The federal income tax just turned 100. President Wilson signed it into law on Oct. 3, 1913, a little more than four years after the 16th Amendment was proposed by Congress and eight months after official ratification by the states.
Some facts about the 1913 tax:
- The basic income tax rate was only 1%, with a surtax that ranged from 1% on net income over $20,000 and up to $50,000 to 6% on net income in excess of $500,000.
- All filers were allowed to deduct interest on personal debts plus state and local taxes paid.
- The standard deduction was $3,000 for single filers and $4,000 for married couples.
- About 1% of households paid tax.
- The 1040 form was three pages long, with separate pages for income, deductions and the calculation of the tax and surtax.
- The 20 instructions for completing the form fit on one page. The full set of instructions for filling out 2012’s 1040 was 214 pages.
But don’t pine too hard for the good old days. Five years later, as World War I was coming to an end, the top rate had soared to 77% on net income over $1 million.