HISTORY: 1918 — Income taxes impact the common man

Federal income taxes were 5 years old when an agent from the Internal Revenue Service traveled to Grant County to explain the system to locals.

The taxing authority of Congress provided in the Constitution had been an issue for decades when Congress proposed a Sixteenth Amendment to allow for an income tax with no requirement to apportion the revenue to the states.

The amendment was ratified in 1913, and Congress enacted an income tax in October 1913. The rate was 1 percent for income over $3,000 with a 6 percent surtax on incomes above $500,000.

Clarence D. Tillson, a deputy collector for the IRS, was the first IRS official to visit Grant County since the law was imposed, the Eagle reported Jan. 11, 1918.

Anyone who earned more than $1,000 in 1917 would have to file, he said, and any married couple or head of household who earned more than $2,000 would have to file.

“After March 1, this state will be combed as it was never combed before, and those who fail to make reports of their incomes will be compelled to do so, and they will be liable to heavy penalties for failing to make their returns before March 1, 1918,” Tillson said.

Changes to the income tax, however, were made to meet the demands of World War I. The top rate was increased in 1918 to 77 percent on income above $1 million, but other changes affected most residents of Grant County.

On Aug. 16, the Eagle reported that proposed war tax levies would affect every person in the county with an average income.

“The general public has not yet awakened to a realization of the scope of the war tax bill pending in Congress, the provisions of which are tentative only but highly significant,” tax expert Chester W. LeNoir told the Eagle.

Only successful businessmen and higher paid employees were taxed last year, he said.

“This year, because of the reduction of exemptions, every unmarried man and woman earning over $750 a year and every married person earning over $1,500 is to be taxed, to begin with 10 percent of the income over these exemptions,” LeNoir said.

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