assessment levied upon individual or corporate incomes. Although personal incomes were occasionally taxed in medieval Italian cities, the income tax is essentially a modern form of taxation. The first important income tax was levied in Great Britain from 1799 to 1816 in order to raise funds for the Napoleonic Wars. After several other temporary income taxes, Britain adopted a permanent one in 1874. The first income tax in the United States was imposed in 1864, during the Civil War, but was discontinued in 1872. Various European countries, as well as Australia, New Zealand, and Japan, adopted regular income taxes during the latter half of the 19th cent.
In the United States, the income tax law of 1894 was declared unconstitutional on the grounds that it was a direct tax not apportioned according to state population. The adoption of the Sixteenth Amendment (1913) permitted both the corporate and individual income tax to become a lawful element in the federal tax structure. Since then they have been a major source of revenue for the federal government, yielding as much as 85% of all its receipts in some years. Income taxes had been levied sporadically by various states since 1789; since 1919 most states have adopted the tax. The first major American city to impose a tax on incomes was Philadelphia (1939).
In general, personal incomes below a certain amount are exempted from the individual income tax, the amount varying for single and for married persons with or without dependents. The tax is applied to the net income above such exemptions, and the rate becomes progressively higher for larger incomes. From the mid-1960s until 1982 the tax rate ranged from about 15% for the lowest brackets to about 70% for the highest, with a similar structure for corporate income taxes. In 1982, Congress passed President Reagan's plan to cut the highest rate on personal income tax from 70% to 50% and the capital gains tax from 50% to 20%. The Tax Reform Act of 1986 further lowered the maximum marginal tax rates from 50% to 28%, the lowest since the 1920s. A top rate of 31% was added in 1991, and additional rates of 36% and 39.6% for the wealthiest individuals were approved in 1993. Under changes enacted in 1997, the tax rate on most long-term capital gains is 20%—10% for people in the 15% tax bracket; the rate is slightly lower for investments held at least five years. Further changes enacted under President George W. Bush in 2001 reduced the rate in the lowest income-tax bracket to 10% (for the first $6,000 of income only) and called for the tax rates of all brackets above the 15% rate to be reduced to 25%, 28%, 33%, and 35% by 2006. These rates and all other provisions of the act will be rescinded in 2011, however, unless continued by passage of another law. The top corporate tax rate is 39%, although the highest income-bracket tax rate is 35%. In many states and cities, lowered federal income taxes have been offset by higher state and local income and property taxes. In the 1980s and 90s, the call for a "flat tax"—a single tax rate (around 17%–20%) for individuals and businesses—was a recurring campaign issue among American conservatives. Such an income tax has been adopted by a number of E European countries.
- See Principles of Federal Income Taxation (1982);. ; ,
- The Dynamics of Income Distribution (1985);. ,
- Of Rule and Revenue (1988). ,
Full text Article Corporate Tax Rate & Jobs
Background of the Issue The creation of the federal corporate income tax occurred in 1909, when the uniform rate was 1% for all business income above $5,000. [ 3 ] Since then the rate has increased to as high as 52.8% in 1969, and the single rate has become eight different rates for different income…continue
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