Progressive tax in the U.S.

[TroutMan]

When did the U.S. first get a progressive national income tax (as opposed to a proportional or regressive tax)? Has the income tax always been progressive?

I’m interested just in personal income tax, and just the simple tax brackets. I realize it gets more complicated when you add in all the deductions that can be more common for higher incomes, but let’s ignore that for now.

[Exapno_Mapcase]

Looks from this chart that the income tax has been progressive since the 16th amendment was passed.

Apparently the tries at a small income tax earlier, which were both declared unconstitutional so that they didn’t last long, were not progressive.

In order to help pay for its war effort in the American Civil War, the United States government imposed its first personal income tax, on August 5, 1861, as part of the Revenue Act of 1861 (3% of all incomes over US $800)[8]. This tax was repealed and replaced by another income tax in 1862.[9]

In 1894, Democrats in Congress passed the Wilson-Gorman tariff, which imposed the first peacetime income tax. The rate was 2% on income over $4000, which meant fewer than 10% of households would pay any. The purpose of the income tax was to make up for revenue that would be lost by tariff reductions.[10]

[Balthisar]

@TroutMan

When did the U.S. first get a progressive national income tax (as opposed to a proportional or regressive tax)? Has the income tax always been progressive?

I’m interested just in personal income tax, and just the simple tax brackets. I realize it gets more complicated when you add in all the deductions that can be more common for higher incomes, but let’s ignore that for now.

Deductions for earned income principally help lower income people, not higher income people. They contribute a lot towards making the tax system progressive. Mortgage interest deductions, child tax credits, etc., are a drop in the bucket for wealthy people, but offer a significant tax savings for just about anybody with earned income under six figures.

[Cliffy]

True. However, payroll taxes are extremely regressive, and they can be a significant part of the tax burden of lower-income workers.

As Exapno’s chart shows, throughout most of the history of the income tax, it’s been a lot more progressive than it is now.

–Cliffy