The United States

United States

The United States of America is a federal constitutional republic comprising fifty states and a federal district...

 Revenue Act of 1916, (ch. 463, , September 8, 1916) raised the lowest income tax

Income tax

An income tax is a tax levied on the income of individuals or businesses . Various income tax systems exist, with varying degrees of tax incidence. Income taxation can be progressive, proportional, or regressive. When the tax is levied on the income of companies, it is often called a corporate...

 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

Estate tax in the United States

The estate tax in the United States is a tax imposed on the transfer of the "taxable estate" of a deceased person, whether such property is transferred via a will, according to the state laws of intestacy or otherwise made as an incident of the death of the owner, such as a transfer of property...

.

The entry of the United States into World War I

World War I

World War I , which was predominantly called the World War or the Great War from its occurrence until 1939, and the First World War or World War I thereafter, was a major war centred in Europe that began on 28 July 1914 and lasted until 11 November 1918...

 greatly increased the need for revenue.

An excess profits tax

Excess profits tax

In the United States, an excess profits tax is a tax, some say excise tax, on any profit above a certain amount. A predominantly wartime fiscal instrument, the tax was designed primarily to capture wartime profits that exceeded normal peacetime profits....

 was introduced and the modern estate tax was imposed.

The act was applicable to incomes for 1916.

Income Tax Table for Individuals

A Normal Tax and an Additional Tax were levied against the net income of individuals as shown in the following table.

Revenue Act of 1916 Normal Tax and Additional Tax on Individuals
Net Income (dollars)	Normal Rate (percent)	Additional Rate (percent)	Combined Rate (percent)
0	2	0	2
20,000	2	1	3
40,000	2	2	4
60,000	2	3	5
80,000	2	4	6
100,000	2	5	7
150,000	2	6	8
200,000	2	7	9
250,000	2	8	10
300,000	2	9	11
500,000	2	10	12
1,000,000	2	11	13
1,500,000	2	12	14
2,000,000	2	13	15

• Exemption of $3,000 for single filers and $4,000 for married couples.

Inflation-adjusted numbers

Corrected for inflation by CPI:

1916 dollars	2009 dollars
$500,000	$10,018,348
$2,000,000	$40,073,394