Sixty years ago the permanent individual income tax, with escalation built into its table of rates, came on gently and quietly, by no means ignored, yet not the object of any great furor, either.

There were a number of reasons why the majority of American people reacted with composure. First of all, the new statute was signed by President Wilson in October, 1913, but the taxpayers were not required to get up the money until March 1, 1914. This lag in time diffused the impact. Furthermore, the exaction fell upon a very small proportion of the population, estimated to be about one per cent including dependents. Actually the number turned out to be even smaller. The fortunate or unfortunate few, depending upon one’s point of view, were required to pay a modest one per cent on taxable income above three thousand dollars and up to a top of 7 per cent on incomes above $500,000. Certain deductions were allowed: business expenses, interest on indebtedness, other taxes, casualty losses not compensated for by insurance, bad debts, depreciation, dividends of corporations that had paid the corporation tax, and income upon which the tax had already been collected at the source.

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