Income Tax, History Of
A tax consists of a rate and a base. Because income is the base for the income tax, a central question is: What constitutes income? Different theoretical concepts of income exist in economics, accounting, and taxation. The base of income to which the federal income tax rate structure applies is taxable income as constitutionally and statutorily defined. Thus, the concept of taxable income is grounded in theory and modified by political dynamics and administrative concerns.
From its modern introduction in 1913, the rate structure for the individual income tax has been progressive, meaning that tax rates graduate upward as the base of taxable income increases. Different tax rates apply to ranges of income, called brackets. Over time, the number of brackets and tax rates that apply to them have varied greatly. The tax rate applied to the last dollar of taxable income earned by a taxpayer is called the marginal tax rate. Total income tax as a percentage of total taxable income is the average tax rate, whereas total income tax as a percentage of total economic income is the effective tax rate.
Adoption and Early Implementation of Federal Income Tax
Until the Civil War, federal revenues came from relatively low tariff rates imposed on a broad base of imported goods and from excise taxes.
This page contains 201 words.
Income Tax, History Of article
Read the rest of this article.
This article contains 1,965 words
(approx. 7 pages at 300 words per page).
Order our Income tax Article
