Wealth Inequality Charts…
The Great Depression brought an end to GOP tax cuts. Faced with a ballooning deficit, President Herbert Hoover proposed a major tax increase, including new excise taxes and a broader, somewhat steeper income tax. In a striking display of bipartisanship, Democratic leaders embraced the plan. They even went Hoover one better, trying to replace the regressive excise taxes with an even more regressive national sales tax. It was a major reversal for the party, which had long opposed any sort of sales tax. It was also a huge blunder, prompting a revolt among rank-and-file Democrats. When the dust finally settled, lawmakers agreed to a host of new excises, as well as steeper, somewhat broader income taxes. Widely considered both prudent and distasteful, these changes constituted the largest peacetime tax increase in the nation's history. For Republicans, the law brought an unhappy end to Mellon's long campaign for tax reduction. For Democrats, it established the regressive starting point for New Deal tax reform.
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Tax cuts were the order of the day -- and the decade -- throughout the 1920s. Taken together, the Revenue Acts of 1921, 1924, 1926, and 1928 lightened the burden for almost everyone. Wealthy taxpayers did particularly well, enjoying a steep decline in marginal rates; between 1918 and 1929, the top rate fell from 77 percent to just 24 percent. Meanwhile, many middle-class Americans disappeared from the tax rolls altogether, as Congress narrowed the income tax to focus on the well-to-do. Perhaps most important, the business community managed to orchestrate repeal of the excess profits tax -- the most progressive, and burdensome, tax to emerge from World War I.
On the eve of the Great Depression, the revenue system featured a narrower, flatter individual income tax, as well as a modest corporate income levy. Despite the best efforts of Treasury Secretary Andrew Mellon, it also included an estate tax; Democrats and progressive Republicans had managed to stave off his call for repeal, although they agreed to substantial rate cuts. Mellon could console himself with broad success in almost every other facet of his tax cut program. Dominating fiscal policy for more than 11 years, he reshaped the tax system along new, distinctly less progressive lines.
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http://taxhistory.tax.org/Articles/1920s.htmThe more things change, the more they stay the same.