity in Calcutta, India


A year of firsts:

  • Siam became Thailand
  • Luis Munoz Marin became the first democratically elected governor of Puerto Rico
  • David Ben-Gurion’s party won the first Israeli election


  • Taxes were lowered; they ranged from 16.6% to 82.13%
  • Britain’s railways were nationalized
  • Sri Lanka declared independence from the U.K.
  • The first Polaroid camera was sold


  • Britain’s coal industry was nationalized
  • Richard Reynolds invented aluminum foil
  • Bardeen, Shockley and Brattain invented the transistor


  • The war was over.  Income tax rates in the U.S. were reduced to 19% (on the low end) through 86.45%
  • ENIAC, the first programmable digital computer, was completed
  • The Bank of England was nationalized
  • The bikini swimsuit was introduced in Paris


  • World War II ended
  • Harry S. Truman assumed the presidency upon the death of Franklin D. Roosevelt
  • Due to heavy fog, a U.S. B-25 bomber crashed into the Empire State Building


  • U.S. income tax rates increased to 23% on the low end, with a high of 94%!
  • New Zealand and the Soviet Union established diplomatic relations
  • D-Day in Europe


  • The Current Tax Payment of 1943 reintroduced payroll tax withholding; unlike the 1913 Act, though, this time is wasn’t repealed.  Per the U.S. Treasury, “it also greatly reduced the taxpayer’s awareness of the amount of tax being collected, i.e. it reduced the transparency of the tax, which made it easier to raise taxes in the future.”
  • President Franklin Roosevelt, in an attempt to check inflation, froze wages and prices, prohibited workers from changing jobs unless doing so would aid the war effort, and barred common carriers and public utilities from increasing rates
  • One in three people paid income tax


  • Franklin D. Roosevelt ordered men between the ages of 45 and 60 to register for non-military duty
  • Glenn Miller was awarded the first ever gold record for selling a million copies of Chattanooga Choo Choo
  • Mexico changed from three time zones to two
  • Food, coffee, and gasoline were rationed in the United States due to WWII


  • Bob Hope performed his first USO show
  • Reza Shah abdicated the throne of Iran in favor of his son, Mohammad Reza Pahlavi
  • The Japanese attack on Pearl Harbor brought the United States into World War II


  • War was in the air.  Tax rates increased to 4.4% on the low end, up to 81.1%
  • In the midst of the war in France, the Lascaux Cave Paintings were discovered
  • The British fought the Battle of Britain, encouraged by Winston Churchill who praised the Royal Air Force by saying, “Never in the field of human conflict was so much owed by so many to so few.”


  • The USSR was expelled from the League of Nations
  • World War II began in Europe
  • Taxes still ranged from 4% on the low end, to a 79% marginal tax rate, but guess which way they’ll be going next year


  • Adolf Hitler seized control of the German army, and German troops invaded Austria
  • The top income tax rate in the U.S. was 79%


  • Bernard Fantus established the first blood bank in the United States, at what was then the Cook County Hospital in Chicago
  • The United Kingdom established a national emergency phone number:  999
  • George VI was crowned King of England


  • Edward VIII of England ascended the throne, but subsequently abdicated to marry Wallis Simpson
  • The NY Herald Tribune began microfilming its current issues
  • Adolf Hitler announced the building of Volkswagens – the people’s car
  • Jesse Owens won 4 gold medals at the Berlin Olympics


  • The passage of the Social Security Act in the United States provided aid to the unemployed, aged, needy, handicapped, and certain minors.  A 2% tax was levied on the first $3,000 of income, half due from the employee and half from the employer.  It was collected via payroll deduction
  • The number of casualties on the roads of Britain prompted the government to require driving tests
  • Persia became Iran (Iran is the Persian word for Persia)
  • Sir Robert Watson Watt invented radar
  • Paperback books were introduced


  • Wages were taxed at 4% on the low end of the income scale, up to 63% on the high end
  • There was civil war in Austria
  • The USSR joined the League of Nations


  • The Social Security Act passed, with an initial tax rate of 1% on the first $3,000 of taxable income
  • Adolf Hitler was appointed chancellor of Germany, and subsequently banned trade unions
  • Franklin D. Roosevelt was inaugurated as the 32nd President of the United States
  • America left the gold standard


  • The Revenue Act of 1932 increased personal income taxes from 23% to 45%, doubled estate taxes, and introduced a sales tax and 1-cent federal excise tax on gasoline
  • Charles Lindbergh Jr. was kidnapped and killed
  • The cost of mailing a first class letter within the United States went up to 3 cents
  • King George V was the first British monarch to broadcast on the radio


  • Al Capone was convicted of tax evasion
  • The “Star Spangled Banner” officially became the U.S. National Anthem


  • Declining tax revenues due to the depression produced a $200 million deficit
  • The telephone connection between England and Australia went into service


  • The start of the Great Depression
  • The highest marginal tax rate dropped to 24%
  • Herbert Hoover became the United States’ 31st president
  • Mother Teresa arrived to work in Calcutta
  • Salvador Dali put on his first one-man show


  • Andrew Mellon suggested repealing the estate tax and lowering corporate taxes.  Congress agreed to reduce the corporate tax, but kept the estate tax
  • The first solo England to Australia flight was made by Bert Hinkler
  • Pre-sliced bread was introduced


  • A quiet year on the tax front
  • Lindbergh became the first pilot to cross the Atlantic solo
  • The Grand Ole Opry was first broadcast on the radio from Nashville, Tennessee


  • This was a year of tax cuts – including the estate tax – and higher exemptions
  • The Methodist church voted to allow women to become priests
  • A general strike was called in Great Britain in support of the coal miners, who were on strike for more than 6 months


  • The top income tax bracket dropped to 25%
  • Great Britain returned to the gold standard
  • Norway’s capital was renamed Oslo
  • Adolf Hitler’s “Mein Kampf” was published


  • Nationally:  Andrew Mellon urged lower tax rates, claiming that high rates would encourage people to look for ways to avoid paying
  • Globally:  France hosted the first Winter Olympics
  • Universally:  Hubble announced the existence of distant galleries


  • Calvin Coolidge took office upon the death of Warren Harding.  (The notary public administering the oath was Coolidge’s father.)
  • The USSR was established.
  • The Hollywoodland sign was dedicated.  (The “land” was dropped in 1949.)


  • The tax rate for taxable income up to $4,000 was just 4%; if you had taxable income over $200,000 your rate was 56%!  (This was down from last year’s 73% though.)
  • Geologists declared the U.S. oil supply would only last 20 years.
  • Howard Carter discovered the tomb of Tutankhamun.  (If you’re a fan of Downton Abbey you may be interested to know that Lord Carnarvon funded Howard Carter’s expedition.  Lord Carnarvon’s home was Highclere Castle, a.k.a. Downton Abbey.  You can bet they pay a lot of property tax.)


  • This year the Republicans engineered the first of a series of tax cuts
  • Warren Harding took over the White House
  • Afghanistan gained sovereignty after 84 years of British rule


The war was over, but

  • Terrorists were still active.  A bomb on Wall Street took more than 30 lives and injured over 300.
  • The Democrats and some  Republicans wanted to retain income taxes at wartime rates.

In lighter news:

  • Walt Disney got his first job as an artist
  • The New York Yankees purchased Babe Ruth
  • Dutch airline KLM took its first flight, and Australian airline Qantas was formed
  • The United States Postal Service announced that children could not be sent via Parcel Post


  • The Bureau of Internal Revenue hired another 1,000+ auditors to address its chronic personnel shortage
  • UPS was formed
  • Congress passed the Nineteenth Amendment (it would be ratified in 1920), granting American women the right to vote
  • Alcock & Brown made the first nonstop air crossing of the Atlantic


In this year,

  • World War I came to an end
  • The Bureau of Internal Revenue staff grew to 9,600 employees
  • British women aged 30 and older were granted the right to vote


This year,

  • Congress passed an excess profits tax on corporations.  Individuals with incomes over $6,000 were also subject to the tax
  • A 2% tax on income over $1,000 ($2,000 for married couples) was introduced
  • Jeannette Rankin became the first female member of congress
  • The first jazz record was recorded


Congress was busy this year:

  • The U.S. Naval Reserve was created
  • Needing additional revenue for war expenses, Congress increased the income tax from 1% to 2% for individuals
  • Corporate income tax was also raised from 1% to 2%
  • The federal Estate Tax was established


In this year:

  • Several congressmen complained that the 4-page income tax forms were too complicated.  (Unfortunately, no one listened to them . . . )
  • Woodrow Wilson became the first president to attend a World Series game
  • Albert Einstein published his Theory of Relativity


1914 was a tough year:

  • The first Form 1040 was issued by the Bureau of Internal Revenue and was due to be filed by March 1st
  • World War I started in Europe


Prior to 1913, Congress had to approve the collection of income taxes for special circumstances.  In this year, future generations’ lives were changed forever when the 16th Amendment was ratified:

“The Congress shall have power to lay and collect taxes on incomes, from whatever source derived, without apportionment among the several States, and without regard to any census or enumeration.”

Also during this year,

  • The Federal Reserve System was created
  • The Chinese foreign debt was $835 million (equals $19.417 trillion in today’s money; compare that with the current U.S. foreign debt of $16.44 trillion)
  • In Sheffield, England, Harry Brearly invented stainless steel
  • Woodrow Wilson was inaugurated as the United States’ 28th president
  • Richard Hellman trademarked the blue ribbon on the mayonnaise jars
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