PART 10. OTHER TAXES IN RELATION TO FORESTRY 
CONTENTS 
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Individual and corporation income taxes-__--. A405 e\wuD eabhi taxessnicse cath bse ee eee a 413 
Federal income tax__.__-___-_-----_----. 405), Severance: taxese 2 2-22 22 ee See 416 
State income taxes__...__-..__-__-------. 411 
General leita ise e aha an luc ieee SNe aaa 412 
INDIVIDUAL AND CORPORATION INCOME TAXES 
FEDERAL INCOME TAX 
GENERAL DESCRIPTION 
The sixteenth amendment to the Constitution of the United 
States authorizing the Congress to levy a tax on income was pro- 
claimed February 25, 1913, by the Secretary of State as having 
been ratified and adopted as a part of the Constitution of the United 
States. In the first revenue act passed after the adoption of the 
amendment (act of Oct. 3, 1913, 38 Stat. 168) in section II, sub- 
section D, incomes received from March LO HO) December 31, 
1913, were subjected to the tax imposed by that act. Consequently, 
March 1, 1913, marks the beginning of the period during which 
income taxes lawfully may be assessed and collected under the 
sixteenth amendment. Although that date marks the beginning 
of the modern Federal income “tax, the fact is that prior to 1917 
the rates were so low and the exemptions so liberal that this tax was 
almost negligible as an economic factor. 
The participation of the United States in the World War begin- 
ning in 1917 made it immediately necessary for the Federal Govern- 
ment to raise huge sums of money. The enormous debt and other 
obligations arising out of that war have contributed largely to a 
heavy Federal budget, with which the Nation will be burdened for 
many years. The income tax has become the chief reliance of the 
Federal Government in meeting this budget. 
The normal tax on individuals was increased from 1 to 2 percent 
in 1916. This rate was again doubled in 1917 for incomes of over 
$2,000, and the personal exemption was reduced. There was in 
1918 a third increase in normal rates, which became 6 and 12 per- 
cent, the lower rate applying to the first $4,000 of net taxable in- 
come. Surtaxes, which were imposed at progressive rates, at first 
did not go above 6 percent, but these rates were successively raised 
in 1916, 1917, and 1918, when they reached a maximum of 65 per- 
cent on the excess of net incomes over $1,000,000. After 1918 
normal rates were reduced, and after 1921 surtax rates also. These 
rates reached a low level in the period 1925 to 1931 and were ac- 
companied by high personal exemptions and credits for dependents. 
405 
