The United States Revenue Act of 1921 (ch. 136, , November 23, 1921) was the first

Republican Republican can refer to: Political ideology * An advocate of a republic, a type of government that is not a monarchy or dictatorship, and is usually associated with the rule of law. ** Republicanism, the ideology in support of republics or agains ...

tax reduction following their landslide victory in the 1920 federal elections. New

Secretary of the Treasury The United States secretary of the treasury is the head of the United States Department of the Treasury, and is the chief financial officer of the federal government of the United States. The secretary of the treasury serves as the principal a ...

Andrew Mellon Andrew William Mellon (; March 24, 1855 – August 26, 1937), sometimes A. W. Mellon, was an American banker, businessman, industrialist, philanthropist, art collector, and politician. From the wealthy Mellon family of Pittsburgh, Pennsylva ...

argued that significant tax reduction was necessary in order to spur economic expansion and restore prosperity. Mellon obtained repeal of the wartime

excess profits tax In the United States, an excess profits tax is a tax on any profit above a certain amount. A predominantly wartime fiscal instrument, the tax was designed primarily to capture wartime profits that exceeded normal peacetime profits to prevent perv ...

. The top marginal rate on individuals fell from 73 to 58 percent by 1922, and preferential treatment for capital gains was introduced at a rate of 12.5 percent. Mellon had hoped for more significant tax reduction.

Tax on Corporations

In 1921 a rate of 10 percent was levied on the net income of corporations and 12.5 percent levied thereafter.

Tax on Individuals

A Normal Tax and a Surtax were levied against the net income of individuals as shown in the following table. *Exemption of $1,000 for single filers and $2,500 for married couples and heads of family. A $400 exemption for each dependent under 18. Married couple exemption is reduced to $2,000 for net income over $5,000.

References

{{US tax acts 1921 in law United States federal taxation legislation 1921 in the United States