Revenue Act of 1926
The United States Revenue Act of 1926, 44 Stat. 9, reduced inheritance and personal income taxes, cancelled many excise imposts, eliminated the gift tax and ended public access to federal income tax returns. Passed by the 69th Congress, it was signed into law by President Calvin Coolidge; the act was applicable to incomes for 1925 and thereafter. A rate of 13.5 percent was levied on the net income of corporations. A normal tax and a surtax were levied against the net income of individuals as shown in the following table. Exemption of $1,500 for single filers and $3,500 for married couples and heads of family. A $400 exemption for each dependent under 18
The United States of America known as the United States or America, is a country composed of 50 states, a federal district, five major self-governing territories, various possessions. At 3.8 million square miles, the United States is the world's third or fourth largest country by total area and is smaller than the entire continent of Europe's 3.9 million square miles. With a population of over 327 million people, the U. S. is the third most populous country. The capital is Washington, D. C. and the largest city by population is New York City. Forty-eight states and the capital's federal district are contiguous in North America between Canada and Mexico; the State of Alaska is in the northwest corner of North America, bordered by Canada to the east and across the Bering Strait from Russia to the west. The State of Hawaii is an archipelago in the mid-Pacific Ocean; the U. S. territories are scattered about the Pacific Ocean and the Caribbean Sea, stretching across nine official time zones. The diverse geography and wildlife of the United States make it one of the world's 17 megadiverse countries.
Paleo-Indians migrated from Siberia to the North American mainland at least 12,000 years ago. European colonization began in the 16th century; the United States emerged from the thirteen British colonies established along the East Coast. Numerous disputes between Great Britain and the colonies following the French and Indian War led to the American Revolution, which began in 1775, the subsequent Declaration of Independence in 1776; the war ended in 1783 with the United States becoming the first country to gain independence from a European power. The current constitution was adopted in 1788, with the first ten amendments, collectively named the Bill of Rights, being ratified in 1791 to guarantee many fundamental civil liberties; the United States embarked on a vigorous expansion across North America throughout the 19th century, acquiring new territories, displacing Native American tribes, admitting new states until it spanned the continent by 1848. During the second half of the 19th century, the Civil War led to the abolition of slavery.
By the end of the century, the United States had extended into the Pacific Ocean, its economy, driven in large part by the Industrial Revolution, began to soar. The Spanish–American War and World War I confirmed the country's status as a global military power; the United States emerged from World War II as a global superpower, the first country to develop nuclear weapons, the only country to use them in warfare, a permanent member of the United Nations Security Council. Sweeping civil rights legislation, notably the Civil Rights Act of 1964, the Voting Rights Act of 1965 and the Fair Housing Act of 1968, outlawed discrimination based on race or color. During the Cold War, the United States and the Soviet Union competed in the Space Race, culminating with the 1969 U. S. Moon landing; the end of the Cold War and the collapse of the Soviet Union in 1991 left the United States as the world's sole superpower. The United States is the world's oldest surviving federation, it is a representative democracy.
The United States is a founding member of the United Nations, World Bank, International Monetary Fund, Organization of American States, other international organizations. The United States is a developed country, with the world's largest economy by nominal GDP and second-largest economy by PPP, accounting for a quarter of global GDP; the U. S. economy is post-industrial, characterized by the dominance of services and knowledge-based activities, although the manufacturing sector remains the second-largest in the world. The United States is the world's largest importer and the second largest exporter of goods, by value. Although its population is only 4.3% of the world total, the U. S. holds 31% of the total wealth in the world, the largest share of global wealth concentrated in a single country. Despite wide income and wealth disparities, the United States continues to rank high in measures of socioeconomic performance, including average wage, human development, per capita GDP, worker productivity.
The United States is the foremost military power in the world, making up a third of global military spending, is a leading political and scientific force internationally. In 1507, the German cartographer Martin Waldseemüller produced a world map on which he named the lands of the Western Hemisphere America in honor of the Italian explorer and cartographer Amerigo Vespucci; the first documentary evidence of the phrase "United States of America" is from a letter dated January 2, 1776, written by Stephen Moylan, Esq. to George Washington's aide-de-camp and Muster-Master General of the Continental Army, Lt. Col. Joseph Reed. Moylan expressed his wish to go "with full and ample powers from the United States of America to Spain" to seek assistance in the revolutionary war effort; the first known publication of the phrase "United States of America" was in an anonymous essay in The Virginia Gazette newspaper in Williamsburg, Virginia, on April 6, 1776. The second draft of the Articles of Confederation, prepared by John Dickinson and completed by June 17, 1776, at the latest, declared "The name of this Confederation shall be the'United States of America'".
The final version of the Articles sent to the states for ratification in late 1777 contains the sentence "The Stile of this Confederacy shall be'The United States of America'". In June 1776, Thomas Jefferson wrote the phrase "UNITED STATES OF AMERICA" in all capitalized letters in the headline of his "original Rough draught" of the Declaration of Independence; this draft of the document did not surface unti
Revenue Act of 1924
The United States Revenue Act of 1924 known as the Mellon tax bill cut federal tax rates and established the U. S. Board of Tax Appeals, renamed the United States Tax Court in 1942; the bill was named after U. S. Secretary of the Treasury Andrew Mellon; the Revenue Act was applicable to incomes for 1924. The bottom rate, on income under $4,000, fell from 1.5% to 1.125%. A parallel act, the Indian Citizenship Act of 1924, granted all non-citizen resident Indians citizenship, thus the Revenue Act declared that there were no longer any "Indians, not taxed" to be not counted for purposes of United States Congressional apportionment. President Calvin Coolidge signed the bill into law. Both 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
President of the United States
The president of the United States is the head of state and head of government of the United States of America. The president directs the executive branch of the federal government and is the commander-in-chief of the United States Armed Forces. In contemporary times, the president is looked upon as one of the world's most powerful political figures as the leader of the only remaining global superpower; the role includes responsibility for the world's most expensive military, which has the second largest nuclear arsenal. The president leads the nation with the largest economy by nominal GDP; the president possesses international hard and soft power. Article II of the Constitution establishes the executive branch of the federal government, it vests the executive power of the United States in the president. The power includes the execution and enforcement of federal law, alongside the responsibility of appointing federal executive, diplomatic and judicial officers, concluding treaties with foreign powers with the advice and consent of the Senate.
The president is further empowered to grant federal pardons and reprieves, to convene and adjourn either or both houses of Congress under extraordinary circumstances. The president directs the foreign and domestic policies of the United States, takes an active role in promoting his policy priorities to members of Congress. In addition, as part of the system of checks and balances, Article I, Section 7 of the Constitution gives the president the power to sign or veto federal legislation; the power of the presidency has grown since its formation, as has the power of the federal government as a whole. Through the Electoral College, registered voters indirectly elect the president and vice president to a four-year term; this is the only federal election in the United States, not decided by popular vote. Nine vice presidents became president by virtue of a president's intra-term resignation. Article II, Section 1, Clause 5 sets three qualifications for holding the presidency: natural-born U. S. citizenship.
The Twenty-second Amendment precludes any person from being elected president to a third term. In all, 44 individuals have served 45 presidencies spanning 57 full four-year terms. Grover Cleveland served two non-consecutive terms, so he is counted twice, as both the 22nd and 24th president. Donald Trump of New York is the current president of the United States, he assumed office on January 20, 2017. In July 1776, during the American Revolutionary War, the Thirteen Colonies, acting jointly through the Second Continental Congress, declared themselves to be 13 independent sovereign states, no longer under British rule. Recognizing the necessity of coordinating their efforts against the British, the Continental Congress began the process of drafting a constitution that would bind the states together. There were long debates on a number of issues, including representation and voting, the exact powers to be given the central government. Congress finished work on the Articles of Confederation to establish a perpetual union between the states in November 1777 and sent it to the states for ratification.
Under the Articles, which took effect on March 1, 1781, the Congress of the Confederation was a central political authority without any legislative power. It could make its own resolutions and regulations, but not any laws, could not impose any taxes or enforce local commercial regulations upon its citizens; this institutional design reflected how Americans believed the deposed British system of Crown and Parliament ought to have functioned with respect to the royal dominion: a superintending body for matters that concerned the entire empire. The states were out from under any monarchy and assigned some royal prerogatives to Congress; the members of Congress elected a President of the United States in Congress Assembled to preside over its deliberation as a neutral discussion moderator. Unrelated to and quite dissimilar from the office of President of the United States, it was a ceremonial position without much influence. In 1783, the Treaty of Paris secured independence for each of the former colonies.
With peace at hand, the states each turned toward their own internal affairs. By 1786, Americans found their continental borders besieged and weak and their respective economies in crises as neighboring states agitated trade rivalries with one another, they witnessed their hard currency pouring into foreign markets to pay for imports, their Mediterranean commerce preyed upon by North African pirates, their foreign-financed Revolutionary War debts unpaid and accruing interest. Civil and political unrest loomed. Following the successful resolution of commercial and fishing disputes between Virginia and Maryland at the Mount Vernon Conference in 1785, Virginia called for a trade conference between all the states, set for September 1786 in Annapolis, with an aim toward resolving further-reaching interstate commercial antagonisms; when the convention failed for lack of attendance due to suspicions among most of the other states, Alexander Hamilton led the Annapolis delegates in a call for a convention to offer revisions to the Articles, to be held the next spring in Philadelphia.
Prospects for the next convention appeared bleak until James Madison and Edmund Randolph succeeded in securing George Washington's attendance to Philadelphia as a delegate for Virginia. When the Constitutional Convention convened in May 1787, the 12 state delegations in attendance (Rh
Tax Relief and Health Care Act of 2006
The Tax Relief and Health Care Act of 2006, includes a package of tax extenders, provisions affecting health savings accounts and other provisions in the United States. The Act retroactively extended for two years certain provisions that had expired at the end of 2005, including: Above the line deduction for qualified tuition and higher education expenses Elective itemized deduction for state and local general sales taxes Research credit For tax years ending after December 31, 2006, the Act modifies the rules for calculating the research credit: it increases the rates of the alternative incremental credit and creates a new alternative simplified credit Work opportunity tax credit, welfare-to-work tax credit Tax credit for Qualified Zone Academy Bonds Up to $250 above-the-line deduction for certain expenses of elementary and secondary school teachers Expensing of brownfields remediation costs Tax incentives for investment in Washington, DC Indian employment tax credit Accelerated depreciation for business property on Indian reservations Fifteen-year depreciation for qualified leasehold improvements and qualified restaurant property Enhanced charitable deductions—for corporate donations of scientific property used for research, of computer technology and equipment Archer medical savings accounts Suspension of the taxable income limit on percentage depletion for oil and natural gas produced from marginal propertiesIn addition, the Act extended certain provisions that would otherwise expire at the end of 2006, including: Election to treat combat pay as earned income for purposes of calculating the earned income credit Provisions affecting IRS disclosure of certain tax return informationThe Act extended the new markets tax credit through the end of 2008 and requires that future regulations ensure that non-metropolitan counties receive a proportional allocation of qualified entity investments.
The Act extended through December 31, 2008, numerous energy provisions that would otherwise have expired at the end of 2007, including: Tax credit for electricity produced from certain renewable resources Authority to issue clean renewable energy bonds Deduction for energy-efficient commercial buildings Tax credit for new energy-efficient homes Tax credit for residential energy-efficient property Several provisions affect health savings accounts, including provisions dealing with limitations on HSA contributions and tax-free rollovers to HSAs from health reimbursement accounts, flexible spending accounts and individual retirement accounts. Other provisions include: Expansion of the Section 199 domestic production activity deduction to income from Puerto Rico, if all Puerto Rican receipts are subject to federal income tax A refundable credit of 20 percent of the long-term unused alternative minimum tax credits per year for the next five years, subject to certain limitations and phaseouts Enhancing reporting requirements for the exercise of incentive stock options and employee stock purchase plans Reform and expansion of whistleblower awards to certain individuals who provide information regarding violations of the tax laws An increase of the penalty for frivolous tax submissions from $500 to $5,000 and an extension of the scope of the penalty A temporary itemized deduction for qualified mortgage insurance premiums accrued during 2007, subject to limitations and phase-out Increased information sharing between the IRS and certain regional governmental organizations Charitable remainder trusts having unrelated business taxable income are subjected to an excise tax equal to 100% of unrelated business taxable income A technical correction to the Subpart F look-through rule under the Tax Increase Prevention and Reconciliation Act of 2005 Clarifying that the Tax Court has jurisdiction to review requests for equitable innocent spouse relief Expanding the Medicare Recovery Audit Contractor program to all 50 states and making it permanent Ordering the completion without delay of the All-American Canal Lining Project and identifying a 1944 treaty between the US and Mexico as the exclusive authority concerning the impacts of projects constructed within US territory on foreign territoriesThe Act makes permanent certain provisions that were included as temporary provisions in the Tax Increase Prevention and Reconciliation Act of 2005 and were otherwise scheduled to expire after 2010, including: Federal income tax exemption of certain qualified settlement funds established to resolve CERCLA claims "Separate affiliated group" rule for satisfaction of active trade or business requirement under Section 355 Election to treat self-created musical works as capital assets Exemption from imputed interest rules for certain loans to qualified continuing care facilities CRS Report in the public domain H.
R. 6111, Legislative History
Tax Reform Act of 1986
The U. S. Congress passed the Tax Reform Act of 1986 to simplify the income tax code, broaden the tax base and eliminate many tax shelters. Referred to as the second of the two "Reagan tax cuts", the bill was officially sponsored by Democrats, Richard Gephardt of Missouri in the House of Representatives and Bill Bradley of New Jersey in the Senate; the Tax Reform Act of 1986 was given impetus by a detailed tax-simplification proposal from President Reagan's Treasury Department, was designed to be tax-revenue neutral because Reagan stated that he would veto any bill, not. Revenue neutrality was achieved by offsetting tax cuts for individuals by eliminating $60 billion annually in tax loopholes and shifting $24 billion of the tax burden from individuals to corporations by eliminating the investment tax credit, slowing depreciation of assets, enacting a stiff alternative minimum tax on corporations; the top tax rate for individuals for tax year 1987 was lowered from 50% to 38.5%. Many lower level tax brackets were consolidated, the upper income level of the bottom rate was increased from $5,720/year to $29,750/year.
This package consolidated tax brackets from fifteen levels of income to four levels of income. The standard deduction, personal exemption, earned income credit were expanded, resulting in the removal of six million poor Americans from the income tax roll and a reduction of income tax liability across all income levels; the higher standard deduction simplified the preparation of tax returns for many individuals. For tax year 1987, the Act provided a graduated rate structure of 11%/15%/28%/35%/38.5%. Beginning with tax year 1988, the Act provided a nominal rate structure of 15%/28%/33%. However, beginning with 1988, taxpayers having taxable income higher than a certain level were taxed at an effective rate of about 28%; this was jettisoned in the Omnibus Budget Reconciliation Act of 1990, otherwise known as the "Bush tax increase", which violated his Taxpayer Protection Pledge. The Act increased incentives favoring investment in owner-occupied housing relative to rental housing. Prior to the Act, all personal interest was deductible.
Subsequently, only home mortgage interest was deductible, including interest on home equity loans. The Act phased out many investment incentives for rental housing, through extending the depreciation period of rental property to 27.5 years from 15-19 years. It discouraged real estate investing by eliminating the deduction for passive losses. To the extent that low-income people may be more to live in rental housing than in owner-occupied housing, this provision of the Act could have had the tendency to decrease the new supply of housing accessible to low-income people; the Low-Income Housing Tax Credit was added to the Act to provide some balance and encourage investment in multifamily housing for the poor. Moreover, interest on consumer loans such as credit card debt was no longer deductible. An existing provision in the tax code, called Income Averaging, which reduced taxes for those only making a much higher salary than before, was eliminated; the Act, increased the personal exemption and standard deduction.
The Individual Retirement Account deduction was restricted. The IRA had been created as part of the Employee Retirement Income Security Act of 1974, where employees not covered by a pension plan could contribute the lesser of $1500 or 15% of earned income; the Economic Recovery Tax Act of 1981 removed the pension plan clause and raised the contribution limit to the lesser of $2000 or 100% of earned income. The 1986 Tax Reform Act retained the $2000 contribution limit, but restricted the deductibility for households that have pension plan coverage and have moderate to high incomes. Non-deductible contributions were allowed. Depreciation deductions were curtailed. Prior to ERTA, depreciation was based on "useful life" calculations provided by the Treasury Department. ERTA set up the "accelerated cost recovery system"; this set up a series of useful lives based on three years for technical equipment, five years for non-technical office equipment, ten years for industrial equipment, fifteen years for real property.
TRA86 lengthened these lives, lengthened them further for taxpayers covered by the alternative minimum tax. These latter, longer lives approximate "economic depreciation," a concept economists have used to determine the actual life of an asset relative to its economic value. Defined contribution pension contributions were curtailed; the law prior to TRA86 was that DC pension limits were the lesser of 25% of compensation or $30,000. This could be accomplished by any combination of elective deferrals and profit sharing contributions. TRA86 introduced an elective deferral limit of $7000, indexed to inflation. Since the profit sharing percentage must be uniform for all employees, this had the intended result of making more equitable contributions to 401's and other types of DC pension plans; the 1986 Tax Reform Act introduced the General Nondiscrimination rules which applied to qualified pension plans and 403 plans that for private sector employers. It did not allow such pension plans to discriminate in favor of compensated employees.
A compensated employee for the purposes of testing a plan's compliance for the 2006 plan year is any employee whose compensation exceeded $95,000 in the 2005 plan year. Therefore, all new hires are by definition nonhighly compensated employees. A plan could not give benefits or contributions on a more favorable basis for
Economic Growth and Tax Relief Reconciliation Act of 2001
The Economic Growth and Tax Relief Reconciliation Act of 2001 was a major piece of tax legislation passed by the 107th United States Congress and signed by President George W. Bush, it is known by its abbreviation EGTRRA, is referred to as one of the two "Bush tax cuts". Bush had made tax cuts the centerpiece of his campaign in the 2000 presidential election, he introduced a major tax cut proposal shortly after taking office. Though a handful of Democrats supported the bill, most support came from congressional Republicans; the bill was passed by Congress in May 2001, signed into law by Bush on June 7, 2001. Due to the narrow Republican majority in the United State Senate, EGGTRA was passed using the reconciliation process, which bypasses the Senate filibuster. EGGTRA lowered federal income tax rates, reducing the top tax rate from 39.6 percent to 35 percent and reducing rates for several other tax brackets. The act reduced capital gain taxes, raised raised pre-tax contribution limits for defined contribution plans and Individual Retirement Accounts, eliminated the estate tax.
In 2003, Bush signed another bill, the Jobs and Growth Tax Relief Reconciliation Act of 2003, which contained further tax cuts and accelerated certain tax changes that were part of EGGTRA. Due to the rules concerning reconciliation, EGGTRA contained a sunset provision that would end the tax cuts in 2011, but most of the cuts were made permanent with the passage of the American Taxpayer Relief Act of 2012. Bush's promise to cut taxes was the centerpiece of his 2000 presidential campaign, upon taking office, he made tax cuts his first major legislative priority. A budget surplus had developed during the Bill Clinton administration, with the Federal Reserve Chairman Alan Greenspan's support, Bush argued that the best use of the surplus was to lower taxes. By the time Bush took office, reduced economic growth had led to less robust federal budgetary projections, but Bush maintained that tax cuts were necessary to boost economic growth. After Treasury Secretary Paul O'Neill expressed concerns over the tax cut's size and the possibility of future deficits, Vice President Cheney took charge of writing the bill, which the administration proposed to Congress in March 2001.
Bush sought a $1.6 trillion tax cut over a ten-year period, but settled for a $1.35 trillion tax cut. The administration rejected the idea of "triggers" that would phase out the tax reductions should the government again run deficits; the Economic Growth and Tax Relief Reconciliation Act won the support of congressional Republicans and a minority of congressional Democrats, Bush signed it into law in June 2001. The narrow Republican majority in the Senate necessitated the use of the reconciliation, which in turn necessitated that the tax cuts would phase out in 2011 barring further legislative action. One of the most notable characteristics of EGTRRA is that its provisions were designed to sunset on January 1, 2011 (that is, for tax years, plan years, limitation years that begin after December 31, 2010. After a two-year extension by the Tax Relief, Unemployment Insurance Reauthorization, Job Creation Act of 2010, the Bush era rates for taxpayers making less than $400,000 per year were made permanent by the American Taxpayer Relief Act of 2012.
The sunset provision allowed EGTRRA to sidestep the Byrd Rule, a Senate rule that amends the Congressional Budget Act to allow Senators to block a piece of legislation if it purports a significant increase in the federal deficit beyond ten years. The sunset allowed the bill to stay within the letter of the PAYGO law while removing nearly $700 billion from amounts that would have triggered PAYGO sequestration. In addition to the tax cuts implemented by the EGTRRA, it initiated a series of rebates for all taxpayers that filed a tax return for 2000; the rebate was up to a maximum of $300 for single filers with no dependents, $500 for single parents, $600 for married couples. Anybody who paid less than their maximum rebate amount in net taxes received that amount, meaning some people who did not pay any taxes did not receive rebates; the rebates were automatic for anybody who filed their 2000 tax return on time, or filed for an extension and sent a return. If an eligible person did not receive a rebate check by December 2001 they could apply for the rebate in their 2001 tax return.
EGTRRA reduced the rates of individual income taxes: a new 10% bracket was created for single filers with taxable income up to $6,000, joint filers up to $12,000, heads of households up to $10,000. The 15% bracket's lower threshold was indexed to the new 10% bracket the 28% bracket would be lowered to 25% by 2006; the 31% bracket would be lowered to 28% by 2006 the 36% bracket would be lowered to 33% by 2006 the 39.6% bracket would be lowered to 35% by 2006The EGTRRA in many cases lowered the taxes on married couples filing jointly by increasing the standard deduction for joint filers to between 164% and 200% of the deduction for single filers. Additionally, EGTRRA increased the per-child tax credit and the amount eligible for credit spent on dependent child care, phased out limits on itemized deductions and personal exemptions for higher income taxpayers, increased the exemption for the Alternative Minimum Tax, created a new depreciation deduction for qualified property owners; the capital gains tax on qualified gains of property or stock held for five years was reduced from 10% to 8% for those in the 15% income tax bracket.
EGTRRA introduced sweeping changes to retirement plans, incorporating many of the so-called Portman-Cardin provisions proposed by those House members i