Our Nation's periods of greatest acheivement and fullest employment came when

          the taxes on our wealthiest citizens were the highest. 

•          
•          The Mellon Tax Cuts Which Caused the Great Depression:
•  
•          --The Revenue Act of 1921 reduced the maximum surtax to 50% and increased exemptions.  Signed by
•                 President Harding.    (We believe the NY times graphic is in error since it seems to show a tax rate
•                 of 55% starting in 1923 or 1924 rather than 1922.)

•          --The Revenue Act of 1924 reduced the surtax to 40% "as an incentive to the wealthy to shift their investments
•                 from tax exempt bonds and into industrial stocks" (Cannadine 2006, p 315).  It was signed by
•                 Pres. Coolidge and began with the 1925 calendar year.

         --The Revenue Act of 1926 reduced the surtax to 25%, as Secretary Mellon had tried to do in 1924.

                Practically the full Mellon Plan was implemented: "the gift tax was repealed, the public disclosure of

                federal income tax returns was abrogated, and althought the estate tax survived the rate was

                halved"  (Cannadine 2006, p318). 

•          The Hoover/Roosevelt Progressive Tax Increases which Healed the Great Depression:
•  
•          --The Revenue Act of 1932 increased the upper individual tax to 63%.  It was signed by President
•                 Hoover, and took effect starting in 1933 (Roosevelt's first year in office).
•         

•          --The Wealth Tax Act was signed by FDR in 1935 as part of the Second New Deal.  It took effect 
•                 in 1936, and raised the upper tax rate to 79%.

         --The Revenue Act of 1942 lowered the personal income tax exemption from $1500 to $624 thereby

                bringing in 13 million new taxpayers.  The tax rate varied from 6% at the lowest level ($625) to

                94% at the highest level.  (Our annotation on the chart at the left incorrectly shows the tax to be 91%)

         --The Revenue Act of 1943 specified income sources which were exempt from the Income Tax.  President

                Roosevelt tried to stop the exemptions by vetoing the bill, but congress overrode his veto.

from NYT August 18, 1986.

page last updated 6/16/09